[mnw21cam]

Oh absolutely. The phrase "I'm sorry you feel that way" disconnects you from the other person, and if that is an appropriate thing to do, then it's an appropriate phrase to use. If someone is trying to guilt-trip you into action that you don't morally need to take and don't want to take, then use this phrase. It asserts your boundaries.

Also, I'd take issue with the phrase always being passive-aggression. Sure, in certain circumstances it can be used as a passive-aggressive move, but in a situation where you are using it to handle someone who is coming at you with a terrible manipulative sob-story to try to pull you into their fantasy world where you have to help them at every turn, then using this phrase is not passive-aggressive - it's just protecting yourself.

Other similar useful phrases are: "I'm sorry to hear that", "That's terrible", "Okay", "Right", "I see".