Mambulao Lumber Company v. PNB (G.R. No. L-22973)


Petitioner Mambulao Lumber applied for an industrial loan with herein respondent PNB and was approved with its real estate, machinery and equipments as collateral. PNB released the approved loan but petitioner failed to pay and was later discovered to have already stopped in its operation. PNB then moved for the foreclosure and sale of the mortgaged properties. The properties were sold and petitioner sent a bank draft to PNB to settle the balance of the obligation. PNB however alleges that a remaining balance stands and a foreclosure sale would still be held unless petitioner remits said amount. The foreclosure sale proceeded and petitioner’s properties were taken out of its compound. Petitioner filed actions before the court and claims among others, moral damages.


Whether or not petitioner corporation, who has already ceased its operation, may claim for moral damages.

Ruling: NO.

Herein appellant’s claim for moral damages, however, seems to have no legal or factual basis. Obviously, an artificial 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 a ground 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.


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