Babst v CA (G.R. No. 99398 & 104625, January 26, 2001 (Section 80: Merger and Consolidation) !

"t#t#on"rs ($onso%#&at"& ' Chester Babst, and Elizalde Steel Consolidated Inc. (ELISCO ) R"s(on&"nts ($onso%#&at"& ' C!, B"I, Elizalde Steel, "aci#ic M$lti%Co&&ercial Cor'oration (M(L)I), Chester Babst )nar"s*+ant#a,o, J. *acts o# the Case

ELISCO obtained a loan #ro& Co&&ercial Ban+ and )r$st Co&'an, (CB)C) -ith an interest o# ./0 'er ann$&, as e1idenced b, a 'ro&issor, note. 2hen ELISCO de#a$lted in 'a,&ents, it o'ened letters o# credit #ro& CB)C $sing the credit #acilities o# M(L)I -ith the said ban+. S$bse3$entl,, !ntonio 4o5as Ch$a and Babst e5ec$ted a Contin$ing S$ret,shi', binding the&sel1es solidaril, liable to 'a, an, e5isting indebtedness o# M(L)I to CB)C to the e5tend o# "8M each. Later on, B"I and CB)C entered into a &erger, -herein B"I, as the s$r1i1ing cor'oration, ac3$ired all the assets and ass$&ed all liabilities o# CB)C. S$bse3$entl,, b, 1irt$e o# cession, 6e1elo'&ent Ban+ o# the "hili''ines (6B") too+ o1er the assets o# ELISCO to ans-er #or the latter7s indebtedness to the #or&er. 6B" s$b&itted #or&$las to settle the liabilities o# ELISCO to its creditors -hich incl$ded B"I that re8ected the sa&e. B"I, as s$ccessor%in%interest o# CB)C, s$ed ELISCO , M(L)I, and Babst #or collection o# s$& o# &one,. )he trial co$rt r$led in #a1or o# B"I, and the sa&e -as a##ir&ed b, the Co$rt o# !''eals. 9ence the instant 'etition. Iss$e

2hether B"I can right#$ll, collect the a&o$nts d$e o# CB)C #ro& its debtors 4$ling

:es. )here -as no 3$estion that there -as a 1alid &erger bet-een B"I and CB)C . -t #s s"tt%"& t.at #n t." /"r,"r o0 t1o "2#st#n, $or(orat#ons, on" o0 t." $or(orat#ons surv#v"s an& $ont#nu"s t." bus#n"ss, 1.#%" t." %att"r #s &#sso%v"& an& a%% #ts r#,.ts, (ro("rt#"s, an& %#ab#%#t#"s ar" a$3u#r"& by t." surv#v#n, $or(orat#on. 4"n$", B!- .a& t." r#,.t to #nst#tut" t." $o%%"$t#on $as". onetheless, Babst co$ld not be &ade liable #or as a s$ret,, he -as an ins$rer o# the debt, and 'ro&ised onl, to 'a, the 'rinci'al7s debt i# the 'rinci'al -ill not 'a,. In the 'resent case, there -as no indication that 6B", -hich too+ o1er ELISCO , -o$ld #ail or de#a$lt in 'a,&ent o# the debt inc$rred.