Republic of the Philippines From among the three packages I can only tick off 10 titles we can purchase.

he three packages I can only tick off 10 titles we can purchase. Please see attached.
SUPREME COURT I hope you will understand my position. Most of the action pictures in the list do not have big action
Manila stars in the cast. They are not for primetime. In line with this I wish to mention that I have not
scheduled for telecast several action pictures in out very first contract because of the cheap
production value of these movies as well as the lack of big action stars. As a film producer, I am
FIRST DIVISION sure you understand what I am trying to say as Viva produces only big action pictures.

  In fact, I would like to request two (2) additional runs for these movies as I can only schedule them
in our non-primetime slots. We have to cover the amount that was paid for these movies because
G.R. No. 128690 January 21, 1999 as you very well know that non-primetime advertising rates are very low. These are the unaired
titles in the first contract.

ABS-CBN BROADCASTING CORPORATION, petitioner,

vs. 1. Kontra Persa [sic].
HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP, VIVA PRODUCTION, INC., and VICENTE DEL
ROSARIO, respondents. 2. Raider Platoon.

3. Underground guerillas
DAVIDE, JR., CJ.:
4. Tiger Command
In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp. (hereafter ABS-CBN) seeks to reverse and set
aside the decision 1 of 31 October 1996 and the resolution 2 of 10 March 1997 of the Court of Appeals in CA-G.R. CV No. 5. Boy de Sabog
44125. The former affirmed with modification the decision 3 of 28 April 1993 of the Regional Trial Court (RTC) of Quezon City,
Branch 80, in Civil Case No. Q-92-12309. The latter denied the motion to reconsider the decision of 31 October 1996.
6. Lady Commando

The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows:
7. Batang Matadero

In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. "A") whereby Viva gave
ABS-CBN an exclusive right to exhibit some Viva films. Sometime in December 1991, in 8. Rebelyon
accordance with paragraph 2.4 [sic] of said agreement stating that —.
I hope you will consider this request of mine.
1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV
telecast under such terms as may be agreed upon by the parties hereto, provided, however, that The other dramatic films have been offered to us before and have been rejected because of the
such right shall be exercised by ABS-CBN from the actual offer in writing. ruling of MTRCB to have them aired at 9:00 p.m. due to their very adult themes.

Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos- As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other
Concio, a list of three(3) film packages (36 title) from which ABS-CBN may exercise its right of first Viva movies produced last year. I have quite an attractive offer to make.
refusal under the afore-said agreement (Exhs. "1" par, 2, "2," "2-A'' and "2-B"-Viva). ABS-CBN,
however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can purchase"
(Exh. "3" - Viva) and therefore did not accept said list (TSN, June 8, 1992, pp. 9-10). The titles Thanking you and with my warmest regards.
ticked off by Mrs. Concio are not the subject of the case at bar except the film ''Maging Sino Ka
Man."
(S

For further enlightenment, this rejection letter dated January 06, 1992 (Exh "3" - Viva) is hereby
quoted: Charo S

6 January 1992 On February 27, 1992, defendant Del Rosario approached ABS-CBN's Ms. Concio, with a list
consisting of 52 original movie titles (i.e. not yet aired on television) including the 14 titles subject of
the present case, as well as 104 re-runs (previously aired on television) from which ABS-CBN may
Dear Vic, choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-CBN airing rights over this
package of 52 originals and 52 re-runs for P60,000,000.00 of which P30,000,000.00 will be in cash
and P30,000,000.00 worth of television spots (Exh. "4" to "4-C" Viva; "9" -Viva).
This is not a very formal business letter I am writing to you as I would like to express my difficulty in
recommending the purchase of the three film packages you are offering ABS-CBN.
1
 On April 2, 1992, defendant Del Rosario and ABS-CBN general manager, Eugenio Lopez III, met at At the pre-trial 12 on 6 August 1992, the parties, upon suggestion of the court, agreed to explore the possibility of an amicable
the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva. What settlement. In the meantime, RBS prayed for and was granted reasonable time within which to put up a P30 million
transpired in that lunch meeting is the subject of conflicting versions. Mr. Lopez testified that he and counterbond in the event that no settlement would be reached.
Mr. Del Rosario allegedly agreed that ABS-CRN was granted exclusive film rights to fourteen (14)
films for a total consideration of P36 million; that he allegedly put this agreement as to the price and
number of films in a "napkin'' and signed it and gave it to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, As the parties failed to enter into an amicable settlement RBS posted on 1 October 1992 a counterbond, which the RTC
77-78, June 8, 1992). On the other hand, Del Rosario denied having made any agreement with approved in its Order of 15 October 1992.13
Lopez regarding the 14 Viva films; denied the existence of a napkin in which Lopez wrote
something; and insisted that what he and Lopez discussed at the lunch meeting was Viva's film On 19 October 1992, ABS-CBN filed a motion for reconsideration 14 of the 3 August and 15 October 1992 Orders, which RBS
package offer of 104 films (52 originals and 52 re-runs) for a total price of P60 million. Mr. Lopez opposed. 15
promising [sic]to make a counter proposal which came in the form of a proposal contract Annex "C"
of the complaint (Exh. "1"·- Viva; Exh. "C" - ABS-CBN).
On 29 October 1992, the RTC conducted a pre-trial. 16

