Case Digest (G.R. No. 170284)
Facts:
Benito Aratea and Ponciana Canonigo v. Esmeraldo P. Suico and Court of Appeals, G.R. No. 170284, March 16, 2007, Supreme Court First Division, Puno, C.J., writing for the Court.Petitioners Benito Aratea and Ponciana Canonigo were the controlling stockholders and authorized corporate representatives of Samar Mining Development Corporation (SAMDECO), a mining company operating in San Isidro, Wright, Western Samar. Respondent Esmeraldo P. Suico was a businessman who, in 1989, entered into a Memorandum of Agreement (MOA) with SAMDECO under which Suico would extend loans and cash advances to the corporation in exchange for the exclusive right to market 50% of SAMDECO's coal production; petitioners signed the MOA on behalf of the corporation pursuant to board authority and Suico was appointed Vice‑President for Administration.
Pursuant to the MOA, Suico advanced funds to SAMDECO and attempted to market his 50% share of the coal; according to his testimony, petitioners and SAMDECO repeatedly rejected prices offered by buyers procured by Suico without articulating any pricing standards. SAMDECO itself sold coal and did not pay Suico the loans and advances. Petitioners later sold the mining rights and their shares in SAMDECO to Southeast Pacific Marketing, Inc. (SPMI) and its president Arturo E. Dy without giving Suico prior notice or respecting his asserted right of first priority under the MOA.
Suico sued SAMDECO, Aratea, Canonigo, SEIKO Philippines, Inc. (later substituted by SPMI and Dy) in the Regional Trial Court (RTC), Cebu City, Branch 24, in Civil Case No. CEB‑10618, for sum of money and damages. On January 5, 1998, the RTC rendered judgment in favor of Suico: it held all defendants solidarily liable to pay P3.5 million plus 5% monthly interest from March 1989 and further ordered Aratea and Canonigo to pay the balance of a principal amounting to P978,440.00 plus 5% interest, together with moral, exemplary damages, attorney's fees and litigation expenses; all counterclaims and cross‑claims were dismissed. Defendants (including petitioners) appealed to the Court of Appeals (CA), Cebu City (CA‑G.R. CV No. 60174).
On May 5, 2005, the CA (Twentieth Division, ponente Associate Justice Isaias P. Dicdican) dismissed the appeal and affirmed the RTC judgment. The CA denied petitioners' motion for reconsideration in its September 23, 2005 resolution. Petitioners Aratea and Canonigo then filed a petition for review on certiorari under Rule 45 before t...(Subscriber-Only)
Issues:
- Whether the corporate veil of SAMDECO should be pierced to hold petitioners personally and solidarily liable for the loans and advances made to the corporation.
- Whether, on the facts found by the trial and appellate courts, petitioners acted in bad faith or with such conduct as to render them personally liable and solidarily liable with SAMDECO for the corpo...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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