ASSET PRIVATIZATION TRUST vs. COURT OF APPEALS, ET. AL., G.R. No.

121171 /
December 29, 1998

Facts:

 Pursuant to a Mortgage Trust Agreement, the Development Bank of the Philippines and
the Philippine National Bank foreclosed the property of the Marinduque Mining and
Industrial Corporation. The property had been bought to Philippine National Bank and
later transferred to the Asset Privatization Trust (APT).
 Thereafter, the Arbitral Tribunal made a decision requesting Asset Privatization Trust to
compensate Marinduque Mining and Industrial Corporation and arbitration costs in the
amount of 2.5 billion pesos, of which 13,000,000.00 pesos for damages. moral and
exemplary.
 At the request of Cabarrus and other shareholders of the Marinduque Mining and
Industry Corporation, the trial court upheld the arbitral tribunal's decision. The
reconsideration request was denied; the Asset Privatization Trust filed a special civil
action on certiorari with the Court of Appeal. It was also rejected.
Therefore, this petition for review on certiorari.

Issue:

 Whether or not the Marinduque Mining and Industrial Corporation is entitled to moral
damages?

Ruling:

 No. How can MMIC enjoy a huge amount of moral damage when its creditworthiness is
not something that is considered solid and sound? According to Article 2217 of the Civil
Code, moral damage includes damage to the reputation that a legal person may suffer.
A company whose outstanding and unpaid debts to the government alone amount to a
whopping 22 billion P22 pesos certainly cannot have a solid business reputation to brag
about. Therefore, this request for review on certiorari.
 Besides, it isn't but a properly settled jurisprudence that agencies are entitled to ethical
damages. While the Supreme Court can also additionally have offered ethical damages
to a company for besmirched recognition in Mambulao vs. PNB, 22 SCRA 359, such
ruling can't locate software on this case. It ought to be talked about that after the
intended wrongful act of foreclosures became done, MMIC's credit score recognition
became now no longer an acceptable one. The organization then became already
stricken by critical economic disaster which clearly initiatives an photograph now no
longer like-minded with desirable and healthy recognition. So it couldn't be stated that
there has been a “recognition” besmirched through the act of foreclosures.
 As a general rule, a company exercises its powers, including the right to contract,
through its board of directors. Although the company may appoint an agent to enter into
contracts on its behalf, the agent must not exceed its authority. 54 In the present case,
there is no evidence that the representatives of the PNB and the DBP in the MMIC even
have the authority required to enter into an exchange of debt for equity investments. And
if they have such power, there is no evidence that the banks, through their boards of
directors, have ratified the FRP. Hence, the request is GIVEN.