I. SHORT TITLE: Crystal v.
BPI CCCC failed to pay both BPI-Butuan and BPI-Cebu
II. FULL TITLE: G.R. No. 172428             November 28,
2008
HERMAN C. CRYSTAL, LAMBERTO C. CRYSTAL,
ANN GEORGIA C. SOLANTE, and DORIS C.
MAGLASANG, as Heirs of Deceased SPOUSES
RAYMUNDO I. CRYSTAL and DESAMPARADOS C.
CRYSTAL, petitioners,
vs.
BANK OF THE PHILIPPINE ISLANDS, respondent.
TOPIC: Corporate Juridical Personality – Recovery
of moral damages
DOCTRINE OF THE CASE:
 A corporation is generally not allowed to receive
moral damages, it being an artificial being and
could not possibly suffer pain, anguish, etc.
However, once a corporation’s reputation has
been besmirched, moral damages may be
awarded to a corporation if such damages can
be proven by facts and causal connection with
the acts of the entity who filed such case against
the corporation.
STATEMENT OF FACTS:
Spouses Crystal obtained a 300,000 peso loan on behalf
of Cebu Contractors Consortium Co (CCCC) from the
BPI Butuan Branch. The loan as secured by a chattel
mortgage on machinery and heavy equipment of CCCC.
Spouses Crystal on the same day of obtaining the loan
executed a continuing suretyship and bound themselves
as surety of CCCC in the principal sum of not exceeding
300k
Thereafter, one of the spouses Crystal namely
Raymundo executed a PN for 300k in also in favour of
BPI Butuan
Later, CCCC renewed a previous loan this time from BPI
Cebu city and the renewal was evidenced by a PN
signed by the spouses crystal in their personal capacity
and as managing partners. The promissory note states
that the spouses are jointly and severally liable with
CCCC. It appears that before the original loan could be
granted, BPI-Cebu City required CCCC to put up a
security.
Since CCC had no real property to offer security, the
spouses executed a REM over their property and
another REM in favour of BPI-Cebu to secure the
additional loan of 20,000 of the CCCC.
which resulted to the foreclosure of the chattel mortgage
(BPI-Butuan) and REM (BPI-Cebu). The spouses also
failed to comply with the obligations when they were
due.
Further, the CM foreclosure was stalled because of the
restraining order issued against BPI, but it was later on
foreclosed and the proceeds were applied to
to P240,000.00 applied to the loan from BPI-Butuan
which had then reached P707,393.90
IBAA offered to buy the lot with 2 REMs and offered to
pay the indebtness of the spouses but BPI rejected
IBAAs offer to pay.
PROCEDURAL HISTORY:
BPI filed a complaint for sum of money against CCCC
and spouses crystal before the RTC of Butuan seeking
to recover the deficiency of the loan of CCC and
spouses with BPI Butuan.
The RTC ruled in favour of BPI Butuan and thus, EJF of
the spouses mortgages property.
The spouses filed an action for injunction with damages
with a prayer for a restraining order and/or writ of
preliminary injunction
The spouses claimed that the foreclosure of the real
estate mortgages is illegal because BPI should have
exhausted CCCC’s properties first, stressing that they
are mere guarantors of the renewed loans. They also
prayed that they be awarded moral and exemplary
damages, attorney’s fees, litigation expenses and cost of
suit.\
The spouses then filed an amended complaint alleging
that CCCC opened a foreign currency account with BPI-
Makati and that the account was used as security for a
loan in BPI Makati which was allegedly paid but BPI-
Makati did not return the passbook and blames BPI-
Makati for the failure of payment of the other obligations
of the spouses.
RTC: Spouses are solidarily liable and the mortgages
were valid & spouses have no benefit of exhaustion
because they were guarantors-mortgagors
The spouses appealed the decision of the trial court to
the Court of Appeals, but their appeal was
dismissed.The spouses moved for the reconsideration of
the decision, but the Court of Appeals also denied their
motion for reconsideration.Hence, the present petition.
(In the proceeding in the SC, The spouses Crystal are
represented by their heirs)
Argument of the Petitionoers: The petitioners suffered
moral damages because BPI unjustly refused the
payment scheme offered by IBAA and the allegedly inconvenienced by the suit, but we do not see
unjust and illegal foreclosure of the real estate how it could have possibly suffered besmirched
mortgages on their property. Petitioners further argue reputation on account of the single suit alone.
that the CA erred in awarding moral damages to BPI, Hence, the award of moral damages should be
which is a corporation as well as exemplary damages, deleted
attorney’s fees and expenses of litigation.
Yes. BPI is entitled to exemplary damages and
ISSUE: attorney’s fees. The awards of exemplary damages and
attorney’s fees, however, are proper. Exemplary
(1) w/n the heirs of the spouses crystal are entitled damages, on the other hand, are imposed by way of
to moral damages? example or correction for the public good, when the
party to a contract acts in a wanton, fraudulent,
oppressive or malevolent manner, while attorney’s fees
(2) w/n BPI, as a corporation is entitled to moral
are allowed when exemplary damages are awarded and
damages?
when the party to a suit is compelled to incur expenses
to protect his interest.The spouses instituted their
RULING complaint against BPI notwithstanding the fact that they
were the ones who failed to pay their obligations.
(1) NO. Moral damages are meant to compensate Consequently, BPI was forced to litigate and defend its
the claimant for any physical suffering, mental interest. For these reasons, BPI is entitled to the awards
anguish, fright, serious anxiety, besmirched of exemplary damages and attorney’s fees.
reputation, wounded feelings, moral shock,
social humiliation and similar injuries unjustly
caused.
DISPOSITIVE PORTION
Such damages, to be recoverable, must be the
proximate result of a wrongful act or omission
WHEREFORE, the petition is DENIED. The Decision
the factual basis for which is satisfactorily
and Resolution of the Court of Appeals dated 24 October
established by the aggrieved party. There being
2005 and 31 March 2006, respectively, are hereby
no wrongful or unjust act on the part of BPI in
AFFIRMED, with the MODIFICATION that the award of
demanding payment from them and in seeking
moral damages to Bank of the Philippine Islands is
the foreclosure of the chattel and real estate
DELETED.
mortgages, there is no lawful basis for award of
damages in favor of the spouses.
Costs against the petitioners.
(2) NO. BPI is NOT entitled to moral damages. A
juridical person is generally not entitled to moral SO ORDERED.
damages because, unlike a natural person, it
cannot experience physical suffering or such
sentiments as wounded feelings, serious
anxiety, mental anguish or moral shock.

In the cases of Manero and Mambulao, however

it was stated that A corporation may have good
reputation which, if besmirched may also be
ground for the award of moral damages.

the Court held that the statements in Manero

and Mambulao were mere obiter dicta, implying
that the award of moral damages to corporations
is not a hard and fast rule. Indeed, while the
Court may allow the grant of moral damages to
corporations, 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. This is so
because moral damages, though incapable of
pecuniary estimation, are in the category of an
award designed to compensate the claimant
for actual injury suffered and not to impose a
penalty on the wrongdoer. BPI may have been