Acme Shoe Rubber & Plastic Corporation vs Court of Appeals

G.R. No. 103576 – 329 Phil. 531 – 260 SCRA 714 – Mercantile Law – Corporation Law – Corporations cannot sue for moral damages 

In June 1978, Acme Shoe, Rubber & Plastic Corporation executed a chattel mortgage in favor of Producers Bank of the Philippines in consideration of a loan in the amount of P3 million. The loan was paid. Thereafter, Producers Bank extended another P2.7 million loan to Acme. The same was paid. In 1984, Producers Bank extended a P1 million loan to Acme. This time, Acme was unable to pay and eventually, Producers Bank foreclosed the property subject of the chattel mortgage executed in June 1978.

Acme opposed the foreclosure as it alleged that the 1984 loan was no longer covered by the chattel mortgage of 1978. Acme is also asking for moral damages (worth P3 million) for the groundless foreclosure done by Producers Bank.

ISSUE: Whether or not Acme Shoe is entitled to moral damages.

HELD: No. It is true that the chattel mortgage executed in 1978 for the initial P3 million loan only covers the initial loan and not the 1984 P1 million loan. However, Acme Shoes is not entitled to moral damages. 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 griefs of life — all of which cannot be suffered by Acme Shoes as an artificial person.

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