Case Summary (G.R. No. 170284)
Facts and Background of the Case
Pursuant to the MOA, Suico was promised that the loans would be repaid from the profits of his share of the coal produced by SAMDECO. However, Aratea and Canonigo did not allow the full implementation of the marketing scheme by rejecting reasonable offers for the coal. Consequently, Suico was unable to sell his portion and recover his loans, while SAMDECO successfully sold its share without fulfilling its financial obligations to Suico.
Proceedings in the Lower Courts
Suico filed a complaint for a sum of money and damages against SAMDECO and its stakeholders, leading to a ruling by the Regional Trial Court (RTC) of Cebu City in January 1998, which found in favor of Suico. The RTC ordered all defendants to solidarily pay Suico various amounts, including the principal loan, interest, and damages.
Court of Appeals Decision
Following appeals by the defendants, including Aratea and Canonigo, the Court of Appeals upheld the RTC's decision in May 2005, affirming that the loan obligations were due. The petitioners subsequently filed a motion for reconsideration, which was denied in September 2005.
Legal Issues Raised by Petitioners
In their petition, Aratea and Canonigo contended that they should not be personally liable for the corporation's debts, arguing that the loans were solely the responsibility of SAMDECO. Instead, they maintained that they acted merely as authorized representatives, not as liable parties.
Doctrine of Piercing the Corporate Veil
The Court addressed whether it was appropriate to pierce the veil of corporate fiction to hold Aratea and Canonigo personally liable. The established principle is that corporate officers and stockholders generally possess a separate legal personality, making them immune to corporate debts unless certain conditions indicate misuse of corporate structure to evade responsibility.
Findings on Bad Faith and Liability
The Court determined that Aratea and Canonigo had acted in bad faith by preventing Suico from marketing his share of coal and by selling their shares without offering Suico his right of first refusal under the MOA. Their conduct w
...continue readingCase Syllabus (G.R. No. 170284)
Case Background
- This case involves a petition for review on certiorari filed under Rule 45 of the Rules of Court.
- The petitioners are Benito Aratea and Ponciana Canonigo, who are the controlling stockholders of Samar Mining Development Corporation (SAMDECO).
- The private respondent is Esmeraldo P. Suico, a businessman engaged in export and general merchandise.
- The case revolves around a Memorandum of Agreement (MOA) signed in 1989, in which Suico agreed to extend loans and cash advances to SAMDECO in exchange for the exclusive right to market 50% of the coal extracted by SAMDECO.
Facts of the Case
- Suico, attracted by promises from Aratea and Canonigo, lent money to SAMDECO under favorable terms.
- The MOA stipulated that Suico would receive profits from the sale of coal, but SAMDECO, through its representatives, did not accept competitive offers from buyers, which prevented Suico from realizing any profit.
- SAMDECO failed to repay the loans, leading Suico to file a complaint for a sum of money and damages against SAMDECO, Aratea, Canonigo, and others in the Regional Trial Court (RTC) of Cebu City.
- The RTC ruled in favor of Suico, ordering all defendants to pay the principal loan amount and damages.
Judicial Proceedings
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