SOLIDBANK CORPORATION V.

MINDANAO FERROALLOY CORPORATION GR 153535, JULY 28, 2005

FACTS:
❖ Mindanao Ferroalloy corporation, Private respondents herein, is the fruit of a joint venture agreement
between a Filipino corporation and Korean Corporation.
❖ The Board of Directors of the Corporation approved a ‘Resolution’ authorizing its President and Chairman
of the Board of Directors to secure an omnibus line in the aggregate amount of P30,000,000.00 from the Solidbank.
❖ In its operations, its liabilities ballooned over its assets that it had to secure loans from petitioner
Solidbank in the total amount of P5,000,000.00.
❖ The loans were later consolidated and restructured, evidenced by a promissory note.
The promissory note was signed by Cu and Hong, both officers of the corporation.
❖ The corporation, through the same officers also executed a Deed of Assignment in favor of the Bank. The
Corporation likewise executed a ‘Quedan,’ under which the Corporation bound and obliged to keep and hold, in
trust for the Bank or its Order,
‘Ferrosilicon for US$197,679.00.’ The Corporation, also, through Hong and Teresita Cu, executed a ‘Trust Receipt
Agreement,
❖ Thereafter, the corporation stopped its operations and the loan was left unpaid despite the letter of demands
from the bank.
❖ The bank was prompted to file a complaint against the corporation, for a collection
‘Sum of Money’ with a plea for the issuance of a writ of preliminary attachment and with it, impleading the officers,
Hong, Cu and Guevarra, as joint and solidary debtors of the bank having signed the agreement and promissory notes.
❖ RTC:Ruled in favor of Solid Bank and ordering respondent corporation to pay the amounts of the loan plus interest.
❖ On appeal, the CA held the decision of the RTC and ruled that the individual respondents were not solidarily liable
with the Mindanao Ferroalloy Corporation, because they had acted merely as officers of the corporation, which was
the real party in interest. Respondent Guevara was not even a signatory to the Promissory Note, the Trust Receipt
Agreement, the Deed of Assignment or the Quedan; he was merely authorized to represent Minfaco to negotiate
with and secure the loans from the bank. On the other hand, the CA noted that Respondents Cu and Hong had
not signed the above documents as comakers, but as signatories in their representative capacities as officers of
Minfaco.

ISSUE: Whether or not the individual respondents are liable, either jointly or solidarily, with the
Mindanao Ferroalloy Corporation.

HELD: No.
❖ Respondents Cu and Hong clearly signed the Note merely as representatives of
Minfaco.
❖ The trial and the appellate courts found, he had not signed any document in connection with the subject
transaction, Respondent Guevara was authorized to represent Minfaco in negotiating for a P30 million loan from
petitioner.
❖ As to Cu and Hong, they signed above the “maker/borrower” and the printed name of the
corporation, without the word “by” preceding their signatures. The fact that they signed in their personal
capacities is negated by the facts that name and address of the corporation also appeared on the
space provided for in the “maker/borrower” and their signatures only appeared once when it should be
twice if indeed it was in their personal capacities. Further, they didn't sign on the portion allocated for
the co-maker, and there was also indicia of it being signed as authorized representatives.
❖ Basic is the principle that a corporation is vested by law with a personality separate and distinct from that
of each person composing or representing it. Equally fundamental is the general rule that corporate officers
cannot be held personally liable for the consequences of their acts, for as long as these are for and on behalf of
the corporation, within the scope of their authority and in good faith.
❖ Under Article 1207 of the Civil Code, “there is a solidary liability only when the obligation expressly so
states, or when the law or the nature of the obligation requires solidarity.” Since solidary liability is not clearly
expressed in the Promissory Note and is not required by law or the nature of the obligation in this case, no conclusion
of solidary liability can be made.