On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance
discussed the terms and conditions of Viva's offer to sell the 104 films, after the rejection of the Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a petition 17 challenging the
same package by ABS-CBN. RTC's Orders of 3 August and 15 October 1992 and praying for the issuance of a writ of preliminary injunction to enjoin the
RTC from enforcing said orders. The case was docketed as CA-G.R. SP No. 29300.

On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from
Ms. Concio, (Exh. "5" - Viva), which reads: "Here's the draft of the contract. I hope you find On 3 November 1992, the Court of Appeals issued a temporary restraining order 18 to enjoin the airing, broadcasting, and
everything in order," to which was attached a draft exhibition agreement (Exh. "C''- ABS-CBN; Exh. televising of any or all of the films involved in the controversy.
"9" - Viva, p. 3) a counter-proposal covering 53 films, 52 of which came from the list sent by
defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35 million.
On 18 December 1992, the Court of Appeals promulgated a decision 19 dismissing the petition in CA -G.R. No. 29300 for
Exhibit "C" provides that ABS-CBN is granted films right to 53 films and contains a right of first
being premature. ABS-CBN challenged the dismissal in a petition for review filed with this Court on 19 January 1993, which
refusal to "1992 Viva Films." The said counter proposal was however rejected by Viva's Board of
was docketed as G.R. No. 108363.
Directors [in the] evening of the same day, April 7, 1992, as Viva would not sell anything less than
the package of 104 films for P60 million pesos (Exh. "9" - Viva), and such rejection was relayed to
Ms. Concio. In the meantime the RTC received the evidence for the parties in Civil Case No. Q-192-1209. Thereafter, on 28 April 1993, it
rendered a decision 20 in favor of RBS and VIVA and against ABS-CBN disposing as follows:
On April 29, 1992, after the rejection of ABS-CBN and following several negotiations and meetings
defendant Del Rosario and Viva's President Teresita Cruz, in consideration of P60 million, signed a WHEREFORE, under cool reflection and prescinding from the foregoing, judgments is rendered in
letter of agreement dated April 24, 1992. granting RBS the exclusive right to air 104 Viva-produced favor of defendants and against the plaintiff.
and/or acquired films (Exh. "7-A" - RBS; Exh. "4" - RBS) including the fourteen (14) films subject of
the present case. 4
(1) The complaint is hereby dismissed;

On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of preliminary
injunction and/or temporary restraining order against private respondents Republic Broadcasting Corporation 5 (hereafter RBS (2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:
), Viva Production (hereafter VIVA), and Vicente Del Rosario. The complaint was docketed as Civil Case No. Q-92-12309.
a) P107,727.00, the amount of premium paid
On 27 May 1992, RTC issued a temporary restraining order 6 enjoining private respondents from proceeding with the airing, by RBS to the surety which issued defendant
broadcasting, and televising of the fourteen VIVA films subject of the controversy, starting with the film Maging Sino Ka Man, RBS's bond to lift the injunction;
which was scheduled to be shown on private respondents RBS' channel 7 at seven o'clock in the evening of said date.
b) P191,843.00 for the amount of print
On 17 June 1992, after appropriate proceedings, the RTC issued an advertisement for "Maging Sino Ka Man" in
order 7 directing the issuance of a writ of preliminary injunction upon ABS-CBN's posting of P35 million bond. ABS-CBN various newspapers;
moved for the reduction of the bond, 8 while private respondents moved for reconsideration of the order and offered to put up
a counterbound. 9 c) Attorney's fees in the amount of P1 million;

In the meantime, private respondents filed separate answers with counterclaim. 10 RBS also set up a cross-claim against d) P5 million as and by way of moral
VIVA.. damages;

On 3 August 1992, the RTC issued an order 11 dissolving the writ of preliminary injunction upon the posting by RBS of a P30 e) P5 million as and by way of exemplary
million counterbond to answer for whatever damages ABS-CBN might suffer by virtue of such dissolution. However, it damages;
reduced petitioner's injunction bond to P15 million as a condition precedent for the reinstatement of the writ of preliminary
injunction should private respondents be unable to post a counterbond.

