Case Digest (G.R. No. 167530)
Case Digest (G.R. No. 167530)
Facts:
Philippine National Bank v. Hydro Resources Contractors Corporation, G.R. No. 167530 (consolidated with G.R. Nos. 167561 and 167603), March 13, 2013, Supreme Court First Division, Leonardo‑De Castro, J., writing for the Court.The petitioners are Philippine National Bank (PNB), Development Bank of the Philippines (DBP), and the Asset Privatization Trust (APT) (now the Privatization and Management Office, PMO). The respondent is Hydro Resources Contractors Corporation (HRCC); the corporate obligor in the underlying contract is Nonoc Mining and Industrial Corporation (NMIC) (now Philnico Processing Corporation).
In 1984 DBP and PNB foreclosed on Marinduque Mining and Industrial Corporation and, through foreclosure and corporate reorganization, organized NMIC, with DBP and PNB owning effectively all shares (57% and 43%, except five qualifying shares). NMIC contracted in 1985 with Hercon, Inc. for a mine‑stripping and road construction program for P35,770,120; after credits, Hercon claimed an unpaid balance of P8,370,934.74. Hercon made demands, then filed suit in the RTC of Makati (Civil Case No. 15375). Hercon later merged into HRCC, which was substituted as plaintiff.
In December 1986 President Aquino issued Proclamation No. 50 creating the APT; pursuant thereto DBP and PNB executed deeds of transfer (February 27, 1987) conveying certain assets and liabilities to the National Government, which in turn transferred them to APT as trustee. The complaint was amended to implead APT.
At trial NMIC denied authority for the contract and alleged defects in procurement; DBP and PNB denied privity and invoked separate juridical personality; APT denied privity and invoked the National Government’s preferred lien and limitations on assumed liabilities under the deeds of transfer.
The Regional Trial Court (RTC), Makati, rendered judgment on November 6, 1995 in favor of HRCC: it pierced NMIC’s corporate veil, held DBP and PNB jointly and severally liable with NMIC for P8,370,934.74 plus interest and 25% attorneys’ fees, dismissed the complaint against APT but directed APT as trustee to ensure compliance. DBP and PNB appealed.
The Court of Appeals (CA) in a Decision dated November 30, 2004 affirmed the judgment but modified it: it reversed the dismissal as against APT and included the Privatization and Management Office (PMO, successor of APT) as jointly and severally liable with NMIC, and deleted the award of attorneys’ fees. Motions for reconsideration by DBP, PNB and APT were denied. The petitioners filed separate petitions for review on certiorari under Rule 45, later consolidated, assailing the CA decision.
Issues:
- Whether the corporate veil of Nonoc Mining and Industrial Corporation should be pierced to hold Development Bank of the Philippines and Philippine National Bank jointly and severally liable for NMIC’s debt to Hydro Resources Contractors Corporation.
- Whether the Asset Privatization Trust (successor/assignee under the deeds of transfer executed pursuant to Proclamation No. 50) is liable for the judgment debt of NMIC.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)