Case Summary (G.R. No. 232275)
Nature of the Action and Relief Sought
First Corporation filed a Special Civil Action for Certiorari under Rule 65 seeking annulment of the RTC judgment in Civil Case No. Q01-44599 (28 June 2004) as affirmed by the Court of Appeals (Decision and Resolution dated 29 November 2005 and 14 February 2006). The petition alleged grave abuse of discretion amounting to lack or excess of jurisdiction by both the RTC and the CA.
Factual Background — Loans, Receipts and Payments
Beginning in 1991 petitioner’s officers, including Abillar, solicited Sacris to infuse equity into the petitioner’s Rema Tip Top Division, with an initial promise to convert the infusion into shareholding. While conversion awaited, the parties treated the infusion as loans bearing interest. From 1991–1994 Sacris extended P1.2 million; in 1997 he extended another P1 million, totaling P2.2 million. Receipts for the loans were issued in Abillar’s name. The parties later agreed to pay 2.5% monthly interest; partial payments totaling P400,000 (principal) and interest payments of P33,750.27 and P23,250.00 were made, leaving an outstanding balance of P1.8 million.
Assignment, Rescission and Initial Litigation in Pasig RTC
On 13 March 1998 Sacris executed a Deed of Assignment, assigning his P1.8 million collectible to Abillar, who agreed to pay Sacris by 30 July 1998; Abillar filed suit in RTC Pasig (Civil Case No. 66757) on 10 April 1998. Because Abillar failed to pay, Sacris and Abillar executed a Deed of Rescission on 27 August 1998, and Sacris attempted to intervene in the Pasig case. The Pasig RTC initially denied intervention but later admitted Sacris’s Complaint in Intervention and dismissed Abillar’s complaint. First Corporation sought certiorari in the CA, which granted relief on 31 May 2001, set aside the Pasig RTC orders, and directed dismissal of the complaint with prejudice and denial of the intervention without prejudice, expressly permitting Sacris to sue First Corporation and First Corporation to sue Abillar if so minded.
Subsequent Suit in Quezon City RTC and Trial Court Ruling
Pursuant to the CA directive, Sacris filed a Complaint for Sum of Money with Damages against First Corporation in RTC Quezon City (Civil Case No. Q01-44599). First Corporation denied liability and filed a third-party complaint against Abillar alleging the loan/investment transactions were entered into by Abillar without corporate knowledge, consent, authority, or ratification. After pre-trial and trial, the RTC rendered judgment on 28 June 2004 in favor of Sacris and Abillar, ordering First Corporation to pay P1,800,000 plus 24% per annum interest from filing until paid, attorney’s fees (P50,000 to Sacris, P20,000 to Abillar), and costs of suit.
Appellate Proceedings and Petition for Certiorari to the Supreme Court
First Corporation appealed to the CA (docketed CA-G.R. CV No. 84660). On 29 November 2005, the CA dismissed the appeal for lack of reversible error and denied reconsideration by Resolution dated 14 February 2006. First Corporation then filed a Rule 65 petition in the Supreme Court alleging: (a) the RTC and CA erred in finding Sacris’s loan claims supported by a preponderance of evidence; (b) the courts erred in concluding First Corporation benefited from the loans; (c) Abillar lacked authority to borrow on behalf of the corporation; and (d) the courts improperly dismissed First Corporation’s third-party complaint and failed to award damages to First Corporation.
Petitioner’s Evidentiary and Corporate-Authority Contentions
First Corporation attacked the probative value and regularity of documentary evidence relied on by the trial court and appellate court, citing irregularities in certifications and official receipts, check vouchers (Exhibits G–FF), deposit slips, receipts (Exhibit RR, handwritten settlement note), and Exhibit GG (alleged use of a P150,000 loan for 13th-month pay). Petitioner also stressed its financial statements (1992–1997) showed loans payable entries only for 1992 and 1993 and not thereafter, contesting the courts’ reliance on those statements. Finally, petitioner invoked its by-laws, arguing that Abillar’s authority as President and signatory was ministerial (signing only) and did not empower him to bind the corporation to loans.
