CASE 2:

MAMBULAO LUMBER COMPANY, plaintiff-appellant,

vs.
PHILIPPINE NATIONAL BANK and ANACLETO HERALDO Deputy Provincial Sheriff of
Camarines Norte, defendants-appellees.

Ernesto P. Vilar and Arthur Tordesillas for plaintiff-appellant.

Tomas Besa and Jose B. Galang for defendants-appellees.

https://lawphil.net/judjuris/juri1968/jan1968/gr_l-22973_1968.html

https://vbdiaz.wordpress.com/2016/12/21/mambulao-lumber-co-vs-pnb-digest/

130 Phil. 366 (1968)

Mambulao Lumber Company VS Philippine National Bank

Mambulao Lumber Co. vs PNB

GR L-22973
30 January 1968
FACTS: Petitioner (P) applied for industrial loan and granted by Respondent
bank (R). To secure payment of loan, P mortgaged a parcel of land together
with various sawmill equipment, rolling units and other fixed assets situated
therein.
P failed to pay the amortization and the amounts released to and received by it.
Repeated demands were made but upon inspection it was found that P stopped
operation. R sent a letter to R sheriff of Camarines Norte requesting him to take
possession of the parcel of land and the chattels and to sell them at public auction.
R sheriff issued corresponding notice of extrajudicial sale and sent copy to P.
P sent a bank draft for to PNB allegedly full settlement of the obligation after the
application of the sum representing the proceeds of the foreclosure sale of the
parcel of land. P averred that the foreclosure of chattel mortgage is no longer
needed for being fully paid and that it could not be legally effected at a place
other than City of Manila, the place agreed and stipulated in their contract.
R’s counsel wrote to P that the remitted amount was not enough for its liability
to which should be added the expenses for guarding the mortgaged of chattels,
attorney’s fees and expenses of the sale. Notwithstanding, the foreclosure of both
land and the chattels were held.
ISSUE: Whether P is entitled to moral damages.
DECISION: No. Even if the R bank and R sheriff committed several
infractions/errors, to wit:
1. R sheriff’s actual work performed should be compensated pursuant to
Sec 4 of Act 3135, which is the governing law for extrajudicial
foreclosure and not Sec 7 of Rule 130, which is applicable for judicial
foreclosure;
2. Atty’s fees was found to be excessive and unconscionable;
3. Foreclosure should be conducted in the City of Manila, as agreed in
the contract. Ergo, R is guilty of conversion when he sells under the
mortgage but not in accordance with its terms; and
4. The amount of sale of the chattels is spurious/ grossly unfair to P.
However, P’s claim for moral damages seems to have no legal or factual
basis. Obviously, an artificial person like herein P 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.
But for the wrongful acts of herein R bank and the R 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.

NOTE:
1. Chattel - refers to all personal property (things you own other than
real estate). An example of chattel is your furniture and car. ... Any
moveable property, tangible personal property, or an intangible
right in such property (such as a patent).
2. The main distinction between Judicial and Extrajudicial Foreclosure
is: Judicial Foreclosure is undertaken through court action, while
Extra-Judicial Foreclosure is carried out under the direction of either
a Sheriff, a Municipal Judge or a Notary Public.