Modes_Batch 3B 1 of 9

G.R. No. 204700 April 10, 2013

EAGLERIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I. OBEN, Petitioners, vs.
CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC. Respondent.
DECISION
LEONEN, J.:
All documents mentioned in a Deed of Assignment transferring the credit of the plaintiff in a pending litigation should
be accessible to the defendant through a Motion for Production or Inspection of Documents under Rule 27 o(the Rules
of Court. Litigation is not a game of skills and stratagems. It is a social process that should allow both parties to fully
and fairly access the truth of the matters in litigation.
Before this Court is a Petition under Rule 45, seeking to review the August 29, 2012 1 and November 27,
20122Resolutions of the Third Division of the Court of Appeals. The Resolutions dismissed petitioners' Rule 65 Petition
and affirmed the Resolutions dated March 28, 20123 and May 28, 20124 of the Regional Trial Court, Branch 60, Makati
City denying petitioners' motion for production/inspection.
The pertinent facts are as follows:5
Petitioners Eagleridge Development Corporation (EDC), and sureties Marcelo N. Naval (Naval) and Crispin I. Oben
(Oben) are the defendants in a collection suit initiated by Export and Industry Bank (EIB) through a Complaint 6dated
February 9, 2005, and currently pending proceedings before the Regional Trial Court (RTC), Branch 60, Makati City7.
By virtue of a Deed of Assignment8 dated August 9, 2006, EIB transferred EDC's outstanding loan obligations of
₱10,232,998.00 to respondent Cameron Granville 3 Asset Management, Inc. (Cameron), a special purpose vehicle,
thus:
For value received and pursuant to the (a) Loan Sale and Purchase Agreement dated as of 7 April 2006 (the "LSPA"),
made and executed by Export and Industry Bank, as Seller ("Seller"), and by Cameron Granville Asset Management
(SPV-AMC), Inc. (the "Purchaser"), and (b) the Deed of Absolute Sale dated 9 August 2006 (the "Deed") made and
executed by and between Seller and Purchaser, Seller hereby absolutely sells, assigns and conveys to Purchaser,
on a "without recourse" basis, all of its rights, title and interests in the following Loan:
EAGLERIDGE DEVELOPMENT CORPORATION with an outstanding loan obligation of Php 10,232,998.00 covered
by an unregistered Deed of Assignment of Receivables.
xxx xxx xxx
Defined terms used but not otherwise defined herein have the meaning given to them in the LSPA.9
Thereafter, Cameron filed its Motion to Substitute/Join EIB dated November 24, 2006, which was granted by the trial
court.
On February 22, 2012, petitioners filed a Motion for Production/Inspection10 of the Loan Sale and Purchase Agreement
(LSPA) dated April 7, 2006 referred to in the Deed of Assignment.
Respondent Cameron filed its Comment11 dated March 14, 2012 alleging that petitioners have not shown "good
cause" for the production of the LSPA and that the same is allegedly irrelevant to the case a quo.
In response, petitioners filed on March 26, 2012 their Reply.12 Petitioners explained that the production of the LSPA
was for "good cause". They pointed out that the claim of Cameron is based on an obligation purchased after litigation
had already been instituted in relation to it. They claimed that pursuant to Article 1634 of the New Civil Code 13 on
assignment of credit, the obligation subject of the case a quo is a credit in litigation, which may be extinguished by
reimbursing the assignee of the price paid therefor, the judicial costs incurred and the interest of the price from the
day on which the same was paid. Article 1634 provides:
When a credit or other incorporeal right in litigation is sold, the debtor shall have a right to extinguish it by reimbursing
the assignee for the price the latter paid therefor, the judicial costs incurred by him, and the interest on the price from
the day on which the same was paid.
As petitioners' alleged loan obligations may be reimbursed up to the extent of the amount paid by Cameron in the
acquisition thereof, it becomes necessary to verify the amount of the consideration from the LSPA, considering that
the Deed of Assignment was silent on this matter.
 Modes_Batch 3B 2 of 9

