Aratea V Suico (Agas)

Aratea v Suico (2007)
Petitioners Aratea and Canonigo are the controlling stockholders of Samar Mining
Development Corporation (SAMDECO). On the other hand, private respondent Suico
is a businessman engaged in export and general merchandise.
Suico entered into a MOA with SAMDECO (represented by Aratea and Canonigo).
Under the MOA, Suico would extend loans and cash advances to Samdeco. In
exchange, SAMDECO would grant Suico the following
1. the exclusive right to sell/ market of the 50% of the coal extracted by
Samdeco from its open pit mines in Samar
2. Suico will be paid 5% interest per month on the loan/ cash advances that he
extends.
3. Suico was also given the right of first priority to operate the mining facilities
in the event SAMDECO becomes incapable of coping with the work demands
4. He was also appointed as VP for Admin of Samdeco.
Pursuant to the MOA, Suico started lending money to SAMDECO. Suico also started
selling the 50% of the coal. However he was never able to close a sale since all the
offers from the clients he brought in were allegedly too low for Aratea and Suico,
despite being competitive and fair enough. In addition, SAMDECO never paid the
loan principal and the 5% monthly interest rate it promised. On the other hand,
SAMDECO was able to sell the other 50%.
Aratea and Canonigo eventually sold the mining rights and passed on the operations
of SAMDECO to Southeast Pacific Marketing, Inc. (SPMI) (owned by Dy) without
notice to/ consent from Suico.
Hence Suico filed a complaint for a Sum of Money and damages.
RTC found Aratea and Canonigo solidarily liable with SAMDECO and SPMI.
Issue: WON Aratea and Canonigo should be held solidarily liable with SAMDECO et
al? Held: Yes
1) Theres no reason to pierce the veil of corporation fiction in this case.
a. Suico was very well aware that he was dealing with SAMDECO and
that Aratea and Canonigo were mere authorized representatives
acting for and in behalf of the corporation (they were authorized by a
Board res)
b. There were no indications whatsoever that Suico was misled to
believe that the loans and cash advances were intended for the
personal benefit of Aratea and/or Canonigo. Absent any proof of fraud
or double dealing, therefore, the doctrine on piercing the veil of
corporate entity would not apply.
2) Nevertheless, they are still solidarily liable with Samdeco.
a. GR: obligations incurred by the corporation are its sole liabilities.
b. Exceptions:
i. When directors/ trustees/ officers of a corporation:

1. vote for or assent to patently unlawful acts of the
corporation;
2. act in bad faith or with gross negligence in directing
the corporate affairs; (Court applied this one)
3. are guilty of conflict of interest to the prejudice of the
corporation, its stockholders or members, and other
persons;
ii. When a director or officer has consented to the issuance of
watered stocks or who, having knowledge thereof, did not
forthwith file with the corporate secretary his written
objection thereto;
iii. When a director, trustee or officer has contractually agreed or
stipulated to hold himself personally and solidarily liable with
the corporation; or
iv. When a director, trustee or officer is made, by specific
provision of law, personally liable for his corporate action.
v. In labor cases - corporate directors and officers are solidarily
liable with the corporation for the termination of employment
of corporate employees done with malice or in bad faith.
3) Petitioners Aratea and Canonigo, despite having separate and distinct
personalities from SAMDECO are personally liable for the loans and advances
made by Suico to SAMDECO on account of their bad faith in carrying out the
business of the corporation. Court noted the following signs of bad faith:
a. Petitioners Aratea and Canonigo acted in bad faith when they, as
officers of SAMDECO, unreasonably prevented Suico from selling his
part of the coal-produce of the mining site, in gross violation of their
MOA.
b. Moreover, petitioners also acted in bad faith when they sold their
rights over the mining area in favor of SPMI and Dy (despite the right
of first priority given to Suico in the MOA).
c. Thus, Suico suffered grave injustice because he was prevented from
acquiring the opportunity to obtain payment of his loans and cash
advances, while petitioners Aratea and Canonigo profited from the
sale of their shareholdings in SAMDECO in favor of SPMI and Dy.

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Aratea v Suico (2007)

i. When directors/ trustees/ officers of a corporation:

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