2
 (3) For defendant VIVA, plaintiff ABS-CBN is ordered to pay The offer of V1VA was sometime in December 1991 (Exhibits 2, 2-A. 2-B; Records, pp. 86-88;
P212,000.00 by way of reasonable attorney's fees. Decision, p. 11, Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario to
ABS-CBN. The Vice President of ABS-CBN, Ms. Charo Santos-Concio, sent a letter dated January
6, 1992 (Exhibit 3, Records, p. 89) where ABS-CBN exercised its right of refusal by rejecting the
(4) The cross-claim of defendant RBS against defendant VIVA is offer of VIVA.. As aptly observed by the trial court, with the said letter of Mrs. Concio of January 6,
dismissed. 1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen (15) day period
from February 27, 1992 (Exhibit 4 to 4-C) when another list was sent to ABS-CBN after the letter of
(5) Plaintiff to pay the costs. Mrs. Concio, still the fifteen (15) day period within which ABS-CBN shall exercise its right of first
refusal has already expired.22

According to the RTC, there was no meeting of minds on the price and terms of the offer. The alleged agreement between
Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors, and said agreement was disapproved Accordingly, respondent court sustained the award of actual damages consisting in the cost of print advertisements and the
during the meeting of the Board on 7 April 1992. Hence, there was no basis for ABS-CBN's demand that VIVA signed the premium payments for the counterbond, there being adequate proof of the pecuniary loss which RBS had suffered as a result
1992 Film Exhibition Agreement. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had of the filing of the complaint by ABS-CBN. As to the award of moral damages, the Court of Appeals found reasonable basis
previously been exercised per Ms. Concio's letter to Del Rosario ticking off ten titles acceptable to them, which would have therefor, holding that RBS's reputation was debased by the filing of the complaint in Civil Case No. Q-92-12309 and by the
made the 1992 agreement an entirely new contract. non-showing of the film "Maging Sino Ka Man." Respondent court also held that exemplary damages were correctly imposed
by way of example or correction for the public good in view of the filing of the complaint despite petitioner's knowledge that the
contract with VIVA had not been perfected, It also upheld the award of attorney's fees, reasoning that with ABS-CBN's act of
On 21 June 1993, this Court denied21 ABS-CBN's petition for review in G.R. No. 108363, as no reversible error was instituting Civil Case No, Q-92-1209, RBS was "unnecessarily forced to litigate." The appellate court, however, reduced the
committed by the Court of Appeals in its challenged decision and the case had "become moot and academic in view of the awards of moral damages to P2 million, exemplary damages to P2 million, and attorney's fees to P500, 000.00.
dismissal of the main action by the court a quo  in its decision" of 28 April 1993.

On the other hand, respondent Court of Appeals denied VIVA and Del Rosario's appeal because it was "RBS and not VIVA
Aggrieved by the RTC's decision, ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract which was actually prejudiced when the complaint was filed by ABS-CBN."
between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. Private respondents VIVA and
Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees.
Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case, contending that the Court of
Appeals gravely erred in
In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract between ABS-CBN and VIVA
had not been perfected, absent the approval by the VIVA Board of Directors of whatever Del Rosario, it's agent, might have
agreed with Lopez III. The appellate court did not even believe ABS-CBN's evidence that Lopez III actually wrote down such I
an agreement on a "napkin," as the same was never produced in court. It likewise rejected ABS-CBN's insistence on its right
of first refusal and ratiocinated as follows: . . . RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND
PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONDERANCE OF EVIDENCE
As regards the matter of right of first refusal, it may be true that a Film Exhibition Agreement was ADDUCED BY PETITIONER TO THE CONTRARY.
entered into between Appellant ABS-CBN and appellant VIVA under Exhibit "A" in 1990, and that
parag. 1.4 thereof provides: II

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four . . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE
(24) VIVA films for TV telecast under such terms as may be agreed upon RESPONDENT RBS.
by the parties hereto, provided, however, that such right shall be
exercised by ABS-CBN within a period of fifteen (15) days from the
actual offer in writing (Records, p. 14). III

[H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall still be subject to . . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE
such terms as may be agreed upon by the parties thereto, and that the said right shall be exercised RESPONDENT RBS.
by ABS-CBN within fifteen (15) days from the actual offer in writing.
IV
Said parag. 1.4 of the agreement Exhibit "A" on the right of first refusal did not fix the price of the
film right to the twenty-four (24) films, nor did it specify the terms thereof. The same are still left to
be agreed upon by the parties. . . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS.

