Corporate claim for moral damages

Published May 12, 2022, 11:52 AM

by Atty. Jun De Zuñiga

                Can a corporation file a claim for moral damages? The expected layman’s answer to this question is no and understandably so. In the first place, a corporation is an artificial being created by operation of law (Section 2, Revised Corporation Code). Moreover, moral damages are those normally suffered by a natural person and they “include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury” (Art. 2217, Civil Code). A corporation therefore has no reputation in the sense that an individual has and besides it is inherently impossible for a corporation to suffer mental anguish (National Power Corporation vs. Philipp Brothers Oceanic, Inc., G. R. No. 126204, Nov. 20, 2001).

                It may be noted, however, that moral damages include “besmirched reputation” and there have been judicial precedents holding that such damages can be sustained by corporations as well. A corporation may acquire goodwill or reputation of its own and if the same is besmirched, the corporation may recover moral damages. In a certain case, a radio broadcaster uttered libelous remarks against an educational center. The Supreme Court held that the latter’s claim for moral damages falls under Article 2219 of the Civil Code which expressly authorizes the recovery of moral damages in cases of libel, slander, or any other form of defamation. The Civil Code did not qualify whether the plaintiff is a natural or a juridical person; therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages (Filipinas Broadcasting Network, Inc. vs. AGO Medical and Educational Center-Bicol Christian College of Medicine, G. R. No. 141994, Jan. 17, 2005)

                Moral damages may also be awarded in case of tortious acts against the corporation. A corporation whose checks were dishonored by the drawee bank despite the availability of funds and because of the negligence of the bank employees can recover moral damages for besmirched reputation. The standing of the corporation was reduced in the business community because of the bank’s negligence (Simex International Incorporated vs. Court of Appeals, G. R. No. 88013, March 19, 1990).

                While the Court may allow the grant of moral damages to a corporation, it is not automatically granted; there must still be proof of the existence of the factual basis of the damage and its causal relation to the defendant’s acts. Moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for the actual injury suffered and not to impose a penalty on the wrongdoer. It was held that where the records are bereft of evidence that the name or reputation of the corporation has been debased as a result of a tortious act (which, in this case, is the disconnection of the electricity supply to the building of the corporation due to alleged meter tampering), the corporation is not entitled to moral damages (Manila Electric Company vs. T.E.A.M. Electronics Corporation, G. R. No. 131723, Dec. 13, 2007).

                Notwithstanding the above exceptions (mainly cited from the Revised Corporation Code of Dean Nilo T. Divina), the general view still is that the award of moral damages cannot be granted in favor of a corporation because being an artificial being, it cannot experience the same damaged feelings as those of an individual.

*       *     *

The above comments are the personal views of the writer. His email address is [email protected]