Case Digest (G.R. No. 148332)
Facts:
National Development Company v. Madrigal Wan Hai Lines Corporation, G.R. No. 148332, September 30, 2003, Third Division, Sandoval‑Gutierrez, J., writing for the Court.Petitioner is the government‑owned National Development Company (NDC); respondent is private respondent Madrigal Wan Hai Lines Corporation. NDC owned 100% of the National Shipping Corporation of the Philippines (NSCP) and in 1993 decided to privatize NSCP and offered for sale the NSCP shares and three vessels through an Information Package that included the March 1993 Negotiated Sale Guidelines and a prescribed Proposal Letter Form. NDC set the asking price at US$26,750,000.00.
During the May 7, 1993 public bidding respondent was the lone bidder; its consultant submitted an initial bid of US$15,000,000.00 which was rejected. Because there were no other bidders, NDC proceeded by negotiated sale; respondent increased its offer to US$18,500,000.00, which NDC accepted. The sale was approved by NDC’s board (August 26, 1993), by the President (September 28, 1993), by the Committee on Privatization (October 7, 1993) and by the Commission on Audit (February 2, 1994). NDC issued a Notice of Award on February 11, 1994 and the parties executed a Contract of Sale on March 14, 1994. Respondent thereafter took over NSCP’s assets, personnel, records and the three vessels.
On September 22, 1994 the U.S. Internal Revenue Service issued a Notice of Final Assessment against NSCP for deficiency taxes on gross transportation income from U.S. sources for 1990–1992 under Section 887 of the U.S. Internal Revenue Code. Concerned about operations, respondent on October 14, 1994 paid US$671,653.00 to the U.S. IRS (and later an additional US$16,533.10 penalty), sums that accrued before respondent assumed management of NSCP. Respondent demanded reimbursement from NDC; NDC refused.
Respondent filed suit in the Regional Trial Court (RTC), Branch 62, Makati City, docketed Civil Case No. 96‑558, for reimbursement and damages. On August 6, 1999 the RTC (Judge Roberto C. Diokno) rendered judgment ordering NDC to pay respondent the U.S. dollar amounts (US$671,653, US$14,415.87, and US$2,117.23 or peso equivalent), 6% interest from filing, exemplary damages P100,000 and attorney’s fees P100,000; NDC’s counterclaims were dismissed. On appeal the Court of Appeals (Portia Alino‑Hor...(Pro-only)
Issues:
- Do the Negotiated Sale Guidelines and the Proposal Letter Form constitute a contract of adhesion?
- Is NDC obligated to reimburse respondent for the U.S. tax deficiency amounts respondent paid to th...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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