Commercial Law, 2019 Bar — Question A.4-b

ESSAY

In 2016, X Corp. obtained a loan worth P50,000,000.00 from J Bank, which was secured by a third-party mortgage executed by Y, Inc. in favor of X Corp. Since X Corp. was not able to settle its loan obligation to J Bank when it fell due, and despite numerous demands, J Bank foreclosed the mortgaged properties. The properties were sold in a foreclosure sale for P35,000,000.00 thereby leaving a P15,000,000.00 deficiency. For failure of X Corp. to pay said deficiency, J Bank filed a complaint for sum of money against X Corp., its President, Mr. P, and Y Inc. With respect to Mr. P, J Bank argued that he should be held solidarily liable together with X Corp. because he signed the loan document on behalf of X Corp. in his capacity as President. J Bank also contended that Y, Inc. should be held solidarily liable because the shareholdings of both corporations are identically owned and their operations are controlled by the same people, hence, Y Inc. is a mere alter ego of X Corp. (b) Should Y, Inc. be held liable? Explain.

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