Is “fishing expedition” or fishing for evidence allowed under our Rules? This is one of the issues raised in this case of a commercial bank (MBTC).
In May and June 1997, MBTC granted 4 foreign currency denominated loans covered by four promissory notes (PN) in favor of an electronics company (GEC) totaling US$2,040,000 to be used as working capital for the latter’s manufacturing operations. To secure the loans covered by the first two PNs amounting to US$760,000, GEC assigned to the bank the proceeds of its Back-end Services Agreement with a semi conductor company (ASC) consisting of letters of credit, purchase orders and sales contract,
GEC failed to comply with its loan obligations which amounted to US$1,975,835.58 as of January 31, 2000, despite numerous demands. So on February 21, 2000, MBTC filed a complaint for collection of sum of money against GEC, which was later amended to include the officers/stockholders of GEC.
On October 11, 2000, MBTC filed a Motion for Production and Inspection of Documents on the basis of an information received from the Chief Financial Officer of ASC that GEC had already received the proceeds/payment of the Back-end Services Agreement. MBTC asked the court to issue an order requiring GEC to bring before the court for inspection and copying “the originals, duplicate originals and copies of all books of accounts, financial statements, receipts, checks, vouchers, invoices, ledgers and other financial/accounting records pertaining to or evidencing financial and money transactions arising from and in connection with or involving the Back-end Services Agreement of GEC with ASC.
The lower court granted the bank’s motion. In compliance therewith, GEC presented invoices representing billings sent by GEC to ASC in relation to the Back-end Services Agreement. MBTC however was not satisfied with the documents produced. So it filed a motion to cite the GEC officers in contempt. While the court denied the motion of MBTC to cite the GEC officers in contempt, it chastised them for exerting no diligent efforts to produce the documents evidencing the payment received by GEC from ASC. Hence the court ordered that “the matters regarding the contents of the documents sought to be produced but which were not produced shall be taken to be established in accordance with the bank’s claim”. Was the lower court correct?
No. It is true that Rule 127 of the Revised Rules of Court permits “fishing” for evidence. The lament against fishing expedition no longer precludes a party 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 subject to the following requisites: (1) that a motion must be filed showing good cause for such inspection or production; (2) that notice of the motion must be served to all the parties; (3) that the motion must designate the documents, papers etc which the party wishes to be produced/inspected; (4) that such documents are not privileged; (5) such documents constitute or contain evidence material to any matter involved in the action; (6) such documents are in the possession and control of the other party.
In this case MBTC was able to show good cause. But it failed to specify with particularity the documents it required GEC to produce. Its motion called for a blanket inspection. Its request for inspection of “all documents pertaining to, arising from, in connection with or involving the Back-end Services Agreement was simply too broad and too generalized in scope.
Furthermore it cannot be said that GEC did not exert effort in complying with the order since it presented the invoices representing the billings sent by it to ASC in relation to the Back-end Services Agreement. Good faith effort must be accorded to GEC absent any finding that it acted willfully, in bad faith or was at fault in failing to produce the documents. The lower court therefore committed grave abuse of discretion in ordering that the matters regarding the contents of the documents sought to be produced but which were not produced by GEC shall be considered as having been established in accordance with MBTC’ s claim (Solidbank etc vs. Gateway Electronics et. al. G.R. 164805, April 30, 2008).
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