ACME SHOE, RUBBER & PLASTIC CORPORATION and CHUA PAC vs. HON. COURT OF APPEALS,

ACME SHOE, RUBBER & PLASTIC CORPORATION and CHUA PAC vs. HON. COURT OF APPEALS, BANK OF THE PHILIPPINES and REGIONAL SHERIFF OF CALOOCAN CITY
G.R. No. 103576 August 22, 1996

Facts:
1.      Petitioner Chua Pac, the president and general manager of Acme Shoe executed for and in behalf of the company, a chattel mortgage in favor respondent Bank.
2.      The mortgage stood by way of security for petitioner's corporate loan of P3,000,000.00. In due time, the loan was paid by petitioner corporation.
3.      Subsequently, it obtained from respondent additional financial accommodations totaling P2,700,000.00. These borrowings were on due date also fully paid.
4.      The bank yet again extended to petitioner corporation a loan of P1,000,000.00 covered by four promissory notes for P250,000.00 each.
5.      Due to financial constraints, the loan was not settled at maturity.
6.      Respondent applied for an extra judicial foreclosure of the chattel mortgage, prompting Petitioner Corporation to forthwith file an action for injunction.
7.       Ultimately, the court dismissed the complaint and ordered the foreclosure of the chattel mortgage.

Issues:
1.      Whether or not the foreclosure is valid
2.      If so, whether the plaintiff is entitled to moral damages as a result of the unlawful action taken by respondent bank against it

Ruling:
1.      No. The mortgage is made for the purpose of securing the obligation specified in the conditions thereof, and for no other purpose, and that the same is a just and valid obligation, and one not entered into for the purpose of fraud. makes it obvious that the debt referred to in the law is a current, not an obligation that is yet merely contemplated. In the chattel mortgage here involved, the only obligation specified in the chattel mortgage contract was the P3,000,000.00 loan which petitioner corporation later fully paid. By virtue of Section 3 of the Chattel Mortgage Law, the payment of the obligation automatically rendered the chattel mortgage void or terminated.

2.      In LBC Express, Inc. vs. Court of Appeals, the court have said: “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 respondent bank as an artificial person.”

While Chua Pac is included in the case, the complaint, however, clearly states that he has merely been so named as a party in representation of Petitioner Corporation.

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