In its Resolution14 dated March 28, 2012, the trial court denied petitioners' motion for production for being utterly
devoid of merit. It ruled that there was failure to show "good cause" for the production of the LSPA and failure to show
that the LSPA is material or contains evidence relevant to an issue involved in the action.
Aggrieved, petitioners filed on April 25, 2012, their Motion for Reconsideration.15 They argued that the application of
Article 1634 of the Civil Code is sanctioned by Section 12, Article III of Republic Act No. 9182, otherwise known as
the Special Purpose Vehicle Law (SPV Law). Section 12 provides:
SECTION 12. Notice and Manner of Transfer of Assets. – (a) No transfer of NPLs to an SPV shall take effect unless
the FI concerned shall give prior notice, pursuant to the Rules of Court, thereof to the borrowers of the NPLs and all
persons holding prior encumbrances upon the assets mortgaged or pledged. Such notice shall be in writing to the
borrower by registered mail at their last known address on file with the FI. The borrower and the FI shall be given a
period of at most ninety (90) days upon receipt of notice, pursuant to the Rules of Court, to restructure or renegotiate
the loan under such terms and conditions as may be agreed upon by the borrower and the FIs concerned.
(b) The transfer of NPAs from an FI to an SPV shall be subject to prior certification of eligibility as NPA by the
appropriate regulatory authority having jurisdiction over its operations which shall issue its ruling within forty-five (45)
days from the date of application by the FI for eligibility.
(c) After the sale or transfer of the NPLs, the transferring FI shall inform the borrower in writing at the last known
address of the fact of the sale or transfer of the NPLs.
They alleged that the production of the LSPA – which would inform them of the consideration for the assignment of
their loan obligation – is relevant to the disposition of the case.
Respondent Cameron filed its Comment/Opposition16 dated April 30, 2012 reiterating that the production of the LSPA
was immaterial, to which, petitioners filed, on May 14, 2012, their Reply.17 Petitioners insisted the materiality of
inquiring about the contents of the LSPA, as the consideration for any transfer of the loan obligation of petitioner EDC
should be the basis for the claim against them.
The trial court denied petitioners' motion for reconsideration in its Resolution dated May 28, 2012.
On July 27, 2012, petitioners filed their Petition for Certiorari with the Court of Appeals (CA), to nullify and/or set aside
the RTC's Resolutions dated March 28, 2012 and May 28, 2012.
In its Resolution dated August 29, 2012, the CA (Third Division) dismissed the petition for lack of petitioner Oben's
verification and certification against forum shopping and failure to attach a copy of the complaint.
Petitioners' subsequent motion for reconsideration18 dated September 20, 2012, was likewise denied in the CA's
November 27, 2012 Resolution.
Hence this instant petition.
The resolution of this case revolves around the following issues: (1) whether the CA erred in dismissing the petition
on technicality, i.e. on a defective verification and certification against forum shopping and the attachment to the
petition of a mere machine copy of the complaint; and (2) whether the RTC gravely abused its discretion in denying
the production and/or inspection of the LSPA.
We agree with petitioner, that the appellate court erred in ruling that Oben's Verification and Certification was defective
for lack of a Board Resolution authorizing Oben to sign on behalf of petitioner EDC. Oben executed and signed the
Verification and Certification in his personal capacity as an impleaded party in the case, and not as a representative
of EDC. We note that an earlier Verification and Certification signed by Naval, for himself and as a representative of
EDC, and a Secretary Certificate containing his authority to sign on behalf of EDC, were already filed with the appellate
court together with the petition for certiorari.19 As such, what was only lacking was Oben's Verification and Certification
as pointed out in the August 29, 2012 Resolution of the CA.
On the other hand, contrary to petitioners' assertion, a reading of the CA Resolution dated November 27, 2012 shows
that the appellate court merely noted the belated attachment of a machine copy, not a certified true copy, of the
complaint to petitioners' motion for reconsideration. Although not expressly stated, the machine copy of the complaint
is in fact acceptable, as Rule 65 provides that one may attach to the petition mere machine copies of other relevant
documents and pleadings.20 More importantly, the CA's dismissal of the petition for certiorari was anchored on its
finding that there was no grave abuse of discretion on the part of the RTC in denying the production of the LSPA, that
the errors committed by Judge Ruiz were, if at all, mere errors of judgment correctible not by the extraordinary writ of
certiorari and an ordinary appeal would still be available in the action below for sum of money.21
 Modes_Batch 3B 3 of 9

