Chevron Philippines, Inc. v. Mendoza

 Chevron Philippines, Inc. v. Mendoza, 

G.R. Nos. 211533 & 212071, 

June 19, 2019

DOCTRINE: A corporation is not entitled to moral damages because, as it is not a

natural person, it cannot experience physical suffering or sentiments such as wounded

feelings, sleepless nights, serious anxiety, mental anguish and moral shock.

FACTS: 

Sometime in 1997, Leo Mendoza applied with Caltex (Chevron) for dealership

of a company-owned service station in Sta. Cruz, Virac, Catanduanes. Pursuant to the

selection procedure of Caltex, Mendoza passed the psychographic exam, had

undergone the required on-the-job evaluation and training and made a successful

defense of his business proposal.

The dealer selection board of Caltex, however, awarded the Virac dealership to the

Spouses Carmen Francisco and Jose Romeo Francisco. Jose happened to be the

grandson of the lessor of the lot occupied by the Virac service station. Caltex informed

Mendoza of its decision regarding his application, the reason cited by Caltex for the

award to Francisco was that the other application is more strategic in location. Leo, in a

letter to the Caltex president insisted that his inclusion in the dealership pool established

a partnership between him and Caltex which must be respected and fulfilled. Mendoza

alleges that Caltex deprived him of his rightful dealership, causing him injustice and

irreparable damages, to which Caltex refused. Leo filed a complaint for which Caltex

prayed that it be awarded moral and exemplary damages, attorney’s fees and litigation

expenses. The Court of Appeals deleted the award of moral and exemplary damages.

ISSUE/S: Whether or not the Court of Appeals erred in deleting the award of moral

damages previously awarded by the RTC in favor of Chevron.

HELD: The Court finds Mendoza’s argument patently unmeritorious. There was no

abuse of right committed by Caltex in denying an award of dealership in favor of

Mendoza. The CA did not commit any reversible error when it sustained the RTC’s

Decision dismissing Mendoza’s Complaint for lack of merit. Jurisprudence has held that

the elements of an abuse of right under Article 19 of the Civil Code are the following: (1)

the existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the

sole intent of prejudicing or injuring another. Malice or bad faith is at the core of an

abuse of right. Malice or bad faith implies a conscious and intentional design to do a

wrongful act for a dishonest purpose or moral obliquity.

As for the main issue, a corporation is not, as a rule, entitled to moral damages

because, not being a natural person, it cannot experience physical suffering or such

sentiments as wounded feelings, serious anxiety, mental anguish and moral shock. The

only exception to this rule is where the corporation has a good reputation that is

debased, resulting in its social humiliation.