Facts:

• The case involves the Philippine National Bank (PNB), Development Bank of the Philippines (DBP), and Asset Privatization Trust (APT) as petitioners, and Hydro Resources Contractors Corporation (HRCC) as the respondent.
• The dispute originated from a 1985 contract between Nonoc Mining and Industrial Corporation (NMIC) and Hercon, Inc. (later merged with HRCC) for a Mine Stripping and Road Construction Program.
• NMIC, owned by DBP and PNB, failed to pay an outstanding balance of P8,370,934.74 to Hercon, Inc.
• Despite several demands, NMIC did not settle the debt, prompting Hercon, Inc. to file a complaint in the Regional Trial Court (RTC) of Makati City.
• The RTC ruled in favor of HRCC, piercing the corporate veil of NMIC and holding DBP and PNB solidarily liable with NMIC.
• The Court of Appeals affirmed this decision, including APT as solidarily liable.
• The petitioners elevated the case to the Supreme Court, arguing that NMIC's separate corporate personality should be respected and that they should not be held liable for NMIC's debts.

Issue:

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Ruling:

• The Supreme Court ruled that the corporate veil of NMIC should not be pierced.
• Consequently, only NMIC is liable for the unpaid balance to HRCC.
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Ratio:

• The Supreme Court emphasized the principle of separate juridical personality, which protects shareholders from being held liable for corporate debts.
• The Court found that the mere ownership of NMIC by DBP and PNB, and the presence of interlocking directorates, were insufficient grounds to pierce the corporate veil.
• There was no evidence that DBP and PNB used NMIC to comm...continue reading