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Mambulao Lumber Co V. PNB 22 Scra 359

The Supreme Court ruled that the National Power Corporation (NAPOCOR) cannot be held liable for actual, moral and exemplary damages for rejecting the application of Philipp Brothers Oceanic, Inc. (PHIBRO) to bid for a coal supply contract. While PHIBRO was delayed in its initial coal shipment under a prior contract with NAPOCOR, NAPOCOR's rejection of PHIBRO's bid was an act of self-protection and not done with malice or bad faith. Moral damages are also not awarded to corporations as corporations cannot experience mental anguish.

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Calagui Tejano Glenda Jaygee
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157 views

Mambulao Lumber Co V. PNB 22 Scra 359

The Supreme Court ruled that the National Power Corporation (NAPOCOR) cannot be held liable for actual, moral and exemplary damages for rejecting the application of Philipp Brothers Oceanic, Inc. (PHIBRO) to bid for a coal supply contract. While PHIBRO was delayed in its initial coal shipment under a prior contract with NAPOCOR, NAPOCOR's rejection of PHIBRO's bid was an act of self-protection and not done with malice or bad faith. Moral damages are also not awarded to corporations as corporations cannot experience mental anguish.

Uploaded by

Calagui Tejano Glenda Jaygee
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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MAMBULAO LUMBER CO V.

PNB 22 SCRA 359


On May 5, 1956 the plaintiff applied for an industrial loan of P155,000 (approved for a loan of
P100,000 only) with the Naga Branch of defendant PNB. To secure payment, the plaintiff
mortgaged a parcel of land, together with the buildings and improvements existing thereon,
situated in the poblacion of Jose Panganiban (formerly Mambulao), province of Camarines Norte.
The PNB released from the approvedloan the sum of P27,500, and another release of
P15,500.The plaintiff failed to pay the amortization on the amounts released to and received by
it. It was found that the plaintiff had already stopped operation about the end of 1957 or early
part of 1958.The unpaid obligation of the plaintiff as of September 22, 1961, amounted to
P57,646.59, excluding attorney's fees. A foreclosure sale of the parcel of land, together with the
buildings and improvements thereon was, held on November 21, 1961, and the said property
was sold to the PNB for the sum of P56,908.00, subject to the right of the plaintiff to redeem the
same within a period of one year.
The plaintiff sent a letter reiterating its request that the foreclosure sale of the mortgaged
chattels be discontinued on the grounds that the mortgaged indebtedness had been fully paid
and that it could not be legally effected at a place other than the City of Manila. The trial court
sentenced the Mambulao Lumber Company to pay to the defendant PNB the sum of P3,582.52
with interest thereon at the rate of 6% per annum. The plaintiff on appeal advanced that its total
indebtedness to the PNB as of November 21, 1961, was only P56,485.87 and not P58,213.51 as
concluded by the court a quo; hence, the proceeds of the foreclosure sale of its real property
alone in the amount of P56,908.00 on that date, added to the sum of P738.59 it remitted to the
PNB thereafter was more than sufficient to liquidate its obligation, thereby rendering the
subsequent foreclosure sale of its chattels unlawful; That for the acts of the PNB in proceeding
with the sale of the chattels, in utter disregard of plaintiff's vigorous opposition thereto, and in
taking possession thereof after the sale thru force, intimidation, coercion, and by detaining its
"man-in-charge" of said properties, the PNB is liable to plaintiff for damages and attorney's fees.
ISSUE:
Whether or not PNB may be held liable to plaintiff Corporation for damages and attorneys fees.
HELD:
Herein appellant's claim for moral damages, seems to have no legal or factual basis. Obviously,
anartificial person like herein appellant corporation cannot experience physical sufferings, mental
anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation which are
basis of moral damages. A corporation may have a good reputation which, if besmirched, may
also be aground for the award of moral damages. The same cannot be considered under the
facts of this case, however, not only because it is admitted that herein appellant had already
ceased in its business operation at the time of the foreclosure sale of the chattels, but also for
the reason that whatever adverse effects of the foreclosure sale of the chattels could have upon
its reputation or business standing would undoubtedly be the same whether the sale was
conducted at Jose Panganiban, Camarines Norte, or in Manila which is the place agreed upon by
the parties in the mortgage contract.
But for the wrongful acts of herein appellee bank and the deputy sheriff of Camarines Norte in
proceeding with the sale in utter disregard of the agreement to have the chattels sold in Manila
as provided for in the mortgage contract, to which their attentions were timely called by herein

appellant, and in disposing of the chattels in gross for the miserable amount of P4,200.00, herein
appellant should be awarded exemplary damages in the sum of P10,000.00. The circumstances
of the case also warrant the award of P3,000.00 as attorney's fees for herein appellant.

NATIONAL POWER CORPORATION VS. PHILIPP BROTHERS OCEANIC, INC.


369 SCRA 629 (2001)
FACTS :
National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of
120,000 metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant of which
Philipp Brothers Oceanic, Inc. (PHIBRO) bidded and was accepted.
On July 10, 1987, PHIBRO told NAPOCOR that disputes might soon plague Australia that will
seriously hamper its ability to supply coal. On July 23 to July 31, 1987, PHIBRO informed
NAPOCOR that unless a "strike-free" clause is incorporated in the charter party or the contract of
carriage, the ship owners are unwilling to load their cargo. In order to hasten the transfer of coal,
they should share the burden of the "strike-free" clause but NAPOCOR refused.
PHIBRO effected its first shipment only on November 17, 1987 which was supposed to be on the
30th day after receipt of the letter of credit of which it received on August 6, 1987.
Consequently, In October 1987: NAPOCOR once more advertised for the delivery of coal to its
Calaca thermal plant of which PHIBRO applied but was rejected since it was not able to satisfy
the demand for damages on its delay. PHIBRO filed for damages in the RTC alleging that the
rejection was tainted with malice and bad faith.
After the trial, the trial court rendered a decision in favor of PHIBRO, ordering the defendant
NAPOCOR to reinstate PHIBRO in the defendant National Power Corporations list of accredited
bidders and indemnify the same actual, moral and exemplary damages. On appeal, the CA
affirmed in toto the decision of RTC.
ISSUE:
Whether the Trial Court erred in awarding moral damages to PHIBRO.
HELD:
The circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to bid do not
show an intention to cause damage to the latter. The measure it adopted was one of selfprotection. Consequently, the court cannot penalize NAPOCOR for the course of action it took.
NAPOCOR cannot be made liable for actual, moral and exemplary damages.
The award of moral damages is improper. To reiterate, NAPOCOR did not act in bad faith.
Moreover, moral damages are not, as a general rule, granted to a corporation. While it is true
that besmirched reputation is included in moral damages, it cannot cause mental anguish to a
corporation, unlike in the case of a natural person, for a corporation has no reputation in the
sense that an individual has, and besides, it is inherently impossible for a corporation to suffer
mental anguish.

In LBC Express, Inc. v. Court of Appeals, we ruled:


Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury.
A corporation, being an artificial person and having existence only in legal contemplation, has no
feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental
anguish. Mental suffering can be experienced only by one having a nervous system and it flows
from real ills, sorrows, and griefs of life all of which cannot be suffered by respondent bank as
an artificial person.
ABS-CBN Broadcasting Network v. CA, 301 SCRA 589
Davao Inc. v. LRC & RD of Davao, 102 Phil 596
JG Summit Holdings v. CA, 450 SCRA 169
People v. Quasha, 93 Phil 333

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