Development Bank of the Philippines v. Sta. Ines Melale Forest Products Corporation

Summary

This complex corporate acquisition case arose from the financial distress of National Galleon Shipping Corporation in the 1980s. Following presidential directives, NDC entered into a Memorandum of Agreement to acquire Galleon's shares for P46.7 million, but failed to execute the formal share purchase agreement despite taking control of operations. The Supreme Court held that NDC's prevention of the agreement's execution made the condition deemed fulfilled under Civil Code Article 1186, obligating NDC to pay the shareholders and advances made. However, the Court ruled that novation of the original Deed of Undertaking between DBP and the shareholders did not occur, as DBP never expressly consented to the substitution of debtors, keeping the original guarantors liable. The decision clarifies important principles on contract performance, condition fulfillment, and novation requirements in complex corporate transactions involving government entities.