Heirs of Tan Uy vs. International Exchange Bank

Facts:

On various dates between June 23 and September 3, 1997, respondent International Exchange Bank (iBank) extended loans to Hammer Garments Corporation (Hammer) totaling P24,938,898.08 under an omnibus P25 million line pursuant to a March 23, 1996 Letter-Agreement. The loans were evidenced by promissory notes and deeds of assignment and were secured by a P9 million real estate mortgage executed July 1, 1997 by Goldkey Development Corporation (Goldkey) and by a P25 million surety agreement allegedly signed by Manuel Chua and his wife, Fe Tan Uy (Uy), on April 15, 1996.

Hammer defaulted and, after foreclosure of Goldkey’s mortgaged properties (which fetched P12 million), a deficiency of P13,420,177.62 remained. iBank filed a complaint for sum of money on December 16, 1997 against Hammer, Chua (Hammer’s president), Uy, and Goldkey in the Regional Trial Court (RTC), Makati City. The RTC granted a writ of preliminary attachment on December 17, 1997 and later issued a notice of levy on July 15, 1998. Chua and Hammer were declared in default for failing to answer; Uy answered, denying liability and asserting her signature on the surety agreement was forged; Goldkey denied liability as a third‑party mortgagor.

The RTC, in a December 27, 2000 decision, ruled for iBank: it found Uy’s signature on the surety agreement forged yet held Uy jointly liable because she was an officer and stockholder; it pierced the corporate veil and ruled Goldkey and Hammer were one and the same due to shared family ownership, co‑mingled assets, shared offices, and common control, making Goldkey liable beyond its mortgaged properties. Aggrieved, Uy’s heirs and Goldkey appealed to the Court of Appeals (CA).

The CA, in an August 16, 2004 decision (and December 2, 2004 resolution), affirmed the RTC, finding iBank was not negligent and that petitioners had submitted a falsified financial report that induced iBank to exte...(Pro-only)

Issues:

• May a trial court determine liability beyond the issues raised in the pleadings (i.e., go outside the pleadings)?
• Can Fe Tan Uy be held personally liable for Hammer’s loan obligations by virtue of being an officer and stockholder—i.e., does the record justify piercing the corporate veil as to Uy?
• Can Goldkey Development Corporation be held liable for Hammer’s obligations under the alter ego doctrine—i.e., do the facts justify disregardi...(Pro-only)

Ruling:

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Ratio:

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Doctrine:

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