An appeal would not have adequately remedied the situation because, in that case, the court would have rendered its
decision without giving the petitioners the opportunity to make use of the information that the LSPA would have
supplied as a result of the court allowing the production of the LSPA. If, on appeal, public respondent reversed its
decision, the reversal would result in the case being retried in the lower court, which would unnecessarily delay the
resolution of the case and burden the parties with additional litigation expense.
Having resolved the issue on the supposed technical defects, we go on to discuss the second issue.
Section 1, Rule 27 of the 1997 Rules of Court, states:
Section 1. Motion for production or inspection; order. – Upon motion of any party showing good cause therefor, the
court in which an action is pending may a) order any party to produce and permit the inspection and copying or
photographing, by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters,
photographs, objects or tangible things, not privileged, which constitute or contain evidence material to any matter
involved in the action and which are in his possession, custody or control; xxx
The provision on production and inspection of documents is one of the modes of discovery sanctioned by the Rules
of Court in order to enable not only the parties, but also the court to discover all the relevant and material facts in
connection with the case pending before it.22
Generally, the scope of discovery is to be liberally construed so as to provide the litigants with information essential
to the fair and amicable settlement or expeditious trial of the case.23 All the parties are required to lay their cards on
the table so that justice can be rendered on the merits of the case.24
Although the grant of a motion for production of document is admittedly discretionary on the part of the trial court
judge, nevertheless, it cannot be arbitrarily or unreasonably denied because to do so would bar access to relevant
evidence that may be used by a party-litigant and hence, impair his fundamental right to due process.25
The test to be applied by the trial judge in determining the relevancy of documents and the sufficiency of their
description is one of reasonableness and practicability.26
According to the trial court, there is no need for the production of the LSPA in order to apprise the petitioners of the
amount of consideration paid by respondent in favor of EIB and that it is enough that the Deed of Assignment has
been produced by Cameron showing that it has acquired the account of the petitioners pursuant to the SPV Law.27
We find the Petition impressed with merit.
The question was whether respondent had acquired a valid title to the credit, i.e., EDC’s outstanding loan obligation,
and whether it had a right to claim from petitioners. In fact, petitioners had maintained in their motions before the trial
court the nullity or non-existence of the assignment of credit purportedly made between respondent and EIB (the
original creditor).
As respondent Cameron’s claim against the petitioners relies entirely on the validity of the Deed of Assignment, it is
incumbent upon respondent Cameron to allow petitioners to inspect all documents relevant to the Deed, especially
those documents which, by express terms, were referred to and identified in the Deed itself. The LSPA, which pertains
to the same subject matter – the transfer of the credit to respondent is manifestly useful to petitioners’ defense.
Furthermore, under Section 17, Rule 132 of the 1997 Rules of Court, when part of a writing or record is given in
evidence by one party, the whole of the same subject may be inquired into by the other, 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. Since the Deed of Assignment was produced in court by respondent and marked as one of its documentary
exhibits, the LSPA which was made a part thereof by explicit reference and which is necessary for its understanding
may also be inevitably inquired into by petitioners.
In this light, the relevance of the LSPA sought by petitioners is readily apparent. Fair play demands that petitioners
must be given the chance to examine the LSPA. Besides, we find no great practical difficulty, and respondent did not
allege any, in presenting the document for inspection and copying of the petitioners.
Incidentally, the legal incidents of the case a quo necessitates the production of said LSPA.
Section 13 of the SPV Law clearly provides that "in the transfer of the Non-Performing Loans (NPLs), the provisions
on subrogation and assignment of credits under the New Civil Code shall apply." The law does not exclude the
application of Article 1634 of the New Civil Code to transfers of NPLs by a financial institution to a special purpose
vehicle. Settled is the rule in statutory construction that "when the law is clear, the function of the courts is simple
application." Besides, it is within the power of an SPV to restructure, condone, and enter into other forms of debt
settlement involving NPLs.
 Modes_Batch 3B 4 of 9

