G.R. No. 166282 & 166283; February 13, 2013
HEIRS OF FE TAN UY and GOLDKEY DEVELOPMENT CORPORATION, Petitioners, vs. INTERNATIONAL EXCHANGE BANK, Respondent.

FACTS

Respondent International Exchange Bank (iBank) granted loans to Hammer Garments Corporation, secured by a surety agreement signed by Manuel Chua and his wife Fe Tan Uy, and a real estate mortgage executed by petitioner Goldkey Development Corporation. Hammer defaulted. After foreclosure of Goldkey’s mortgaged properties, a deficiency balance remained. iBank filed a complaint for sum of money against Hammer, Chua, Uy, and Goldkey.
The Regional Trial Court (RTC), while finding Uy’s signature on the surety agreement forged, still held her liable as an officer and stockholder of Hammer. It also held Goldkey liable for Hammer’s deficiency, piercing the corporate veil after finding the two corporations were alter egos, sharing the same office, commingled assets, and controlled by the same family. The Court of Appeals affirmed the RTC decision.

ISSUE

The core issues are: (1) whether Fe Tan Uy can be held personally liable for Hammer’s corporate debt; and (2) whether Goldkey’s corporate veil can be pierced to hold it liable for Hammer’s deficiency obligation.

RULING

The Supreme Court ruled partly in favor of the petitioners. Uy is not personally liable. The piercing of Goldkey’s corporate veil is justified.
The Court emphasized the fundamental principle of separate corporate personality. A corporate officer is generally not personally liable for corporate obligations. For personal liability to attach, the officer must have acted with malice or bad faith. The RTC’s finding that Uy’s signature was forged negated her consent to the surety. Mere ownership of stock and holding a corporate office, without proof of fraud, bad faith, or specific wrongful acts to justify piercing the veil against her personally, are insufficient to hold her liable for the corporate debt. The RTC and CA erred in imposing liability based solely on her corporate role.
Conversely, the Court upheld the piercing of Goldkey’s corporate veil. The alter ego doctrine applies when a corporation is a mere instrumentality or conduit of another, used to defeat public convenience, justify wrong, or perpetrate fraud. The evidence showed Goldkey and Hammer were not operated as distinct entities: they shared the same business address, were controlled by the same family (Chua and Uy), commingled assets, and ceased operations simultaneously when Chua absconded. These circumstances demonstrated that Goldkey was used as an instrument to secure credit for Hammer. Therefore, disregarding their separate identities to prevent fraud or injustice was proper. Goldkey was correctly held solidarily liable with Hammer for the loan deficiency.