In the instant case, ABS-CBN's letter of rejection Exhibit 3 (Records, p. 89) stated that it can only ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles under the 1990 Film Exhibition
tick off ten (10) films, and the draft contract Exhibit "C" accepted only fourteen (14) films, while Agreement, as it had chosen only ten titles from the first list. It insists that we give credence to Lopez's testimony that he and
parag. 1.4 of Exhibit "A'' speaks of the next twenty-four (24) films. Del Rosario met at the Tamarind Grill Restaurant, discussed the terms and conditions of the second list (the 1992 Film
Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It also asserts that the contract has
already been effective, as the elements thereof, namely, consent, object, and consideration were established. It then
concludes that the Court of Appeals' pronouncements were not supported by law and jurisprudence, as per our decision of 1
3
December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals, 23 which cited Toyota Shaw, Inc. v. Court of In support of its stand that a juridical entity can recover moral and exemplary damages, private respondents RBS cited
Appeals, 24 Ang Yu Asuncion v. Court of Appeals, 25 and Villonco Realty Company v. Bormaheco. Inc.26 People v. Manero,35 where it was stated that such entity may recover moral and exemplary damages if it has a good
reputation that is debased resulting in social humiliation. it then ratiocinates; thus:
Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS spent for the premium on the
counterbond of its own volition in order to negate the injunction issued by the trial court after the parties had ventilated their There can be no doubt that RBS' reputation has been debased by ABS-CBN's acts in this case.
respective positions during the hearings for the purpose. The filing of the counterbond was an option available to RBS, but it When RBS was not able to fulfill its commitment to the viewing public to show the film "Maging Sino
can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had another available option, i.e., Ka Man" on the scheduled dates and times (and on two occasions that RBS advertised), it suffered
move for the dissolution or the injunction; or if it was determined to put up a counterbond, it could have presented a cash serious embarrassment and social humiliation. When the showing was canceled, late viewers
bond. Furthermore under Article 2203 of the Civil Code, the party suffering loss or injury is also required to exercise the called up RBS' offices and subjected RBS to verbal abuse ("Announce kayo nang announce, hindi
diligence of a good father of a family to minimize the damages resulting from the act or omission. As regards the cost of print ninyo naman ilalabas," "nanloloko yata kayo") (Exh. 3-RBS, par. 3). This alone was not something
advertisements, RBS had not convincingly established that this was a loss attributable to the non showing "Maging Sino Ka RBS brought upon itself. it was exactly what ABS-CBN had planned to happen.
Man"; on the contrary, it was brought out during trial that with or without the case or the injunction, RBS would have spent
such an amount to generate interest in the film.
The amount of moral and exemplary damages cannot be said to be excessive. Two reasons justify
the amount of the award.
ABS-CBN further contends that there was no clear basis for the awards of moral and exemplary damages. The controversy
involving ABS-CBN and RBS did not in any way originate from business transaction between them. The claims for such
damages did not arise from any contractual dealings or from specific acts committed by ABS-CBN against RBS that may be The first is that the humiliation suffered by RBS is national extent. RBS operations as a
characterized as wanton, fraudulent, or reckless; they arose by virtue only of the filing of the complaint, An award of moral broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN, consists of those who
and exemplary damages is not warranted where the record is bereft of any proof that a party acted maliciously or in bad faith own and watch television. It is not an exaggeration to state, and it is a matter of judicial notice that
in filing an action. 27 In any case, free resort to courts for redress of wrongs is a matter of public policy. The law recognizes the almost every other person in the country watches television. The humiliation suffered by RBS is
right of every one to sue for that which he honestly believes to be his right without fear of standing trial for damages where by multiplied by the number of televiewers who had anticipated the showing of the film "Maging Sino
lack of sufficient evidence, legal technicalities, or a different interpretation of the laws on the matter, the case would lose Ka Man" on May 28 and November 3, 1992 but did not see it owing to the cancellation. Added to
ground. 28 One who makes use of his own legal right does no injury. 29 If damage results front the filing of the complaint, it this are the advertisers who had placed commercial spots for the telecast and to whom RBS had a
is damnum absque injuria. 30 Besides, moral damages are generally not awarded in favor of a juridical person, unless it enjoys commitment in consideration of the placement to show the film in the dates and times specified.
a good reputation that was debased by the offending party resulting in social humiliation.31
The second is that it is a competitor that caused RBS to suffer the humiliation. The humiliation and
As regards the award of attorney's fees, ABS-CBN maintains that the same had no factual, legal, or equitable justification. In injury are far greater in degree when caused by an entity whose ultimate business objective is to
sustaining the trial court's award, the Court of Appeals acted in clear disregard of the doctrines laid down in Buan lure customers (viewers in this case) away from the competition. 36
v. Camaganacan  32 that the text of the decision should state the reason why attorney's fees are being awarded; otherwise,
the award should be disallowed. Besides, no bad faith has been imputed on, much less proved as having been committed by, For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of Appeals do not
ABS-CBN. It has been held that "where no sufficient showing of bad faith would be reflected in a party' s persistence in a case support ABS-CBN's claim that there was a perfected contract. Such factual findings can no longer be disturbed in this petition
other than an erroneous conviction of the righteousness of his cause, attorney's fees shall not be recovered as cost." 33 for review under Rule 45, as only questions of law can be raised, not questions of fact. On the issue of damages and
attorneys fees, they adopted the arguments of RBS.
On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and VIVA absent any meeting of
minds between them regarding the object and consideration of the alleged contract. It affirms that the ABS-CBN's claim of a The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABS-CBN, and (2)
right of first refusal was correctly rejected by the trial court. RBS insist the premium it had paid for the counterbond constituted whether RBS is entitled to damages and attorney's fees. It may be noted that the award of attorney's fees of P212,000 in
a pecuniary loss upon which it may recover. It was obliged to put up the counterbound due to the injunction procured by ABS- favor of VIVA is not assigned as another error.
CBN. Since the trial court found that ABS-CBN had no cause of action or valid claim against RBS and, therefore not entitled
to the writ of injunction, RBS could recover from ABS-CBN the premium paid on the counterbond. Contrary to the claim of
ABS-CBN, the cash bond would prove to be more expensive, as the loss would be equivalent to the cost of money RBS I.
would forego in case the P30 million came from its funds or was borrowed from banks.
The first issue should be resolved against ABS-CBN. A contract is a meeting of minds between two persons whereby one
RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing of the film "Maging Sino Ka binds himself to give something or to render some service to another 37 for a consideration. there is no contract unless the
Man" because the print advertisements were put out to announce the showing on a particular day and hour on Channel 7, i.e., following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject of the contract; and
in its entirety at one time, not a series to be shown on a periodic basis. Hence, the print advertisement were good and (3) cause of the obligation, which is established.38 A contract undergoes three stages:
relevant for the particular date showing, and since the film could not be shown on that particular date and hour because of the
injunction, the expenses for the advertisements had gone to waste.
(a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending
at the moment of agreement of the parties;
As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and secured injunctions purely for the
purpose of harassing and prejudicing RBS. Pursuant then to Article 19 and 21 of the Civil Code, ABS-CBN must be held liable
(b) perfection or birth of the contract, which is the moment when the parties come to agree on the
for such damages. Citing  Tolentino,34 damages may be awarded in cases of abuse of rights even if the act done is not illicit
terms of the contract; and
and there is abuse of rights were plaintiff institutes and action purely for the purpose of harassing or prejudicing the
defendant.
(c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the
contract. 39

