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Torts and Damages Case Digest: PNB v. CA (1997)

G.R. No. 118357    May 6, 1997
Lessons Applicable: Factors in determining amount (Torts and Damages)
Laws Applicable: 


  • Industrial Enterprises, Inc. (IEI) entered into a coal operating contract with the Bureau of Energy Development (BED) with Cabarrus and then Minister of Energy Geronimo Velasco as signatories.  IEI found 3 newly-discovered coal blocks and applied it for conversion.  But instead it was awarded to Marinduque Mining and Industrial Corporation (MMIC).  
  • Consequently, IEI made written demands to MMIC, pursuant to the MOA, for the reimbursement of all costs and expenses it had incurred on the project which, as of July 31, 1983, had amounted to P31.66 million as audited by the Sycip, Gorres and Velayo Company
  • IEI filed a complaint alleging that MMIC acted in gross and evident bad faith in entering into the MOA when it had no intention at all to operate the 2 coal blocks and of complying with any of its obligations under the said agreement
  • July 13, 1981: MMIC entered into a Mortgage Trust Agreement in favor of PNB and DBP.  MMIC defaulted in the payment of its loan obligation.
  • August 15, 1984: IEI advised PNB and DBP that it had assigned to MMIC per the MOA were still unpaid but still foreclosure sale proceeded.
  • IEI filed a rescission of the assignment of the Giporlos Coal Project to MMIC before the RTC impleading PNB and DBP
  • RTC: granted. PNB is equally guilty of bad faith because it was advised beforehand that the heavy equipment and movable property which are part of the Giporlos Coal Project were still unpaid.  MMIC and PNB jointly and solidarily liable to pay moral damages P300,000,exemplary damages P200,000 and P200,000 attorney's fees
  • CA: reversed.  IEI's claim against PNB for actual, consequential and moral damages including attorney's fees, litigation expenses and costs of suit, has neither legal nor factual bases.
ISSUE: W/N PNB should be liable for damages.

HELD: NO.  REVERSED and SET ASIDE insofar as it renders petitioner solidarily liable with Marinduque Mining and Industrial Corporation for damages and AFFIRMED insofar as it nullifies the foreclosure sale of August 31, 1984

  • In view of the noninvolvement of petitioner in the alleged conspiracy to strip private respondent of the its rights over the Giporlos Project, petitioner cannot be made solidarily liable with the MMIC for damages. However, although petitioner's rights to foreclose the mortgage and to subject the equipment of private respondent to the foreclosure sale are unassailable, we find that the foreclosure proceedings fell short of the requirements of the law.