G.R. NO. 171989 - FIRST CORPORATION, VS. FORMER SIXTH DIVISION OF THE COURT OF APPEALS, BRANCH 218 OF THE REGIONAL TRIAL COURT OF QUEZON CITY,** EDUARDO M. SACRIS, AND CESAR A. ABILLAR.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, from the year 1991 up to 1994, private respondent Sacris had already extended a P1.2 million loan to the Rema Tip Top Division of the petitioner corporation. In 1997, private respondent Sacris extended another P1 million loan to the petitioner corporation. Thus, from 1991 up to 1997, the total loan extended by private respondent Sacris to the petitioner corporation reached a total amount of P2.2 million. All loans were given by private respondent Sacris to herein private respondent Abillar, as the latter was then the President and Chairman of the Board of Directors of the petitioner corporation. The receipts for the said loans were issued by the petitioner corporation in the name of private respondent Abillar. Petitioner corporation failed to convert private respondent Sacris's investment/loan into equity or shareholding in the petitioner corporation. In its place, petitioner corporation agreed to pay a monthly interest of 2.5% on the amount of the loan extended to it by private respondent Sacris. Petitioner corporation likewise made partial payments of P400,000.00 on the principal obligation and interest payment in the amounts of P33,750.27 and P23,250.00, thus, leaving an outstanding balance of P1.8 million. In the meantime or on 27 February 1998, a Special Stockholders' Meeting of the petitioner corporation was held to elect the members of the Board of Directors and also to elect a new set of officers. The stockholders of the petitioner corporation no longer re-elected private respondent Abillar as President and member of the Board of Directors because they had already lost their confidence in him for having been involved in various anomalies and irregularities during his tenure. Thereby, private respondent Abillar was ousted from the petitioner corporation. On 13 March 1998, private respondent Sacris, for a valuable consideration, executed a Deed of Assignment [4] in favor of private respondent Abillar, assigning and transferring to private respondent Abillar his remaining collectibles due from the petitioner corporation in the amount of P1.8 million. As consideration for the execution of the aforesaid Deed of Assignment, private respondent Abillar shall pay private respondent Sacris the outstanding balance of P1.8 million due from the petitioner corporation on or before 30 July 1998. On 10 April 1998, private respondent Abillar, by virtue of the Deed of Assignment, filed a Complaint for Sum of Money with Prayer for a Writ of Preliminary Attachment and Damages before the RTC of Pasig City against the petitioner corporation. The said case was docketed as Civil Case No. 66757. While the case was still pending, both private respondents agreed to rescind the Deed of Assignment that they had executed on 13 March 1998 for failure of private respondent Abillar to comply with his undertaking to pay private respondent Sacris the amount of P1.8 million on or before 30 July 1998. Thus, on 27 August 1998, private respondents Sacris and Abill