Eagleridge Development Corporation vs. Cameron Granville 3 Asset Management, Inc.

A trial court commits grave abuse of discretion in denying a Motion for Production/Inspection of a document expressly referred to in a Deed of Assignment when the document contains the consideration paid for the assigned credit, which is material to the debtor's right of legal redemption under Article 1634 of the Civil Code.

The case involves a collection suit for a loan obligation originally held by Export and Industry Bank (EIB). EIB transferred the non-performing loan to Cameron Granville 3 Asset Management, Inc., a special purpose vehicle (SPV), through a Deed of Assignment. The Deed explicitly referenced a Loan Sale and Purchase Agreement (LSPA) but did not state the actual purchase price, only stating "For value received." Petitioners sought the production of the LSPA to ascertain the price paid, which is the baseline for their right to extinguish the obligation by reimbursing the assignee under Article 1634 of the Civil Code.

• Original Filing: RTC, Branch 60, Makati City, Civil Case No. 05-213 (Collection suit by EIB)
• Lower Court Decision: March 28, 2012 — RTC denied petitioners' Motion for Production/Inspection for lack of good cause; May 28, 2012 — RTC denied Motion for Reconsideration.
• Appeal: Petition for Certiorari under Rule 65 filed with the CA.
• CA Decision: August 29, 2012 — CA dismissed petition based on defective verification/certification against forum shopping and failure to attach a certified true copy of the complaint; November 27, 2012 — CA denied Motion for Reconsideration.
• SC Action: Petition for Review on Certiorari under Rule 45 filed to review the CA Resolutions.

• The Collection Suit: EIB filed a collection suit against Eagleridge Development Corporation (EDC), Marcelo N. Naval, and Crispin I. Oben on February 9, 2005.
• The Assignment of Credit: On August 9, 2006, EIB assigned EDC's outstanding loan obligation (P10,232,998.00) to respondent Cameron Granville 3 Asset Management, Inc. via a Deed of Assignment.
• Reference to the LSPA: The Deed of Assignment stated it was made pursuant to the Loan Sale and Purchase Agreement (LSPA) dated April 7, 2006. The Deed itself was silent on the exact consideration paid, stating only "For value received."
• Substitution: Cameron was substituted as the plaintiff in the RTC collection suit in place of EIB.
• Demand for Production: On February 22, 2012, petitioners filed a Motion for Production/Inspection of the LSPA under Rule 27. They argued they needed to know the purchase price to exercise their right of legal redemption under Article 1634 of the Civil Code.
• Lower Court Denials: The RTC denied the motion on March 28, 2012, ruling petitioners failed to show "good cause" and that the LSPA was immaterial. The RTC held the Deed of Assignment was sufficient to prove the acquisition. The RTC denied reconsideration on May 28, 2012.

• The CA erred in dismissing the petition on technicalities; Crispin I. Oben signed the verification in his personal capacity as an impleaded party, not as a representative of EDC, and a prior verification by Naval for EDC was already submitted.
• Machine copies of pleadings are acceptable attachments under Rule 65.
• The RTC gravely abused its discretion in denying the production of the LSPA.
• The LSPA is material because Article 1634 of the Civil Code grants debtors the right to extinguish a credit in litigation by reimbursing the assignee the price paid; knowing the exact purchase price is essential to exercise this right.
• Section 12 and Section 13 of the Special Purpose Vehicle Law (RA 9182) sanction the application of Article 1634 to transfers of non-performing loans to SPVs.

• Petitioners failed to show "good cause" for the production of the LSPA.
• The LSPA is irrelevant to the collection case a quo.
• If petitioners believe the LSPA bolsters their defense, they should secure a copy from the Bangko Sentral ng Pilipinas, not from Cameron, because Cameron did not mark it as an exhibit.

• Procedural Issues: Whether the CA erred in dismissing the Rule 65 petition based on a defective verification and certification against forum shopping and the attachment of a mere machine copy of the complaint.
• Substantive Issues: Whether the RTC gravely abused its discretion in denying the motion for production/inspection of the LSPA.

• Procedural: The CA erred in ruling that Oben's verification was defective. Oben signed in his personal capacity as an impleaded party, not as EDC's representative. Furthermore, Naval had already submitted a verification and secretary's certificate for EDC. Regarding the attachment, Rule 65 allows the attachment of mere machine copies of relevant pleadings. However, the CA's ultimate basis for dismissal was its finding that the RTC committed no grave abuse of discretion—an error the SC corrects, noting that appeal would be an inadequate remedy since the information is needed before judgment is rendered.
• Substantive: The RTC gravely abused its discretion. The LSPA is material and relevant to the case. Under Section 1, Rule 27 of the Rules of Court, a motion for production should be granted upon a showing of "good cause." Since the Deed of Assignment was presented in evidence by the respondent, Section 17, Rule 132 allows the adverse party to inquire into any other writing necessary for its understanding—the LSPA is explicitly referenced in the Deed. Furthermore, under Section 13 of the SPV Law (RA 9182), the provisions on assignment of credits under the Civil Code apply to transfers of NPLs to SPVs. Thus, petitioners have the right of legal redemption under Article 1634 of the Civil Code, which requires them to reimburse the assignee the price paid. Without the LSPA, petitioners cannot determine the purchase price and exercise this right. The arbitrary denial of the motion suppressed relevant documents and impaired petitioners' right to due process.

• Right of Legal Redemption under Article 1634 — When a credit in litigation is sold, the debtor has the right to extinguish it by reimbursing the assignee the price paid, judicial costs incurred, and interest. This right applies to transfers of Non-Performing Loans (NPLs) to Special Purpose Vehicles under Section 13 of the SPV Law (RA 9182).
• Liberal Construction of Discovery Rules — The scope of discovery is liberally construed to provide litigants with information essential to the fair settlement or expeditious trial of a case. Parties are required to lay their cards on the table.
• Grave Abuse of Discretion in Denying Discovery — While the grant of a motion for production of documents is discretionary on the trial court, it cannot be arbitrarily or unreasonably denied. To do so bars access to relevant evidence and impairs the fundamental right to due process, constituting grave abuse of discretion correctible by certiorari.
• Doctrine of Secondary Evidence / Inevitable Inquiry — Under Section 17, Rule 132, when a detached writing (the Deed of Assignment) is given in evidence, any other writing or record necessary to its understanding (the LSPA) may also be given in evidence and inquired into.

• Article 1634, Civil Code — Provides the right of legal redemption for a debtor when a credit in litigation is sold, allowing extinguishment of the obligation by reimbursing the assignee the price paid, judicial costs, and interest. Applied to determine that petitioners have a substantive right to know the purchase price of their assigned loan.
• Section 1, Rule 27, Rules of Court — Governs the Motion for Production or Inspection, requiring a showing of "good cause" for documents not privileged which constitute or contain evidence material to the action. Applied to establish that the LSPA should be produced because it contains evidence material to the issue of the purchase price.
• Section 17, Rule 132, Rules of Court — States that when a detached writing is given in evidence, any other writing necessary to its understanding may also be given in evidence. Applied to rule that since the Deed of Assignment was presented, the LSPA (incorporated by reference) may be inquired into.
• Section 13, Republic Act No. 9182 (SPV Law) — Stipulates that the provisions on subrogation and assignment of credits under the Civil Code apply to the transfer of NPLs to SPVs. Applied to confirm that Article 1634 of the Civil Code is applicable to the transfer of EDC's loan to Cameron.