Case Digest (G.R. No. L-45515)
Facts:
Asbestos Integrated Manufacturing, Inc. v. Hon. Elviro L. Peralta, Presiding Judge, Branch XVII, Manila Court of First Instance, Metropolitan Waterworks and Sewerage System, Eternit Corporation, and Sanvar Development Corporation, G.R. No. L-45515, October 29, 1987, Supreme Court En Banc, Padilla, J., writing for the Court.Petitioner Asbestos Integrated Manufacturing, Inc. (AIMI) is a wholly Filipino-owned corporation marketing asbestos cement pressure pipes manufactured by another Filipino corporation. Respondent Eternit Corporation is a domestic corporation largely alien‑owned, and respondent Sanvar Development Corporation is a wholly Filipino‑owned domestic corporation that acted as a bidder in public procurement conducted by respondent Metropolitan Waterworks and Sewerage System (MWSS), a government-owned and controlled corporation.
On 18 May 1976 MWSS conducted a public bidding for asbestos cement pipes; Sanvar bid P373,122.30 and AIMI bid P423,913.96 (AIMI higher). No award was made then because the pipes would be supplied in a later 27 September 1976 bidding. In the 27 September 1976 bidding Sanvar bid P2,653,360.00 while AIMI bid P3,259,492.00 (AIMI higher by 22.84%), and MWSS awarded the contract to Sanvar.
AIMI filed Civil Case No. 105410 in the Court of First Instance (CFI) of Manila seeking nullification of the award and injunctive relief, alleging that Sanvar was a mere dealer/marketing arm or alter ego of Eternit and therefore disqualified under the Retail Trade Nationalization Act (Republic Act No. 1180), the Flag Law (Commonwealth Act No. 138), the Anti‑Dummy Act (Com. Act No. 108), and Republic Act No. 5183 (which reserves certain contracts to Filipinos/Fili p ino‑owned corporations). The CFI found the petition sufficient and on 12 November 1976 issued a restraining order enjoining respondents from implementing the award and set a hearing for a preliminary injunction.
Respondents moved to dismiss, to lift the restraining order, and to deny injunctive relief. The CFI, after hearings, issued an order dissolving the restraining order (the source refers to an Order dated 25 January 1977) and subsequently, following a motion for reconsideration and interim procedural directions (orders of 28 January 1977 and related deadlines), on 2 February 1977 denied the motion for reconsideration and dismissed the complaint. AIMI then sought relief from this Court by way of a petition for certiorari with preliminary prohibitory and/or mandatory injunction to annul the CFI's orders; this Court issued a temporary restraining order on 7 February 1977 to preserve the status quo pending resolution.
The gravamen of AIMI’s case was that Sanvar was effectively an alter ego, distributor or dummy for Eternit such that the award to Sanvar was barred by the cited nationality and anti‑dummy statutes and the Flag Law. The CFI, however, concluded that the documentary evidence showed a dealer‑seller relationship (purchase and resale) rather than agency or alter ego, and that the Flag Law did not favor AIMI because (a) both bidders offered pipes manufactured in the Philippines substantially from Philippine materials and thus both qualified as domestic entities under CA 138, and (b) AIMI’s bid was appreciably...(Pro-only)
Issues:
- Did the Court of First Instance commit grave abuse of discretion in dissolving the restraining order and dismissing AIMI’s complaint?
- Was Sanvar Development Corporation an alter ego or dummy of Eternit Corporation such that the award to Sanvar was void under the Retail Trade Nationalization Act (R.A. No. 1180), the Flag Law (Commonwealth Act No. 138), the Anti‑Dummy Act (Com. Act No. 108)...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)