DBP v.

Court of Appeals

GR NO 126200 August 16, 2001 Kapunan, J.:

Facts: Marinduque Mining Corporation (MMC) purchased construction materials from

Remington Industrial Sales Corporation (RISC). MMC failed to pay, this prompted RISC
to file an action for collection with the court. In the meantime, MMC obtained various
loan accommodations from the PNB, as a security, the former (MMC) executed REMs and
CMs over its properties in favour of the bank. The Mortgage Agreement was amended
it was agreed that Marinduque mortgaged in favour of PNB all other real and personal
properties and other real rights the latter may subsequently acquire. For failure to
settle the account, the bank extrajudicially foreclosed the mortgaged property. PNB and
DBP emerged as the highest bidders. PNB and DBP assigned and conveyed all their rights,
interests and participation over the foreclosed properties in favour of Nonoc Mining,
Mariculum Mining, Island Cement and APT. Sometime in 1987, PNB and DBP pursuant to
Resolution No. 50 assigned, transferred and conveyed to the National Government thru
the Asset Privatization Trust (APT) all its rights and interest over MMC which were
earlier assigned to other corporations. Remington impleaded as co defendants PNB, DBP
and other assignee corporations on the ground that all of them must be treated in law
as one and the same entity by disregarding the veil of corporate fiction since all of
these corporations share the same or almost the same set of directors.

Issue: Whether Remington, a third person may raise the issue on interlocking directors

Held: NO. The rule pertaining to transactions between corporation with interlocking
directors resulting in prejudice to one of the corporation does not apply where the
corporation allegedly prejudiced is a third party, not one of the corporations with
interlocking directors. Thus, when a mortgage bank foreclosed the mortgage on the real
and personal property of the debtor and thereafter assigned and the properties to a
corporation it formed to manage and thereafter assigned the properties to a
corporation it formed to manage the foreclosed assets, the unpaid seller of the debtor
can not complain that the assignment is invalid simply because the morgagee and the
assignee have interlocking directors.