Also, Section 19 of the SPV Law expressly states that redemption periods allowed to borrowers under the banking
law, the rules of court and/or other laws are applicable. Hence, the equitable right of redemption allowed to a debtor
under Article 1634 of the Civil Code is applicable.
Therefore, as petitioners correctly pointed out, they have the right of legal redemption by paying Cameron the transfer
price plus the cost of money up to the time of redemption and the judicial costs.
Certainly, it is necessary for the petitioners to be informed of the actual consideration paid by the SPV in its acquisition
of the loan, because it would be the starting point for them to negotiate for the extinguishment of their obligation. As
pointed out by the petitioners, since the Deed of
Assignment merely states "For value received", the appropriate information may be supplied by the LSPA. It is self-
evident that in order to be able to intelligently match the price paid by respondent for the acquisition of the loan,
petitioner must be provided with the necessary information to enable it to make a reasonably informed proposal.
Because of the virtual refusal and denial of the production of the LSPA, petitioners were never accorded the chance
to reimburse respondent of the consideration the latter has paid.
Consequently, this Court finds and so holds that the denial of the Motion for Production despite the existence of "good
cause," relevancy and materiality for the production of the LSPA was unreasonable and arbitrary constituting grave
abuse of discretion on the part of the trial court. Hence, certiorari properly lies as a remedy in the present case.
Discretionary acts will be reviewed where the lower court or tribunal has acted without or in excess of its jurisdiction,
where an interlocutory order does not conform to the essential requirements of law and may reasonably cause material
injury throughout subsequent proceedings for which the remedy of appeal will be inadequate, or where there is a clear
or serious abuse of discretion.28 The exercise of discretion pertaining to discovery will be set aside where there is
abuse, or the trial court’s disposition of matters of discovery was improvident and affected adversely the substantial
rights of a party.29 After all, the discretion conferred upon trial courts is a sound discretion which should be exercised
with due regard to the rights of the parties and the demands of equity and justice.30
Indeed, the insistent refusal of respondent to produce the LSPA is perplexing and unacceptable to this Court.
Respondent even asserts that if petitioner EDC thinks that the LSPA will bolster its defense, then it should secure a
copy of the document from the Bangko Sentral ng Pilipinas and not from respondent, because allegedly the document
was not marked by respondent as one of its exhibits.31
In light of the general philosophy of full discovery of relevant facts, the unreceptive and negative attitude by the
respondent is abominable. The rules on discovery are accorded broad and liberal interpretation precisely to enable
the parties to obtain the fullest possible knowledge of the issues and facts, including those known only to their
adversaries, in order that trials may not be carried on in the dark.32
Undoubtedly, the trial court had effectively placed petitioners at a great disadvantage inasmuch as respondent
effectively suppressed relevant documents related to the transaction involved in the case a quo. Furthermore, the
remedies of discovery encouraged and provided for under the Rules of Court to be able to compel the production of
relevant documents had been put to naught by the arbitrary act of the trial court.
It must be remembered that "litigation is essentially an abiding quest for truth undertaken not by the judge alone, but
jointly with the parties. Litigants, therefore, must welcome every opportunity to achieve this goal; they must act in good
faith to reveal documents, papers and other pieces of evidence material to the controversy."33 Courts, as arbiters and
guardians of truth and justice, must not countenance any technical ploy to the detriment of an expeditious settlement
of the case or to a fair, full and complete determination on its merits.
WHEREFORE, the instant petition is GRANTED. The August 29, 2012 and November 27, 2012 resolutions of the
Court of Appeals are REVERSED and SET ASIDE, and respondents are ORDERED to produce the Loan Sale and
Purchase Agreement dated April 7, 2006, including its annexes and/or attachments, if any, in order that petitioners
may inspect and/or photocopy the same.
SO ORDERED.
 Modes_Batch 3B 5 of 9

G.R. No. 164805 April 30, 2008

SOLIDBANK CORPORATION, NOW KNOWN AS METROPOLITAN BANK AND TRUST
COMPANY, petitioner, vs. GATEWAY ELECTRONICS CORPORATION, JAIME M. HIDALGO AND ISRAEL
MADUCDOC, respondents.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari1 assailing the Decision dated June 2, 2004 and the Resolution
dated July 29, 2004 of the Court of Appeals in CA-G.R. SP No. 73684.
The Facts
In May and June 1997, Gateway Electronics Corporation (Gateway) obtained from Solidbank Corporation (Solidbank)
four (4) foreign currency denominated loans to be used as working capital for its manufacturing operations.2 The loans
were covered by promissory notes3 (PNs) which provided an interest of eight and 75/100 percent (8.75%), but was
allegedly increased to ten percent (10%) per annum, and a penalty of two percent (2%) per month based on the total
amount due computed from the date of default until full payment of the total amount due.4 The particulars of the loans
are:

Promissory Date of Loan Amount of Loan Date Due

Note No.

a) PN 97-375 20 May 1997 US$ 190,000.00 11 Nov. 1998

b) PN 97-408 29 May 1997 US$ 570,000.00 11 Nov. 1998

c) PN 97-435 09 June 1997 US$1,150,000.00 04 June 1998

d) PN 97-458 15 June 1997 US$ 130,000.00 15 June 1998

To secure the loans covered by PN 97-3755 and PN 97-408,6 Gateway assigned to Solidbank the proceeds of its
Back-end Services Agreement7 dated June 25, 2000 with Alliance Semiconductor Corporation (Alliance). The
following stipulations are common in both PNs:
3. This Note or Loan shall be paid from the foreign exchange proceeds of Our/My Letter(s) of Credit, Purchase
Order or Sales Contract described as follows: *** Back-end Services Agreement dated 06-25-96 by and
between Gateway Electronics Corporation and Alliance Semiconductor Corporation.
4. We/I assign, transfer and convey to Solidbank all title and interest to the proceeds of the foregoing Letter(s)
of Credit to the extent necessary to satisfy all amounts and obligations due or which may arise under this Note
or Loan, and to any extension, renewal, or amendments of this Note or Loan. We/I agree that in case the
proceeds of the foregoing Letter(s) of Credit prove insufficient to pay Our/My outstanding liabilities under this
Note or Loan, We/I shall continue to be liable for the deficiency.
5. We/I irrevocably undertake to course the foreign exchange proceeds of the Letter(s) of Credit directly with
Solidbank. Our/My failure to comply with the above would render Us or Me in default of the loan or credit
facility without need of demand.8
Gateway failed to comply with its loan obligations. By January 31, 2000, Gateway’s outstanding debt amounted to
US$1,975,835.58. Solidbank’s numerous demands to pay were not heeded by Gateway. Thus, on February 21, 2000,
Solidbank filed a Complaint9 for collection of sum of money against Gateway.
On June 16, 2002, Solidbank filed an Amended Complaint10 to implead the officers/stockholders of Gateway, namely,
Nand K. Prasad, Andrew S. Delos Reyes, Israel F. Maducdoc, Jaime M. Hidalgo and Alejandro S. Calderon – who
signed in their personal capacity a Continuing Guaranty11 to become sureties for any and all existing indebtedness of
Gateway to Solidbank. On June 20, 2002, the trial court admitted the amended complaint and impleaded the additional
defendants.
Earlier, on October 11, 2000, Solidbank filed a Motion for Production and Inspection of Documents 12 on the basis of
an information received from Mr. David Eichler, Chief Financial Officer of Alliance, that Gateway has already received
from Alliance the proceeds/payment of the Back-end Services Agreement. The pertinent portions of the motion read:
 Modes_Batch 3B 6 of 9

