G.R. No. 211204 . December 10, 2018
GOLDSTAR RIVERMOUNT, INC., PETITIONER, VS. ADVENT CAPITAL AND FINANCE CORP., (FORMERLY ALL ASIA CAPITAL AND TRUST CORP.), RESPONDENT.

FACTS

Petitioner Goldstar Rivermount, Inc. obtained a loan from respondent Advent Capital and Finance Corp., secured by real estate and chattel mortgages. Goldstar defaulted and, on May 26, 2000, entered into a Dation in Payment with Advent to settle the obligation, with a concomitant right to redeem the properties within one year. Goldstar later discovered that Advent had executed a Deed of Assignment of its receivables, including Goldstar’s loan, in favor of the Development Bank of the Philippines (DBP) on November 24, 1998. Goldstar filed an action to declare the Dation in Payment void, arguing Advent was no longer the creditor at the time of its execution due to the prior assignment.
Advent countered that the Deed of Assignment was merely for security purposes to cover its own loan from DBP. The terms stipulated that DBP could only step in to manage the assigned loans if Advent defaulted on its obligation to DBP. Advent asserted it was not in default when the Dation was executed, thus it remained the legitimate creditor. An Amendment and Addendum to the Deed, granting DBP broader management rights, was executed only on July 27, 2000, after the Dation.

ISSUE

Whether the Court of Appeals erred in affirming the validity of the Dation in Payment by ruling that Advent remained Goldstar’s creditor at the time of its execution.

RULING

The Supreme Court denied the petition and affirmed the lower courts. The legal logic centers on the nature of the Deed of Assignment and the timing of the agreements. The Court upheld the finding that the original Deed of Assignment was a security arrangement, not an absolute transfer of credit. Under its terms, DBP’s right to collect from Goldstar was contingent upon Advent’s default to DBP. Since Goldstar failed to prove that Advent was in default as of May 26, 2000, Advent retained its status as creditor with the capacity to enter into the Dation in Payment.
The subsequent Amendment and Addendum, which altered the terms, and DBP’s July 28, 2000 letter asserting its rights, were executed after the Dation. They could not retroactively invalidate a contract that was legally consummated under the original terms. Furthermore, the petition raised factual issues inappropriate for a Rule 45 review. The factual findings of the trial court, as affirmed by the Court of Appeals—that the assignment was for security and no default had occurred—are binding and conclusive absent a showing of grave abuse. No such showing was made. Therefore, the Dation in Payment was validly executed.