Respondents’ Procedural Objections and Merits Position
Respondents argued the petition improperly seeks reexamination of factual findings — a function not available in Rule 65 certiorari proceedings — and that petitioner used certiorari as a substitute for an ordinary appeal. Respondents further contended petitioner failed to present the grave-abuse argument before the CA, precluding its belated invocation before the Supreme Court.
Governing Standard for Certiorari and the Court’s Analytical Framework
The Supreme Court reiterated that under the 1987 Constitution and the Rules of Court, judicial power includes the review of lower-court decisions subject to established procedural rules; however, certiorari under Rule 65 is extraordinary and limited to correcting acts done without or in excess of jurisdiction or with grave abuse of discretion. The Court emphasized it does not function as a trier of facts; it will not reassess credibility or reweigh evidence where both the RTC and CA made findings supported by the record, unless the case falls within recognized exceptions (e.g., findings based on speculation, manifestly mistaken inferences, grave abuse, misapprehension of facts, findings contrary to admissions, conclusions without citation of specific evidence, etc.). The Court identified the documentary
...continue readingCase Syllabus (G.R. No. 232275)
Relevant Parties
- Petitioner: First Corporation, a corporation duly organized and existing under Philippine laws engaged primarily in trade.
- Private Respondent: Eduardo M. Sacris (Sacris), alleged creditor who extended loans / made investments to First Corporation’s Rema Tip Top Division.
- Private Respondent: Cesar A. Abillar (Abillar), who served as President and Chairman of the Board of First Corporation from 1993 until 26 February 1998.
- Judges and tribunals involved: Trial judge(s) of the Regional Trial Court (RTC) of Quezon City; Judge Jose R. Hernandez of RTC, Pasig City (in earlier related proceedings); Court of Appeals (Third Division and Former Sixth Division references appear in the case caption); Supreme Court (Third Division of the Supreme Court, G.R. No. 171989).
Nature of Action; Remedy Sought
- Original proceeding in the Supreme Court: Special Civil Action for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure.
- Relief sought: Annulment of the RTC of Quezon City Decision in Civil Case No. Q01-44599 dated 28 June 2004, as affirmed by the Court of Appeals in its Decision and Resolution dated 29 November 2005 and 14 February 2006, respectively, on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction.
- Alternative procedural considerations discussed: Proper remedy from Court of Appeals decisions is appeal under Rule 45; the petitioner’s use of certiorari under Rule 65 is challenged as improper and as a substitute for appeal.
Generative Facts (1991–1998)
- 1991: Corporate officers of First Corporation (Vicente C. Esmeralda, Edgardo C. Cerbo, Nicolas E. Esposado, Rafael P. La Rosa and Cesar A. Abillar) convinced Sacris to invest in their business; First Corporation needed fresh equity infusion to make viable its continuous operation, particularly in its Rema Tip Top Division.
- Promise made: The corporation promised to convert Sacris’ equity infusion into shareholding; while conversion was pending, Sacris and First Corporation agreed to treat the funds as a loan earning interest of 1% per month (initial agreement).
- Loans extended: From 1991 to 1994 Sacris extended P1,200,000.00 to the Rema Tip Top Division; in 1997 Sacris extended another P1,000,000.00; total loans from 1991 to 1997 amounted to P2,200,000.00.
- Form and recipient of loans: All loans were given by Sacris to Abillar while Abillar was President and Chairman; receipts for the loans were issued by First Corporation in Abillar’s name.
- Conversion failure and changed terms: First Corporation failed to convert Sacris’ investment/loan into equity; the parties then agreed First Corporation would pay monthly interest of 2.5% on the loan.
- Partial payments: First Corporation made partial payments of P400,000.00 on principal and interest payments of P33,750.27 and P23,250.00, leaving an outstanding balance of P1,800,000.00.
- Change in corporate leadership: 27 February 1998 – Special Stockholders’ Meeting elected new Board and officers; Abillar was not re-elected as President or director due to loss of confidence over alleged anomalies and irregularities. Abillar was thereby ousted.