8. Therefore, plaintiffs request that this Honorable Court issue an Order requiring defendant GEC, through its
Treasurer/Chief Financial Officer, Chief Accountant, Comptroller or any such officer, to bring before this
Honorable Court for inspection and copying the following documents:
a) The originals, duplicate originals and copies of all documents pertaining to, arising from, in
connection with or involving the Back-end Services Agreement of defendant GEC and Alliance
Semiconductors;
b) The originals, duplicate originals and copies of all books of account, financial statements,
receipts, checks, vouchers, invoices, ledgers and other financial/accounting records and
documents pertaining to or evidencing financial and money transactions arising from, in connection
with or involving the Back-end Services Agreement of defendant GEC and Alliance Semiconductors;
and
c) The originals, duplicate originals and copies of all documents from whatever source pertaining to
the proceeds/payments received by GEC from Alliance Semiconductors.
d) Documents, as used in this section, means all writings of any kind, including the originals and all
non-identical copies, whether different from the originals by reason of any notation made on such
copies or otherwise, including without limitation, correspondence, memoranda, notes diaries,
statistics, letters, telegrams, minutes, contracts, reports, studies, checks, statements, receipts, returns,
summaries, pamphlets, books, inter-office and intra-office communications, notations of any sort of
conversations, telephone calls, meetings or other communications, bulletins, printed matter, computer
records, diskettes or print-outs, teletypes, telefax, e-mail, invoices, worksheets, all drafts, alterations,
modifications, changes and amendments of any of the foregoing, graphic or oral records or
representations of any kind (including, without limitation, photographs, charts, graphs, microfiche,
microfilm, videotapes, recordings, motion pictures, CD-ROM’s), and any electronic, mechanical or
electric records or representations (including, without limitation, tapes, cassettes, discs, recordings
and computer or computer-related memories).
9. Furthermore, plaintiffs request that said Order to the Treasurer/Chief Financial Officer, Chief Accountant,
Comptroller of defendant GEC include the following instructions:
a. If the response is that the documents are not in defendant GEC’s or the officers’ possession or
custody, said officer should describe in detail the efforts made to locate said records or documents;
b. If the documents are not in defendant GEC’s or the officer’s possession and control, said officer
should identify who has control and the location of said documents or records;
c. If the request for production seeks a specific document or itemized category that is not in defendant
GEC’s or the officer’s possession, control or custody, the officer should provide any documents he
has that contain all or part of the information contained in the requested document or category;
d. If the officer cannot furnish the originals of the documents requested, he should explain in detail the
reasons therefore; and
e. The officer should identify the source within or outside GEC of each of the documents he produces.13
On January 30, 2001, the trial court issued an Order14 granting the motion for production and inspection of documents,
viz.:
WHEREFORE, the defendant GEC is hereby ordered to bring all the records and documents, not privileged,
arising from, in connection with and/or involving the Back-end Services Agreement between defendant GEC
and Alliance Semiconductor Corporation, particularly to those pertaining to all payments made by Alliance
Semiconductor Corporation to GEC pursuant to said Agreement, incorporating the instructions enumerated in
par. 9 of the instant motion, for inspection and copying by the plaintiff, the same to be made before the Officer-
In-Charge, Office of the Branch Clerk of Court on February 27, 2001 at 9:00 a.m.
SO ORDERED.15
Gateway filed a motion to reset the production and inspection of documents to March 29, 2001 in order to give them
enough time to gather and collate the documents in their possession. The trial court granted the motion.16
On April 30, 2001, Solidbank filed a motion for issuance of a show cause order for Gateway’s failure to comply with
the January 30, 2001 Order of the trial court.17 In response, Gateway filed a manifestation that they appeared before
the trial court on March 29, 2001 to present the documents in their possession, however, Solidbank’s counsel failed
 Modes_Batch 3B 7 of 9

