Solidbank VS MBTC

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
SOLIDBANK CORPORATION,
Petitioner,
vs.
GATEWAY ELECTRONICS CORPORATION,

Respondent.
G.R. No.164805 April 30, 2008
NACHURA, J.:
FACTS
Gateway Electronics Corporation (Gateway) obtained from Solidbank Corporation
(Solidbank) four foreign currency denominated loans to be used as working capital for its
manufacturing operations. Gateway failed to comply with its loan obligations. Solidbank
filed a Complaint for collection of sum of money against Gateway. Solidbank filed an
Amended Complaint to implead the officers of Gateway who signed in their personal
capacity a Continuing Guaranty to become sureties for any and all existing indebtedness of
Gateway to Solidbank. The trial court admitted the amended complaint and impleaded the
additional defendants.
Solidbank filed a Motion for Production and Inspection of Documents on the basis of
information that Gateway has already received from Alliance the proceeds of the Back-end
Services Agreement. The trial court granted the motion for production and inspection of
documents. Gateway filed a Motion to reset the production and inspection of documents to
give them enough time to gather and collate the documents in their possession. The trial
court likewise granted the motion. Solidbank filed a motion for issuance of a show cause
order for Gateway’s failure to comply with the trial court’s order dated January 30, 2001.
Gateway, in response, filed a manifestation that they appeared before the trail court to
present the documents in their possession, however, Solidbank’s counsel failed to appear on
the said date. They also express their willingness to make available for inspection at
Gateway’s offices any requested document.
After setting the production and inspection of documents in the premises of Gateway,
Solidbank was not satisfied with the documents produced by the former. Thus, Solidbank
filed a motion to cite Gateway and its officers in contempt for their refusal to produce the
documents subject of the January 30, 2001 order. Gateway, however, 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.
The trial court denied 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. Gateway filed a partial motion for reconsideration but the same was denied.
Gateway filed a petition for certiorari before the Court of Appeals (CA) seeking to
nullify the orders dated April 15, 2002 and August 27, 2002. The CA nullified the
challenged orders and ruled that both the Motion for Production of Documents and the order
dated January 30, 2001 failed to comply with the provisions of Section 1, Rule 27 of the
Rules of Court.
A motion for reconsideration of the Decision of the CA was filed, but the CA denied
the same. Hence, this petition.
ISSUE
Whether or not the motion for production and inspection of documents filed by
Solidbank and the Order of the trial court dated January 30, 2001 failed to comply with
Section 1, Rule 27 of the Rules of Court.
RULING
No. Section 1, Rule 27 of the Rules of Court provides that “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 to 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 above-mentioned rules provides for the mechanics for the production of
documents and the inspection of things during the pendency of a case. In the present case,
Gateway assigned to Solidbank the proceeds of its Back-end Services Agreement with
Alliance. By virtue of the assignment, Gateway was obligated to remit to Soldibank 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. Solidbank availed of the discovery
procedure under Rule 27, in order to ascertain the veracity of the information.
Solidbank was able to show good cause for the production of the documents. 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.

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Republic of the Philippines

GATEWAY ELECTRONICS CORPORATION,

G.R. No.164805 April 30, 2008

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