- Deed of Assignment: 13 March 1998 – Sacris executed a Deed of Assignment in favor of Abillar, assigning Sacris’ remaining collectibles from First Corporation amounting to P1,800,000.00; consideration: Abillar to pay Sacris P1,800,000.00 on or before 30 July 1998.
- Complaint by Abillar: 10 April 1998 – Abillar, by virtue of the Deed of Assignment, filed before RTC Pasig a Complaint for Sum of Money with Prayer for Writ of Preliminary Attachment and Damages (Civil Case No. 66757).
- Rescission of Assignment: While Abillar’s case was pending, Sacris and Abillar rescinded the Deed of Assignment on 27 August 1998 due to Abillar’s failure to pay; Sacris resumed demand directly from First Corporation.
Subsequent Proceedings in RTC Pasig and Court of Appeals (related but relevant)
- Sacris sought intervention: Before pre-trial in Civil Case No. 66757, Sacris filed a Motion for Intervention attaching a Complaint in Intervention; RTC Pasig initially denied the Motion but later admitted the Complaint in Intervention and dismissed Abillar’s Complaint.
- First Corporation’s CA petition: First Corporation filed a Petition for Certiorari and Prohibition before the Court of Appeals (CA-G.R. SP No. 54322, First Corporation v. Hon. Jose R. Hernandez, and Eduardo Sacris).
- Court of Appeals decision (31 May 2001): Third Division of the Court of Appeals granted First Corporation’s petition, issued writ of certiorari, set aside RTC Pasig Orders dated 27 April 1999 and 21 July 1999, directed Judge Jose R. Hernandez to dismiss the Complaint with prejudice and deny the Motion in Intervention without prejudice, and stated that First Corporation and Sacris remained free to institute appropriate actions.
Filing of Civil Case No. Q01-44599 (RTC Quezon City) and Trial
- Based on the CA decision, Sacris filed a Complaint for Sum of Money with Damages before the RTC of Quezon City (docketed Civil Case No. Q01-44599) to recover P1,800,000.00.
- First Corporation’s pleadings: Filed Answer denying material allegations and denying liability; alleged lack of knowledge, consent, approval and ratification by First Corporation or its Board to the transactions between Sacris and Abillar.
- Third-party complaint: First Corporation filed a Third-Party Complaint against Abillar alleging Abillar entered into the investment/loan transactions without First Corporation’s authority.
- Abillar’s answer: Abillar answered the Third-Party Complaint raising the same allegations as in Sacris’s Complaint.
- Trial ensued, pre-trial and trial on the merits took place.
RTC of Quezon City Decision (28 June 2004) — Decretal Portion
- Judgment in favor of respondents Sacris and Abillar and against First Corporation:
- Order First Corporation to pay balance of P1,800,000.00 plus interest of 24% per annum computed from filing of action until fully paid.
- Order First Corporation to pay Abillar P20,000.00 as attorney’s fees.
- Order First Corporation to pay Sacris P50,000.00 as attorney’s fees.
- Order First Corporation to pay cost of suit.
- Decision authored by Judge Hilario L. Laqui (per footnote [1]), rollo pp. 58-69.
- Note in record: The SC rollo incorrectly stated "Regional Trial Court of Manila" but the decision was rendered by the RTC of Quezon City.
Court of Appeals Proceedings (CA-G.R. CV No. 84660)
- Appeal: First Corporation appealed the RTC Quezon City decision to the Court of Appeals (docketed CA-G.R. CV No. 84660).
- Court of Appeals Decision (29 November 2005): Dismissed First Corporation’s appeal for lack of reversible error in the RTC decision.
- Motion for Reconsideration: First Corporation moved for reconsideration; the Court of Appeals denied reconsideration by Resolution dated 14 February 2006 (though the rollo cites 14 February 2005 in one instance — the later citation and timeline indicate 14 February 2006).
- Authors and concurrence: CA Decision penned by Associate Justice Mariano C. del Castillo with Associate Justices Portia AliAo-Hormachuelos and Magdangal M. de Leon concurring (per footnote [2]).