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    Acme V Ca

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    The Acme Shoe, Rubber & Plastic Corporation obtained loans from the Bank of the Philippines secured by a chattel mortgage. A provision in the mortgage stated it would secure any current or future obligations of Acme to the bank. Acme defaulted on a subsequent $1M loan. The bank sought to foreclose on the mortgage but Acme appealed. The Court of Appeals held that (1) the chattel mortgage could only secure debts existing at the time it was constituted, not future loans, so foreclosure was not allowed; and (2) Acme, as a corporation, could not be awarded moral damages since only individuals can experience mental anguish.

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    Acme V Ca

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    104 views2 pages
    The Acme Shoe, Rubber & Plastic Corporation obtained loans from the Bank of the Philippines secured by a chattel mortgage. A provision in the mortgage stated it would secure any current or future obligations of Acme to the bank. Acme defaulted on a subsequent $1M loan. The bank sought to foreclose on the mortgage but Acme appealed. The Court of Appeals held that (1) the chattel mortgage could only secure debts existing at the time it was constituted, not future loans, so foreclosure was not allowed; and (2) Acme, as a corporation, could not be awarded moral damages since only individuals can experience mental anguish.

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    acme v ca

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    The Acme Shoe, Rubber & Plastic Corporation obtained loans from the Bank of the Philippines secured by a chattel mortgage. A provision in the mortgage stated it would secure any current or future obligations of Acme to the bank. Acme defaulted on a subsequent $1M loan. The bank sought to foreclose on the mortgage but Acme appealed. The Court of Appeals held that (1) the chattel mortgage could only secure debts existing at the time it was constituted, not future loans, so foreclosure was not allowed; and (2) Acme, as a corporation, could not be awarded moral damages since only individuals can experience mental anguish.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    104 views2 pages

    Acme V Ca

    Uploaded by

    dot_rocks
    The Acme Shoe, Rubber & Plastic Corporation obtained loans from the Bank of the Philippines secured by a chattel mortgage. A provision in the mortgage stated it would secure any current or future obligations of Acme to the bank. Acme defaulted on a subsequent $1M loan. The bank sought to foreclose on the mortgage but Acme appealed. The Court of Appeals held that (1) the chattel mortgage could only secure debts existing at the time it was constituted, not future loans, so foreclosure was not allowed; and (2) Acme, as a corporation, could not be awarded moral damages since only individuals can experience mental anguish.

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    © All Rights Reserved
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    of 2

    ACME SHOE, RUBBER & PLASTIC CORPORATION and CHUA PAC

    vs. HON. COURT OF APPEALS, BANK OF THE PHILIPPINES


    and REGIONAL SHERIFF OF CALOOCAN CITY
    G.R. No. 103576 August 22, 1996
    FACTS: Chua Pac, the president and general manager of Acme Shoe, Rubber & Plastic
    Corporation, executed in behalf of the company, a chattel mortgage in favor of
    Producers Bank of the Philippines to secure Acme's corporate loan of P3M. A provision
    in the chattel mortgage provides: "This mortgage shall also stand as security for said
    obligations and any and all other obligations of the MORTGAGOR to the MORTGAGEE
    of whatever kind and nature, whether such obligations have been contracted before,
    during or after the constitution of this mortgage."
    The P3M loan and the subsequent financial accommodations worth P2.7M
    availed by Acme were paid on due date. Acme thereafter obtained a loan of P1M
    covered by 4 promissory notes of P250 000 each. This loan was not settled at maturity,
    thus the bank applied for an extrajudicial foreclosure of the chattel mortgage which
    the RTC granted. Acme appealed to the CA. The first MR was denied on the ground
    that the petition was insufficient in form and substance, but upon compliance, the
    2nd MR was granted.
    ISSUES:
    (1) Whether or not the foreclosure should be allowed
    (2) Whether or not Acme's other prayer that the case should be remanded to the
    trial court for a specific finding on the amount of damages it has sustained "as a result
    of the unlawful action taken by respondent bank against it should be granted
    (Whether or not Acme, a corporation, is entitled to moral damages)
    HELD: (1) No. Once the obligation is complied with, then the contract of security
    becomes, ipso facto, null and void. . . While a pledge, real estate mortgage, or
    antichresis may exceptionally secure after-incurred obligations so long as these future
    debts are accurately described,
    a chattel mortgage, however, can only cover
    obligations existing at the time the mortgage is constituted. Although a promise
    expressed in a chattel mortgage to include debts that are yet to be contracted can be a
    binding commitment that can be compelled upon, the security itself, however, does not
    come into existence or arise until after a chattel mortgage agreement covering the
    newly contracted debt is executed either by concluding a fresh chattel mortgage or by
    amending the old contract conformably with the form prescribed by the Chattel
    Mortgage Law. . . the remedy of foreclosure can only cover the debts extant at the time
    of constitution and during the life of the chattel mortgage sought to be foreclosed
    (2) No. 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.
    While Chua Pac is included in the case, the complaint, however, clearly states
    that he has merely been so named as a party in representation of petitioner
    corporation.

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