4
Contracts that are consensual in nature are perfected upon mere meeting of the minds, Once there is concurrence between SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the contract was
the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is produced. The offer 14 films. The complaint in fact prays for delivery of 14 films. But Exhibit "C" mentions 53 films as its
must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the subject matter. Which is which If Exhibits "C" reflected the true intent of the parties, then ABS-
offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, CBN's claim for 14 films in its complaint is false or if what it alleged in the complaint is true, then
or one that involves a new proposal, constitutes a counter-offer and is a rejection of the original offer. Consequently, when Exhibit "C" did not reflect what was agreed upon by the parties. This underscores the fact that there
something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent was no meeting of the minds as to the subject matter of the contracts, so as to preclude perfection
because any modification or variation from the terms of the offer annuls the offer. 40 thereof. For settled is the rule that there can be no contract where there is no object which is its
subject matter (Art. 1318, NCC).
When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package
of films, said package of 104 VIVA films was VIVA's offer to ABS-CBN to enter into a new Film Exhibition Agreement. But THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. "D") states:
ABS-CBN, sent, through Ms. Concio, a counter-proposal in the form of a draft contract proposing exhibition of 53 films for a
consideration of P35 million. This counter-proposal could be nothing less than the counter-offer of Mr. Lopez during his
conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no acceptance of VIVA's offer, for it was met by We were able to reach an agreement. VIVA gave us the exclusive
a counter-offer which substantially varied the terms of the offer. license to show these fourteen (14) films, and we agreed to pay Viva the
amount of P16,050,000.00 as well as grant Viva commercial slots worth
P19,950,000.00. We had already earmarked this P16, 050,000.00.
ABS-CBN's reliance in Limketkai Sons Milling, Inc. v. Court of
Appeals 41 and Villonco Realty Company v. Bormaheco, Inc., 42 is misplaced. In these cases, it was held that an acceptance
may contain a request for certain changes in the terms of the offer and yet be a binding acceptance as long as "it is clear that which gives a total consideration of P36 million (P19,950,000.00 plus P16,050,000.00. equals
the meaning of the acceptance is positively and unequivocally to accept the offer, whether such request is granted or not." P36,000,000.00).
This ruling was, however, reversed in the resolution of 29 March 1996, 43 which ruled that the acceptance of all offer must be
unqualified and absolute, i.e., it "must be identical in all respects with that of the offer so as to produce consent or meeting of On cross-examination Mr. Lopez testified:
the minds."