to appear on the said date.18 In the manifestation, Gateway also expressed their willingness to make available for
inspection at Gateway’s offices any requested document.19
On May 31, 2001, the trial court issued an Order setting the production and inspection of documents on June 7, 2001
in the premises of Gateway.20 It was subsequently moved to July 24, 2001. On the said date, Gateway presented the
invoices representing the billings sent by Gateway to Alliance in relation to the Back-end Services Agreement.21
Solidbank was not satisfied with the documents produced by Gateway. Thus, on December 13, 2001, Solidbank filed
a motion to cite Gateway and its responsible officers in contempt for their refusal to produce the documents subject
of the January 30, 2001 Order. In opposition thereto, Gateway claimed that they had complied with the January 30,
2001 Order and that the billings sent to Alliance are the only documents that they have pertaining to the Back-end
Services Agreement.22
On April 15, 2002, the trial court issued an Order23 denying the motion to cite Gateway for contempt. However, the
trial court chastised Gateway for exerting no diligent efforts to produce the documents evidencing the payments
received by Gateway from Alliance in relation to the Back-end Services Agreement, viz.:
Before this Court is a Motion to Cite Defendant GEC In Contempt For Refusing To Produce Documents
Pursuant to the Order Dated 30 January 2001 filed by plaintiff dated December 12, 2001, together with
defendant GEC’s Opposition thereto dated January 14, 2002, as well as plaintiff’s Reply dated February 6,
2002 and GEC’s Rejoinder dated February 27, 2002.
As Courts are cautioned to utilize the power to punish for contempt on the preservative and not on the
vindictive, contempt being drastic and extraordinary in nature (Wicker vs. Arcangel, 252 SCRA 444; Paredes-
Garcia vs. CA, 261 SCRA 693), this Court is inclined to DENY the present motion.
However, as no diligent effort was shown to have been exerted by defendant GEC to produce the documents
enumerated in the Order dated January 30, 2001, this Court hereby orders, in accordance with Sec. 3(a), Rule
29 of the Rules of Court, that the matters regarding the contents of the documents sought to be produced but
which were not otherwise produced by GEC, shall be taken to be established in accordance with plaintiff’s
claim, but only for the purpose of this action.
SO ORDERED.24
Gateway filed a partial motion for reconsideration of the April 15, 2002 Order. However, the same was denied in an
Order25 dated August 27, 2002.
On November 5, 2002, Gateway filed a petition for certiorari26 before the Court of Appeals (CA) seeking to nullify the
Orders of the trial court dated April 15, 2002 and August 27, 2002.
On June 2, 2004, the CA rendered a Decision27 nullifying the Orders of the trial court dated April 15, 2002 and August
27, 2002. The CA ruled that both the Motion for Production of Documents and the January 30, 2001 Order of the trial
court failed to comply with the provisions of Section 1, Rule 27 of the Rules of Court. It further held that the trial court
committed grave abuse of discretion in ruling that the matters regarding the contents of the documents sought to be
produced but which were not produced by Gateway shall be deemed established in accordance with Solidbank’s
claim. The fallo of the Decision reads:
WHEREFORE, the instant petition is hereby GRANTED. Accordingly, the assailed portion of the Order dated April
15, 2002 and Order dated August 27, 2002, both issued by public respondent, are hereby NULLIFIED and SET
ASIDE without prejudice to the filing by private respondent of a new Motion for Production and Inspection of
Documents in accordance with the requirements of the Rules.
SO ORDERED.28
Solidbank filed a motion for reconsideration of the Decision of the CA. On July 29, 2004, the CA rendered a
Resolution29 denying the same. Thus, this petition.
The Issues
I. Whether Solidbank’s motion for production and inspection of documents and the Order of the trial court
dated January 30, 2001 failed to comply with Section 1, Rule 27 of the Rules of Court; and
II. Whether the trial court committed grave abuse of discretion in holding that the matters subject of the
documents sought to be produced but which were not produced by Gateway shall be deemed established in
accordance with Solidbank’s claim.
 Modes_Batch 3B 8 of 9

