Case Digest: Noell Whessoe, Inc. v. Independent Testing Consultants, Inc., G.R. No. 199851, November 7, 2018

 Corporation Law | Right to Moral Damage

• Independent Testing Consultants conducted non-destructive testing on Liquigaz's piping systems and gas storage tanks, billing Petrotech for the services rendered.
• Despite demands, Petrotech refused payment, leading Independent Testing Consultants to file a complaint against Petrotech, Liquigaz, and Noell Whessoe, Inc.
• Liquigaz claimed no contractual relations with Independent Testing Consultants, stating that any contract was with their subcontractors.
• Noell Whessoe denied being Liquigaz's contractor and asserted that their contract was with Petrotech, also mentioning their engagement by Whessoe UK.
• Petrotech alleged Independent Testing Consultants' poor performance, incurring additional costs and requested compensation.
• RTC: Found all defendants liable to Independent Testing Consultants due to their respective involvements and benefits from the services.
• Court of Appeals: Affirmed the decision but with modifications regarding the extent of liability and reimbursement between the defendants.
• Petitioner maintains that it cannot be bound by the contract between Whessoe UK and Petrotech simply because it sent a letter to Petrotech expressing dissatisfaction or disapproval of respondent Independent Testing Consultants' services. Thus, it asserts that it was entitled to moral damages of P1,000,000.00 since "the filing of this baseless and unfounded case . . . has tarnished its good business name and standing by giving the erroneous and false impression to the public that it is a company that reneges on its obligations.

WoN Noelle Whessoe is entitled to moral damages. NO

Since Whessoe UK and petitioner should be considered the same entity for the purposes of the Mariveles Terminal Expansion Project, Whessoe UK's full payment to Petrotech would serve as a valid defense against petitioner's solidary liability. Thus, petitioner still cannot be held solidarily liable with Liquigaz and Petrotech for any remaining receivables from respondent Independent Testing Consultants. Any remaining obligations to it should be solidarily borne by the owner, Liquigaz, and the subcontractor, Petrotech.

While petitioner is absolved from its solidary liability, it is not, however, entitled to any moral damages.

Petitioner asserts that it was entitled to moral damages of P1,000,000.00 on the basis that respondent Independent Testing Consultants' collection suit "has tarnished its good business name and standing[.]"

Moral damages are awarded when the claimant suffers "physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury." "These damages must be understood to be in the concept of grants, not punitive or corrective in nature, calculated to compensate the claimant for the injury suffered." Its award is "aimed at a restoration, within the limits possible, of the spiritual status quo ante; and therefore, it must be proportionate to the suffering inflicted."

A corporation is not a natural person. It is a creation of legal fiction and "has no feelings, no emotions, no senses." A corporation is incapable of fright, anxiety, shock, humiliation, and physical or mental suffering. "Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life." A corporation, not having a nervous system or a human body, does not experience physical suffering, mental anguish, embarrassment, or wounded feelings. Thus, a corporation cannot be awarded moral damages.

In the 1968 case of Mambulao Lumber v. Philippine National Bank, this Court stated, in passing, "a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages."

This same statement has appeared in People v. Manero. Mambulao Lumber and Manero, however, were not meant to be used as basis to carve an exception to the rule. There is still no definitive pronouncement by this Court of any existing exceptions to the rule. In ABS-CBN Broadcasting Corporation v. Court of Appeals, this Court even clarified that the statement in Mambulao Lumber and Manero was mere obiter dictum.

There is no standing doctrine that corporations are, as a matter of right, entitled to moral damages. The existing rule is that moral damages are not awarded to a corporation since it is incapable of feelings or mental anguish. Exceptions, if any, only apply pro hac vice.

Even assuming that moral damages may be granted, no moral damages can be awarded in this case. Claims for moral damages must have sufficient factual basis, either in the evidence presented or in the factual findings of the lower courts. Petitioner has not presented any evidence, other than its bare allegations, that it was entitled to its award.