Q. What was written in this napkin?

On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counter-offer were not material but
merely clarificatory of what had previously been agreed upon. It cited the statement in Stuart v. Franklin Life Insurance
Co.44 that "a vendor's change in a phrase of the offer to purchase, which change does not essentially change the terms of the A. The total price, the breakdown the known Viva movies, the 7
offer, does not amount to a rejection of the offer and the tender of a counter-offer." 45 However, when any of the elements of blockbuster movies and the other 7 Viva movies because the price was
the contract is modified upon acceptance, such alteration amounts to a counter-offer. broken down accordingly. The none [sic] Viva and the seven other Viva
movies and the sharing between the cash portion and the concerned
spot portion in the total amount of P35 million pesos.
In the case at bar, ABS-CBN made no unqualified acceptance of VIVA's offer. Hence, they underwent a period of bargaining.
ABS-CBN then formalized its counter-proposals or counter-offer in a draft contract, VIVA through its Board of Directors,
rejected such counter-offer, Even if it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance Now, which is which? P36 million or P35 million? This weakens ABS-CBN's claim.
did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so.
FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit "C" to Mr. Del
Under Corporation Code,46 unless otherwise provided by said Code, corporate powers, such as the power; to enter into Rosario with a handwritten note, describing said Exhibit "C" as a "draft." (Exh. "5" - Viva; tsn pp. 23-
contracts; are exercised by the Board of Directors. However, the Board may delegate such powers to either an executive 24 June 08, 1992). The said draft has a well defined meaning.
committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific
purposes, 47 Delegation to officers makes the latter agents of the corporation; accordingly, the general rules of agency as to
Since Exhibit "C" is only a draft, or a tentative, provisional or preparatory writing prepared for
the bindings effects of their acts would
discussion, the terms and conditions thereof could not have been previously agreed upon by ABS-
apply. 48 For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must
CBN and Viva Exhibit "C'' could not therefore legally bind Viva, not having agreed thereto. In fact,
specially authorize them to do so. That Del Rosario did not have the authority to accept ABS-CBN's counter-offer was best
Ms. Concio admitted that the terms and conditions embodied in Exhibit "C" were prepared by ABS-
evidenced by his submission of the draft contract to VIVA's Board of Directors for the latter's approval. In any event, there was
CBN's lawyers and there was no discussion on said terms and conditions. . . .
between Del Rosario and Lopez III no meeting of minds. The following findings of the trial court are instructive:

As the parties had not yet discussed the proposed terms and conditions in Exhibit "C," and there
A number of considerations militate against ABS-CBN's claim that a contract was perfected at that
was no evidence whatsoever that Viva agreed to the terms and conditions thereof, said document
lunch meeting on April 02, 1992 at the Tamarind Grill.
cannot be a binding contract. The fact that Viva refused to sign Exhibit "C" reveals only two [sic]
well that it did not agree on its terms and conditions, and this court has no authority to compel Viva
FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price to agree thereto.
and the number of films, which he wrote on a napkin. However, Exhibit "C" contains numerous
provisions which, were not discussed at the Tamarind Grill, if Lopez testimony was to be believed
FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the Tamarind
nor could they have been physically written on a napkin. There was even doubt as to whether it
Grill was only provisional, in the sense that it was subject to approval by the Board of Directors of
was a paper napkin or a cloth napkin. In short what were written in Exhibit "C'' were not discussed,
Viva. He testified:
and therefore could not have been agreed upon, by the parties. How then could this court compel
the parties to sign Exhibit "C" when the provisions thereof were not previously agreed upon?

5
 Q. Now, Mr. Witness, and after that Tamarind meeting ... the second 8, 1992, pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN has lost its rights
meeting wherein you claimed that you have the meeting of the minds of the first refusal when his list of 36 titles were rejected (Tsn, June 9, 1992, pp. 10-11) 50
between you and Mr. Vic del Rosario, what happened?
II
A. Vic Del Rosario was supposed to call us up and tell us specifically the
result of the discussion with the Board of Directors.
However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages. Chapter 2, Title XVIII, Book
IV of the Civil Code is the specific law on actual or compensatory damages. Except as provided by law or by stipulation, one
Q. And you are referring to the so-called agreement which you wrote in is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved. 51 The
[sic] a piece of paper? indemnification shall comprehend not only the value of the loss suffered, but also that of the profits that the obligee failed to
obtain. 52 In contracts and quasi-contracts the damages which may be awarded are dependent on whether the obligor acted
with good faith or otherwise, It case of good faith, the damages recoverable are those which are the natural and probable
A. Yes, sir. consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the
time of the constitution of the obligation. If the obligor acted with fraud, bad faith, malice, or wanton attitude, he shall be
Q. So, he was going to forward that to the board of Directors for responsible for all damages which may be reasonably attributed to the non-performance of the obligation. 53 In crimes and
approval? quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or
omission complained of, whether or not such damages has been foreseen or could have reasonably been foreseen by the
defendant.54
A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992)

Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or permanent
Q. Did Mr. Del Rosario tell you that he will submit it to his Board for personal injury, or for injury to the plaintiff's business standing or commercial credit. 55
approval?

The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-delict. It arose from the fact
A. Yes, sir. (Tsn, p. 69, June 8, 1992). of filing of the complaint despite ABS-CBN's alleged knowledge of lack of cause of action. Thus paragraph 12 of RBS's
Answer with Counterclaim and Cross-claim under the heading COUNTERCLAIM specifically alleges:
The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had no
authority to bind Viva to a contract with ABS-CBN until and unless its Board of Directors approved 12. ABS-CBN filed the complaint knowing fully well that it has no cause of action RBS. As a result
it. The complaint, in fact, alleges that Mr. Del Rosario "is the Executive Producer of defendant Viva" thereof, RBS suffered actual damages in the amount of P6,621,195.32. 56
which "is a corporation." (par. 2, complaint). As a mere agent of Viva, Del Rosario could not bind
Viva unless what he did is ratified by its Board of Directors. (Vicente vs. Geraldez, 52 SCRA
210; Arnold vs. Willets and Paterson, 44 Phil. 634). As a mere agent, recognized as such by Needless to state the award of actual damages cannot be comprehended under the above law on actual damages. RBS
plaintiff, Del Rosario could not be held liable jointly and severally with Viva and his inclusion as could only probably take refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows:
party defendant has no legal basis. (Salonga vs. Warner Barner  [sic] , COLTA , 88 Phil. 125;
Salmon vs. Tan, 36 Phil. 556). Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith.
The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what was
supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall
not a binding agreement. It is as it should be because corporate power to enter into a contract is indemnify the latter for tile same.
lodged in the Board of Directors. (Sec. 23, Corporation Code). Without such board approval by the
Viva board, whatever agreement Lopez and Del Rosario arrived at could not ripen into a valid
contract binding upon Viva (Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA 763). The Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to
evidence adduced shows that the Board of Directors of Viva rejected Exhibit "C" and insisted that morals, good customs or public policy shall compensate the latter for the damage.
the film package for 140 films be maintained (Exh. "7-1" - Viva ). 49
It may further be observed that in cases where a writ of preliminary injunction is issued, the damages which the defendant
The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four films under the 1990 Film may suffer by reason of the writ are recoverable from the injunctive bond. 57 In this case, ABS-CBN had not yet filed the
Exhibition Agreement and that the meeting between Lopez and Del Rosario was a continuation of said previous contract is required bond; as a matter of fact, it asked for reduction of the bond and even went to the Court of Appeals to challenge the
untenable. As observed by the trial court, ABS-CBN right of first refusal had already been exercised when Ms. Concio wrote order on the matter, Clearly then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN cannot be held
to VIVA ticking off ten films, Thus: responsible for the premium RBS paid for the counterbond.

