LBC Express v.

CA 081
GR No. 108670, 21 Sept 1994, Puno, J.
Digested by Nads • Law 106 – Corpo

RESP Carloto, as President-Manager of RESP Rural Bank, was instructed to go to Central bank
Manila to follow-up the Bank’s plan of payment of rediscounting obligations. Carloto instructed
his sister to send via PET LBC P1,000 as pocket money. However, this was not delivered to
Carloto. Because his efforts were focused on claiming the P1,000, he was unable to go to Manila
to negotiate, which caused the Bank P32,000 as penalty interest. Carloto and Rural Bank filed
for damages. RTC awarded moral and exemplary damages. SC held that Rural Bank, as an
artificial person, is not entitled to moral damages as it is incapable of feeling emotions.

FACTS
• RESP Adolfo Carloto, incumbent President-Manager of RESP Rural Bank of Labason.
He was in Cebu transacting business with Central Bank Regional Office and was
instructed to proceed to Manila to follow-up the Rural Bank’s plan of payment of
rediscounting obligations.
• He instructed his sister Elsie Concha to send him P1,000 for his pocket money and some
rediscounting papers from Dipolog to Cebu thru PET LBC.
• Nov. 16: Mrs. Concha consigned thru LBC Dipolog Branch the documents and P1,000,
as evidenced by LBC Air Cargo Cashpack Delivery Receipt.
• Nov. 17: the documents arrived without the cashpack. RESP Carloto made personal
follow-ups on the same day but PET LBC failed to deliver the cashpack.
• Nov. 24: Carloto said he was compelled to go to Dipolog City but the same was not there
and had been returned to the shipper, Mrs. Concha.
• Because of this delay, Carloto was not able to go to Manila to submit the rediscounting
documents to Central Bank. As a consequence, Rural Bank was made to pay P32,000 as
penalty interest.
• RESP Carloto filed an Action for Damages Arising from non-performance of obligation,
alleging wanton and reckless disregard of its obligation. Later, the petition was amended
to include RESP Rural Bank as plaintiff.
• RTC:
1. Order LBC to pay RESPs Carloto and Rural Bank of Labason moral damages
(P10,000), exemplary damages (P5,000), atty’s fees (P3,000) and lit. expenses
2. To reimburse RESP Rural Bank P32,000.
• CA: Affirmed with modification by deleting award of attorney’s fees.

ISSUES & HOLDING

• WON RESP Rural Bank of Labason being an artificial person should be awarded moral
damages? – NO. As an artificial person, it is not capable of feeling anything. (AY
WUW!)
RATIO
CA erred in awarding 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 respondent
bank as an artificial person.
• Moreover, he who comes to court must come with clean hands.
• Application:
o RESP Carloto was fully aware that his rural bank’s obligation would mature on
November 21. Moreover, his bank has set aside cash for these bills payable.
Everything was all set.
§ Nevertheless, he did not immediately proceed to Manila but instead
delayed for days just to claim P1,000 pocket money.
§ The undue importance given by Carloto to his P1,000 is inexplicable and
unnecessary.
o RESP Carloto also failed to show that PET LBC’s late delivery was motivated by
malice or bad faith. In fact, it was proved that the cashpack was consigned on
Nov. 16 and was sent to Cebu on the next business day. Considering this
circumstance, PET cannot be charged with gross neglect of duty.

DISPOSITIVE
Petition is GRANTED. Decision is
REVERSED and SET ASIDE.