National Power Corporation v. Philipp Brothers Oceanic, Inc.

NATIONAL POWER CORPORATION VS. PHILIPP BROTHERS OCEANIC, INC.

369 SCRA 629 (2001)

FACTS OF THE CASE

National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120,000 metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant of which Philipp Brothers Oceanic, Inc. (PHIBRO) bidded and was accepted. 

On July 10, 1987, PHIBRO told NAPOCOR that disputes might soon plague Australia that will seriously hamper its ability to supply coal. On July 23 to July 31, 1987, PHIBRO informed NAPOCOR that unless a "strike-free" clause is incorporated in the charter party or the contract of carriage, the ship owners are unwilling to load their cargo. In order to hasten the transfer of coal, they should share the burden of the "strike-free" clause but NAPOCOR refused. 

PHIBRO effected its first shipment only on November 17, 1987 which was supposed to be on the 30th day after receipt of the letter of credit of which it received on August 6, 1987.

Consequently, In October 1987: NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant of which PHIBRO applied but was rejected since it was not able to satisfy the demand for damages on its delay. PHIBRO filed for damages in the RTC alleging that the rejection was tainted with malice and bad faith.

After the trial, the trial court rendered a decision in favor of PHIBRO, ordering the defendant NAPOCOR to reinstate PHIBRO in the defendant National Power Corporation’s list of accredited bidders and indemnify the same actual, moral and exemplary damages. On appeal, the CA affirmed in toto the decision of RTC.

ISSUE

Whether the Trial Court erred in awarding moral damages to PHIBRO.

RULING

The award of moral damages is improper.  To reiterate, NAPOCOR did not act in bad faith.  Moreover, moral damages are not, as a general rule, granted to a corporation. While it is true that besmirched reputation is included in moral damages, it cannot cause mental anguish to a corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense that an individual has, and besides, it is inherently impossible for a corporation to suffer mental anguish. 

In LBC Express, Inc. v. Court of Appeals, we ruled:

“Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

A corporation, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish.  Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and grief’s of life – all of which cannot be suffered by respondent bank as an artificial person.”