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Asset Privatization Vs Ca (300 Scra 579)
Asset Privatization Vs Ca (300 Scra 579)
Asset Privatization Vs Ca (300 Scra 579)
In other words the corporation must be joined as a party because it is its cause of action that is being litigated and because
judgement must be a res judicata against it.
MAMBULAO LUMBER COMPANY V. PNB (G.R. NO. L-22973) The reasons given for not allowing direct individual suit are:
Facts: 1. That the prior rights of the creditors may be prejudiced. Thus, our Supreme Court held in the case of Evangelista vs Santos that the
Petitioner Mambulao Lumber applied for an industrial loan with herein respondent PNB and was approved with its real estate, machinery and “Stockholders may not directly claim those damages for themselves for that would result in the appropriation by, and the
equipments as collateral. PNB released the approved loan but petitioner failed to pay and was later discovered to have already stopped in its distribution among them of part of the corporate assets before the
operation. PNB then moved for the foreclosure and sale of the mortgaged properties. The properties were sold and petitioner sent a bank 2. The universally recognized doctrine that a stockholder in a corporation has no title legal or equitable to the corporate property;
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 that both of these are in the corporation itself for the benefit of the stockholders. In other words, to allow shareholders to sue
held unless petitioner remits said amount. The foreclosure sale proceeded and petitioner’s properties were taken out of its compound. separately would conflict with the separate corporate entity principle.
Petitioner filed actions before the court and claims among others, moral damages. 3. dissolution of the corporation and the liquidation of its debts and liabilities, something which cannot be legally done in view of
Issue: section 16 of the corporation law.
Whether or not petitioner corporation, who has already ceased its operation, may claim for moral damages. 4. The filing of such suits would conflict with the duty of the management to sue for the protection of all concerned;
Ruling: NO. 5. It would produce wasteful multiplicity of suits; and
Herein appellant’s claim for moral damages, however, seems to have no legal or factual basis. Obviously, an artificial person like herein 6. It would involve confusion in ascertaining the effect of partial recovery by an individual on the damages recoverable by the
appellant corporation cannot experience physical sufferings, mental anguish, fright, serious anxiety, wounded feelings, moral shock or social corporation for the same act.
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.