The Ruling of the Court

We resolve to deny the petition.
I
Section 1, Rule 27 of the Rules of Court provides:
SECTION 1. Motion for production or inspection; order. – Upon motion of any party showing good cause
therefor, the court in which an action is pending may (a) order any party to produce and permit the inspection
and copying or photographing, by or on behalf of the moving party, of any designated documents, papers,
books, accounts, letters, photographs, objects or tangible things, not privileged, which constitute or contain
evidence material to any matter involved in the action and which are in his possession, custody or control; or
(b) order any party or permit entry upon designated land or other property in his possession or control for the
purpose of inspecting, measuring, surveying, or photographing the property or any designated relevant object
or operation thereon. The order shall specify the time, place and manner of making the inspection and taking
copies and photographs, and may prescribe such terms and conditions as are just.
The aforecited rule provides the mechanics for the production of documents and the inspection of things during the
pendency of a case. It also deals with the inspection of sources of evidence other than documents, such as land or
other property in the possession or control of the other party.30 This remedial measure is intended to assist in the
administration of justice by facilitating and expediting the preparation of cases for trial and guarding against
undesirable surprise and delay; and it is designed to simplify procedure and obtain admissions of facts and evidence,
thereby shortening costly and time-consuming trials. It is based on ancient principles of equity. More specifically, the
purpose of the statute is to enable a party-litigant to discover material information which, by reason of an opponent's
control, would otherwise be unavailable for judicial scrutiny, and to provide a convenient and summary method of
obtaining material and competent documentary evidence in the custody or under the control of an adversary. It is a
further extension of the concept of pretrial.31
The modes of discovery are accorded a broad and liberal treatment.32 Rule 27 of the Revised Rules of Court permits
"fishing" for evidence, the only limitation being that the documents, papers, etc., sought to be produced are not
privileged, that they are in the possession of the party ordered to produce them and that they are material to any
matter involved in the action.33 The lament against a fishing expedition no longer precludes a party from prying into
the facts underlying his opponent’s case. Mutual knowledge of all relevant facts gathered by both parties is essential
to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his
possession.34 However, fishing for evidence that is allowed under the rules is not without limitations. In Security Bank
Corporation v. Court of Appeals, the Court enumerated the requisites in order that a party may compel the other party
to produce or allow the inspection of documents or things, viz.:
(a) The party must file a motion for the production or inspection of documents or things, showing good cause
therefor;
(b) Notice of the motion must be served to all other parties of the case;
(c) The motion must designate the documents, papers, books, accounts, letters, photographs, objects or
tangible things which the party wishes to be produced and inspected;
(d) Such documents, etc., are not privileged;
(e) Such documents, etc., constitute or contain evidence material to any matter involved in the action, and
(f) Such documents, etc., are in the possession, custody or control of the other party.35
In the case at bench, Gateway assigned to Solidbank the proceeds of its Back-end Services Agreement with Alliance
in PN Nos. 97-375 and 97-408. By virtue of the assignment, Gateway was obligated to remit to Solidbank all payments
received from Alliance under the agreement. In this regard, Solidbank claims that they have received information from
the Chief Financial Officer of Alliance that Gateway had already received payments under the agreement. In order to
ascertain the veracity of the information, Solidbank availed of the discovery procedure under Rule 27. The purpose of
Solidbank’s motion is to compel Gateway to produce the documents evidencing payments received from Alliance in
connection with the Back-end Services Agreement.
Solidbank was able to show good cause for the production of the documents. It had also shown that the said
documents are material or contain evidence relevant to an issue involved in the action. However, Solidbank’s motion
was fatally defective and must be struck down because of its failure to specify with particularity the documents it
required Gateway to produce. Solidbank’s motion for production and inspection of documents called for a blanket
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inspection. Solidbank’s request for inspection of "all documents pertaining to, arising from, in connection with or
involving the Back-end Services Agreement"36 was simply too broad and too generalized in scope.
A motion for production and inspection of documents should not demand a roving inspection of a promiscuous mass
of documents. The inspection should be limited to those documents designated with sufficient particularity in the
motion, such that the adverse party can easily identify the documents he is required to produce.37
Furthermore, Solidbank, being the one who asserts that the proceeds of the Back-end Services Agreement were
already received by Gateway, has the burden of proof in the instant case. Burden of proof is the duty of a party to
present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required
by law.38 Throughout the trial, the burden of proof remains with the party upon whom it is imposed, 39 until he shall
have discharged the same.
II
The trial court held that as a consequence of Gateway’s failure to exert diligent effort in producing the documents
subject of the Order dated January 30, 2001, in accordance with Section 3(a), Rule 2940 of the Rules of Court, the
matters regarding the contents of the documents sought to be produced but which were not produced by Gateway,
shall be considered as having been established in accordance with Solidbank’s claim.
We hold that the trial court committed grave abuse of discretion in issuing the aforesaid Order. It is not fair to penalize
Gateway for not complying with the request of Solidbank for the production and inspection of documents, considering
that the documents sought were not particularly described. Gateway and its officers can only be held liable for unjust
refusal to comply with the modes of discovery if it is shown that the documents sought to be produced were specifically
described, material to the action and in the possession, custody or control of Gateway.
Neither can it be said that Gateway did not exert effort in complying with the order for production and inspection of
documents since it presented the invoices representing the billings sent by Gateway to Alliance in relation to the Back-
end Services Agreement. Good faith effort to produce the required documents must be accorded to Gateway, absent
a finding that it acted willfully, in bad faith or was at fault in failing to produce the documents sought to be produced.41
One final note. The CA decision nullifying the orders of the trial court was without prejudice to the filing by herein
petitioner of a new motion for Production and Inspection of Documents in accordance with the Rules. It would have
been in the best interest of the parties, and it would have saved valuable time and effort, if the petitioner simply heeded
the advice of the CA.
WHEREFORE, in view of the foregoing, the instant petition is DENIED for lack of merit.
SO ORDERED.