GOTESCO PROPERTIES, INC. V. SOLIDBANK CORP. (G.R. No. 209458, July 26, 2017)

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REMEDIAL LAW-DISQUALIFICATION OF JUDICIAL OFFICERS

GOTESCO PROPERTIES, INC. V. SOLIDBANK CORP. (G.R. No. 209458, July 26, 2017)
On the Disqualification of Judicial Officers
FACTS:
In 1995, Gotesco obtained a term loan of P300 million from Solidbank covered by three (3) promissory
notes. To secure the loan, Gotesco was required to execute a Mortgage Trust Indenture (Indenture)
naming Solidbank Trust-Division as trustee. The Indenture obliged Gotesco to mortgage several parcels of
land in favor of Solidbank. Under the Indenture, a stipulation appointed Solidbank Trust-Division as
Gotesco’s attorney-in-fact and that the latter must maintain the sound value of the collateral at all times.
When the loan was about to mature, Gotesco found it difficult to meet its obligation and proposed to
restructure the obligation.
In a letter dated February 9, 2000, Solidbank informed Gotesco of a substantial reduction in the appraised
value of its mortgaged properties. Since the necessary collateral loan ratio was 200%, Solidbank held that
there was a deficiency in the collateral, which Gotesco had to address. Solidbank required Gotesco to
replace or add to the mortgaged properties. Gotesco construed the letter as an implied agreement to the
proposed loan restructuring. However, Gotesco did not address the alleged deficiency in the collateral and
insisted that the value of the mortgaged properties was still the same.
The loan became due on June 27, 2000 and despite the demand letter sent by Solidbank, Gotesco failed to
pay its obligations, Solidbank then filed a Petition for the Extrajudicial Foreclosure Sale of the mortgaged
properties. Gotesco filed a complaint before the RTC for Annulment of Foreclosure Proceedings, Specific
Performance and Damages against Solidbank. He claimed that the foreclosure was premature and without
legal basis. The RTC dismissed Gotesco’s petition. On appeal, the CA affirmed the decision of the RTC.
The filed a petition for review on certiorari before the SC. On August 28, 2015, Gotesco filed a Motion for
Voluntary Inhibition of the ponente of this case, Associate Justice Marivic M.V.F. Leonen. Petitioner sought
the inhibition of Associate Justice Leonen for his ties with Metrobank (former Solidbank) Foundation. The
ponente allegedly had a working relationship with respondent. Second, he was chosen as a speaker in the
Metrobank Professorial Chair and Metrobank's Country's Outstanding Police Officers in Service.
Respondent opposed the Motion for Voluntary Inhibition as none of the grounds for mandatory inhibition
exists in the present instance.
ISSUE(S):
1. W/N the Motion for Voluntary Inhibition of the ponente is proper.
RULING:
1. NO, there was no just and valid cause for the inhibition to prosper.
RATIO:
1. The Internal Rules of the Supreme Court provide several grounds for inhibition in addition to those
stated in under Rule 137, Section I of the Rules of Court.
Adm. Matter No. 10-4-20-SC (2010), Rule 8, sec. 1 provides:

Section 1. Grounds for inhibition. — A Member of the Court shall inhibit himself or herself
from participating in the resolution of the case for any of these and similar reasons:
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REMEDIAL LAW-DISQUALIFICATION OF JUDICIAL OFFICERS
a. the Member of the Court was the ponente of the decision or participated in the
proceedings in the appellate or trial court;
b. the Member of the Court was counsel, partner or member of a law firm that is or
was the counsel in the case subject to Section 3 (c) of this rule;
c. the Member of the Court or his or her spouse, parent or child is pecuniarily
interested in the case;
d. the Member of the Court is related to either party in the case within the sixth
degree of consanguinity or affinity, or to an attorney or any member of a law firm
who is counsel of record in the case within the fourth degree of consanguinity or
affinity;
e. the Member of the Court was executor, administrator, guardian or trustee in the
case; and
f. the Member of the Court was an official or is the spouse of an official or former
official of a government agency or private entity that is a party to the case, and the
Justice or his or her spouse has reviewed or acted on any matter relating to the
case.
A Member of the Court may in the exercise of his or her sound discretion, inhibit
himself or herself for a just or valid reason other than any of those mentioned above.
The inhibiting Member must state the precise reason for the inhibition.
RULES OF COURT, Rule 137, sec. 1 provides:
Section 1. Disqualification of judges. — No judge or judicial officer shall sit in any case in
which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or
otherwise, or in which he is related to either party within the sixth degree of consanguinity
or affinity, or to counsel within the fourth degree, computed according to the rules of the
civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or
in which he has presided in any inferior court when his ruling or decision is the subject of
review, without the written consent of all parties in interest, signed by them and entered
upon the record.
A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a
case, for just or valid reasons other than those mentioned above.
There was no need for the ponente to inhibit since none of the enumerated circumstances was
attendant in this case. Justices are not given unfettered discretion to desist from hearing a case.
Mere imputation of bias or partiality is not enough; there must be a just and valid cause for
inhibition to prosper.

GOTESCO PROPERTIES, INC. V. SOLIDBANK CORP. (G.R. No. 209458, July 26, 2017)

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GOTESCO PROPERTIES, INC. V. SOLIDBANK CORP. (G.R. No. 209458, July 26, 2017)

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1

REMEDIAL LAW-DISQUALIFICATION OF JUDICIAL OFFICERS

Adm. Matter No. 10-4-20-SC (2010), Rule 8, sec. 1 provides:

RULES OF COURT, Rule 137, sec. 1 provides:

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