ABS-CBN Broadcasting Corporation vs Court of Appeals

written by Howard

G.R. No. 128690 – 361 Phil. 499 – 301 SCRA 572 – Mercantile Law – Corporation Law – Delegation of Corporate Powers – Moral Damages

In 1992, ABS-CBN Broadcasting Corporation, through its vice president Charo Santos-Concio, requested Viva Production, Inc. to allow ABS-CBN to air at least 14 films produced by Viva. Pursuant to this request, a meeting was held between Viva’s representative (Vicente Del Rosario) and ABS-CBN’s Eugenio Lopez (General Manager) and Santos-Concio on April 2, 1992. During the meeting Del Rosario proposed a film package which will allow ABS-CBN to air 104 Viva films for P60 million. Later, Santos-Concio, in a letter to Del Rosario, proposed a counterproposal of 53 films (including the 14 films initially requested) for P35 million. Del Rosario presented the counter offer to Viva’s Board of Directors but the Board rejected the counter offer. Several negotiations were subsequently made but on April 29, 1992, Viva made an agreement with Republic Broadcasting Corporation (referred to as RBS – or GMA 7) which gave exclusive rights to RBS to air 104 Viva films including the 14 films initially requested by ABS-CBN.

ABS-CBN now filed a complaint for specific performance against Viva as it alleged that there is already a perfected contract between Viva and ABS-CBN in the April 2, 1992 meeting. Lopez testified that Del Rosario agreed to the counterproposal and he (Lopez) even put the agreement in a napkin which was signed and given to Del Rosario. ABS-CBN also filed an injunction against RBS to enjoin the latter from airing the films. The injunction was granted. RBS now filed a countersuit with a prayer for moral damages as it claimed that its reputation was debased when they failed to air the shows that they promised to their viewers. RBS relied on the ruling in People vs Manero and Mambulao Lumber vs PNB which states that a corporation may recover moral damages if it “has a good reputation that is debased, resulting in social humiliation”. The trial court ruled in favor of Viva and RBS. The Court of Appeals affirmed the trial court.

ISSUE:

1. Whether or not a contract was perfected in the April 2, 1992 meeting between the representatives of the two corporations.

2. Whether or not a corporation, like RBS, is entitled to an award of moral damages upon grounds of debased reputation.

HELD:

1. No. There is no proof that a contract was perfected in the said meeting. Lopez’ testimony about the contract being written in a napkin is not corroborated because the napkin was never produced in court. Further, there is no meeting of the minds because Del Rosario’s offer was of 104 films for P60 million was not accepted. And that the alleged counter-offer made by Lopez on the same day was not also accepted because there’s no proof of such. The counter offer can only be deemed to have been made days after the April 2 meeting when Santos-Concio sent a letter to Del Rosario containing the counter-offer. Regardless, there was no showing that Del Rosario accepted. But even if he did accept, such acceptance will not bloom into a perfected contract because Del Rosario has no authority to do so.

As a rule, corporate powers, such as the power; to enter into contracts; are exercised by the Board of Directors. But this power may be delegated to a corporate committee, a corporate officer or corporate manager. Such a delegation must be clear and specific. In the case at bar, there was no such delegation to Del Rosario. The fact that he has to present the counteroffer to the Board of Directors of Viva is proof that the contract must be accepted first by the Viva’s Board. Hence, even if Del Rosario accepted the counter-offer, it did not result to a contract because it will not bind Viva sans authorization.

2. No. 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. No moral damages can be awarded to a juridical person. The statement in the case of People vs Manero and Mambulao Lumber vs PNB is a mere obiter dictum hence it is not binding as a jurisprudence.

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