Title
Atillo III vs. Court of Appeals
Case
G.R. No. 119053
Decision Date
Jan 23, 1997
Atillo sued AMANCOR and Lhuillier for unpaid loans; courts ruled Lhuillier not personally liable, upholding corporate liability principles.
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Case Digest (G.R. No. 119053)

Facts:

  1. Loan and Ownership Structure

    • On August 15, 1985, respondent Amancor, Inc. (AMANCOR), a corporation owned and controlled by petitioner Florentino L. Atillo III, contracted a loan of P1,000,000.00 with Metropolitan Bank and Trust Company, secured by real estate properties owned by Atillo.
    • On June 14, 1988, Atillo entered into a Memorandum of Agreement (MOA) with respondent Michell Lhuillier (LHUILLIER), whereby LHUILLIER bought shares in AMANCOR. As a result, both Atillo and LHUILLIER each owned 47% of AMANCOR's shares, with the remaining 6% held by corporate officers.
  2. Additional Capital and Supplemental Agreements

    • Due to AMANCOR's urgent need for fresh capital, Atillo and LHUILLIER executed another MOA on February 13, 1989, wherein LHUILLIER agreed to invest additional capital in AMANCOR.
    • A Supplemental MOA was signed on March 11, 1989, which included a stipulation allowing Atillo to dispose of his properties to prepay AMANCOR's mortgage loan of P300,000.00. AMANCOR was to pay Atillo interest equivalent to the prevailing bank rate until it could repay the amount.
  3. Assumption of Loan and Collection Case

    • Atillo assumed AMANCOR's outstanding loan balance of P300,000.00. After offsetting some accounts, the amount due to Atillo was P199,888.89.
    • When AMANCOR failed to repay, Atillo filed a collection case (Civil Case No. CEB-9801) against AMANCOR and LHUILLIER before the Regional Trial Court (RTC) of Cebu City.
  4. Pre-Trial Stipulations and Issues

    • During pre-trial, the parties stipulated the genuineness of the MOAs and Supplemental MOA and admitted that Atillo's claim amounted to P199,888.89 as of October 1, 1990.
    • The issues for resolution were:
      a. Whether LHUILLIER was personally liable to Atillo.
      b. The applicable interest rate if LHUILLIER was found liable.
  5. Trial Court Decision

    • The RTC ruled in favor of Atillo, ordering AMANCOR to pay P199,888.89 with interest at the prevailing bank rate as of March 11, 1989. However, LHUILLIER was absolved of personal liability.
  6. Appeal to the Court of Appeals

    • Atillo appealed, arguing that LHUILLIER should be jointly and severally liable with AMANCOR since LHUILLIER signed the MOAs without AMANCOR's official participation or ratification.
    • The Court of Appeals affirmed the RTC's decision, holding that the liability was solely AMANCOR's and that LHUILLIER acted as an officer/agent of the corporation.

Issue:

  1. Whether Michell Lhuillier is personally liable for the obligation of AMANCOR to Florentino Atillo III.
  2. Whether the Court of Appeals erred in absolving Lhuillier of personal liability despite alleged judicial admissions in his Answer.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)


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