[T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an Neither could ABS-CBN be liable for the print advertisements for "Maging Sino Ka Man" for lack of sufficient legal basis. The
entirely different package. Ms. Concio herself admitted on cross-examination to having used or RTC issued a temporary restraining order and later, a writ of preliminary injunction on the basis of its determination that there
exercised the right of first refusal. She stated that the list was not acceptable and was indeed not existed sufficient ground for the issuance thereof. Notably, the RTC did not dissolve the injunction on the ground of lack of
accepted by ABS-CBN, (TSN, June 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond.
right of the first refusal may have been already exercised by Ms. Concio (as she had). (TSN, June

6
As regards attorney's fees, the law is clear that in the absence of stipulation, attorney's fees may be recovered as actual or could not have meant to impose a penalty on the right to litigate. If damages result from a person's exercise of a right, it
compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code. 58 is damnum absque injuria.75

The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV No, 44125
be placed on the right to litigate.59 They are not to be awarded every time a party wins a suit. The power of the court to award is hereby REVERSED except as to unappealed award of attorney's fees in favor of VIVA Productions, Inc.1âwphi1.nêt
attorney's fees under Article 2208 demands factual, legal, and equitable justification. 60 Even when claimant is compelled to
litigate with third persons or to incur expenses to protect his rights, still attorney's fees may not be awarded where no
sufficient showing of bad faith could be reflected in a party's persistence in a case other than erroneous conviction of the No pronouncement as to costs.
righteousness of his cause. 61
SO ORDERED.
As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2217 thereof defines what
are included in moral damages, while Article 2219 enumerates the cases where they may be recovered, Article 2220 provides
that moral damages may be recovered in breaches of contract where the defendant acted fraudulently or in bad faith. RBS's
claim for moral damages could possibly fall only under item (10) of Article 2219, thereof which reads:

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

Moral damages 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.62 The award is not meant to enrich the complainant at the expense of the defendant, but
to enable the injured party to obtain means, diversion, or amusements that will serve to obviate then moral suffering he has
undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and should be
proportionate to the suffering inflicted.63 Trial courts must then guard against the award of exorbitant damages; they should
exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption
on the part of the trial court. 64

The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having
existence only in legal contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, experience physical
suffering and mental anguish, which call be experienced only by one having a nervous system. 65 The statement in People
v. Manero 66 and Mambulao Lumber Co. v. PNB  67 that a corporation may recover moral damages if it "has a good reputation
that is debased, resulting in social humiliation" is an obiter dictum. On this score alone the award for damages must be set
aside, since RBS is a corporation.

The basic law on exemplary damages is Section 5, Chapter 3, Title XVIII, Book IV of the Civil Code. These are imposed by
way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory
damages. 68 They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or
more aggravating circumstances; 69 in quasi-contracts, if the defendant acted with gross negligence; 70 and in contracts and
quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 71

It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-contract, delict, or quasi-delict,
Hence, the claims for moral and exemplary damages can only be based on Articles 19, 20, and 21 of the Civil Code.

The elements of abuse of right under Article 19 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. Article 20 speaks of the general sanction
for all other provisions of law which do not especially provide for their own sanction; while Article 21 deals with acts contra
bonus mores, and has the following elements; (1) there is an act which is legal, (2) but which is contrary to morals, good
custom, public order, or public policy, and (3) and it is done with intent to injure. 72

Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral obliquity. 73 Such must be substantiated by evidence. 74

There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly convinced of the merits of its
cause after it had undergone serious negotiations culminating in its formal submission of a draft contract. Settled is the rule
that the adverse result of an action does not per se make the action wrongful and subject the actor to damages, for the law