ASBESTOS INTEGRATED MANUFACTURING INC. (AIMI) vs.

PERALTA
Facts:
AIMI is a 100% Filipino-owned and controlled manufacturing and trading
corporation, engaged in the marketing of asbestos cement pressure pipes
manufactured by Asbestos Cement Products Philippines, Inc. (ACPPI) which is also a
100% Filipino-owned and controlled manufacturing corporation organized under
Phil. Laws and doing business in the Philippines.
Respondent Eternit Corporation is a domestic corporation with 90% of its capital
stock, owned and controlled by aliens.
Respondent Sanvar Development Corporation (Sanvar) is also a 100% Filipinoowned and controlled corporation.
Respondent Metropolitan Waterworks and Sewerage System (MWSS) is a GOCC.
MWSS conducted a public bidding for its asbestos cement pipe requirements. AIMI
and Sanvar participated. In the bidding conducted last 18 May 1976, AIMIs bid is
13.6% higher than that of Sanvars. However, no award was made since the pipes
needed for the projects will now come from the pipes to be supplied in the 27
September 1976 bidding.
In 27 September bidding, AIMIs bid is 22.84% higher than the bid of Sanvar. As a
result, the contract to supply the asbestos cement pressure pipes was awarded to
Sanvar.
Whereupon, AIMI, claiming that Sanvar is but a mere dealer or distributor or
marketing arm of the alien-owned Eternit, filed a petition against the MWSS, Eternit,
and Sanvar, to nullify the award and to restrain the respondents from enforcing the
same. AIMI invoked Retail Trade Nationalization Act, the Flag Law, The Anti-Dummy
Act, and RA. 5183 in support of its petition.
Trial Court issued an order restraining the respondents from entering into contract
covering the public biddings, or making and accepting deliveries under any contract
which may have been entered into in the meantime, or from otherwise
implementing the Board resolution of the MWSS awarding the questioned bids in
favor of defendants Sanvar and/or Eternit, until further orders from the Court, and
set the hearing on the issuance of a writ of prel. Injunction.
Respondents filed separate motions for dismissal, lifting of the restraining order
issue, and denial of the prayer for the issuance of a writ of prel. Injunction.
The trial court lifted the restraining order and denied the motion for issuance of a
writ of prel. Injunction.

AIMI filed a motion for reconsideration which the court denied and dismissed the
complaint. Hence this case. SC issued an TRO. Petitioners contention is that
Sanvar is but an alter ego of the marketing arm of Eternit so that it is prohibited by
law from entering into a contract with the MWSS for the supply of asbestos cement
pressure pipes.
ISSUE:
Whether or not Sanvar is an alter ego of Eternit, thereby disqualified from
participating in the bidding?
HELD:
Evidence presented by AIMI is not sufficient to support the conclusion that Sanvar is
an alter ego of Eternit. The evidence presented by AIMI shows that Sanvar is the
exclusive distributor of pipes manufactured by Eternit. It do not detract a whit from
Sanvars position vis a vis Eternit, as a buyer of the products of the latter, for a
buyer engaged in the business of selling what he buys from the manufacturer has to
necessarily distribute what he buys, without thereby becoming the sellers agent,
and an agreement that the buyer shall deal exclusively with the products of the
seller- a well-known practice in the business world- is not inconsistent with the
contract of sale, much less convert it into one of agency.
Since Sanvar is a not an alter ego of Eternit, it follows that the laws invoked by the
petitioner does not apply to this case.
The petition is dismissed. The TRO is hereby lifted and set aside.