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Date: January 21, 1999
Ponente: C.J. Davide, Jr.
In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby VIVA gave ABS-CBN an exclusive
right to exhibit some VIVA films. According to the agreement, ABS-CBN shall have the right of first refusal to the next 24
VIVA films for TV telecast under such terms as may be agreed upon by the parties, however, such right shall be exercised
by ABS-CBN from the actual offer in writing.
Sometime in December 1991, VIVA, through Vicente Del Rosario (Executive Producer), offered ABS-CBN through
VP Charo Santos-Concio, a list of 3 film packages from which ABS-CBN may exercise its right of first refusal. ABS-CBN,
however through Mrs. Concio, tick off only 10 titles they can purchase among which is the film Maging Sino Ka Man
which is one of the subjects of the present case, therefore, it did not accept the said list as per the rejection letter authored
by Mrs. Concio sent to Del Rosario.
Subsequently, Del Rosario approached Mrs. Concio with another list consisting of 52 original movie titles and 104
re-runs, proposing to sell to ABS-CBN airing rights for P60M (P30M in cash and P30M worth of television spots). Del
Rosario and ABS-CBNs General Manager, Eugenio Lopez III, met at the Tamarind Grill Restaurant in QC to discuss the
package proposal but to no avail.
Four days later, Del Rosario and Mr. Graciano Gozon, Senior VP of Finance of Republic Broadcasting
Corporation (RBS/Channel 7) discussed the terms and conditions of VIVAs offer. A day after that, Mrs. Concio sent the
draft of the contract between ABS-CBN and VIVA which contained a counter-proposal covering 53 films for P35M. VIVAs
Board of Directors rejected the counter-proposal as it would not sell anything less than the package of 104 films for P60M.
After said rejection, ABS-CBN closed a deal with RBS including the 14 films previously ticked off by ABS-CBN.
Consequently, ABS-CBN filed a complaint for specific performance with prayer for a writ of preliminary injunction
and/or TRO against RBS, VIVA and Del Rosario. RTC then enjoined the latter from airing the subject films. RBS posted a
P30M counterbond to dissolve the injunction. Later on, the trial court as well as the CA dismissed the complaint holding
that there was no meeting of minds between ABS-CBN and VIVA, hence, there was no basis for ABS-CBNs demand,
furthermore, the right of first refusal had previously been exercised.
Hence, the present petition, ABS-CBN argued that an agreement was made during the meeting of Mr. Lopez and
Del Rosario jotted down on a napkin (this was never produced in court). Moreover, it had yet to fully exercise its right of
first refusal since only 10 titles were chosen from the first list. As to actual, moral and exemplary damages, there was no
clear basis in awarding the same.
Issue: WON a contract was perfected between ABS-CBN and VIVA and WON moral damages may be awarded to a
Held: Both NO.
Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is
concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a
contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute
and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort
from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a
rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer,
such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer
annuls the offer.
After Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN to discuss the package of films, ABS-CBN, sent through
Ms. Concio, counter-proposal in the form a draft contract. This counter-proposal could be nothing less than the counteroffer of Mr. Lopez during his conference with Del Rosario. Clearly, there was no acceptance of VIVAs offer, for it was met
by a counter-offer which substantially varied the terms of the offer.

In the case at bar, 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 did not bind VIVA, as there
was no proof whatsoever that Del Rosario had the specific authority to do so.
Under the Corporation Code, unless otherwise provided by said Code, corporate powers, such as the
power to enter into contracts, are exercised by the Board of Directors. However, the Board may delegate such
powers to either an executive committee or officials or contracted managers. The delegation, except for the
executive committee, must be for specific purposes . Delegation to officers makes the latter agents of the corporation;
accordingly, the general rules of agency as to the binding effects of their acts would apply. For such officers to be deemed
fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so. That
Del Rosario did not have the authority to accept ABS-CBNs counter-offer was best evidenced by his submission
of the draft contract to VIVAs Board of Directors for the latters approval. In any event, there was between Del
Rosario and Lopez III no meeting of minds.
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 not a binding agreement. It is as it
should be because corporate power to enter into a contract is 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 contact binding upon Viva.
However, the Court find for ABS-CBN on the issue of damages. 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. 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 can be experienced only by one having a nervous
system. The statement 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.

Filipinas Broadcasting Network Inc. vs. Ago Medical and Educational Center-Bicol Christian College of Medicine
Expos is a radio documentary program hosted by Carmelo Mel Rima (Rima) and Hermogenes Jun Alegre (Alegre).
Expos is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. (FBNI). Expos is
heard over Legazpi City, the Albay municipalities and other Bicol areas. In the morning of 14 and 15 December 1989, Rima
and Alegre exposed various alleged complaints from students, teachers and parents against Ago Medical and Educational
Center-Bicol Christian College of Medicine (AMEC) and its administrators. Claiming that the broadcasts were defamatory,
AMEC and Angelita Ago (Ago), as Dean of AMECs College of Medicine, filed a complaint for damages against FBNI, Rima and
Alegre on 27 February 1990.
The complaint further alleged that AMEC is a reputable learning institution. With the supposed exposs, FBNI, Rima and
Alegre transmitted malicious imputations, and as such, destroyed plaintiffs (AMEC and Ago) reputation. AMEC and Ago
included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees,
particularly Rima and Alegre. On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer alleging
that the broadcasts against AMEC were fair and true. FBNI, Rima and Alegre claimed that they were plainly impelled by a
sense of public duty to report the goings-on in AMEC, [which is] an institution imbued with public interest.
Thereafter, trial ensued. During the presentation of the evidence for the defense, Atty. Edmundo Cea, collaborating counsel of
Atty. Lozares, filed a Motion to Dismiss on FBNIs behalf. The trial court denied the motion to dismiss. Consequently, FBNI filed
a separate Answer claiming that it exercised due diligence in the selection and supervision of Rima and Alegre. FBNI claimed
that before hiring a broadcaster, the broadcaster should (1) file an application; (2) be interviewed; and (3) undergo an
apprenticeship and training program after passing the interview. FBNI likewise claimed that it always reminds its broadcasters
to observe truth, fairness and objectivity in their broadcasts and to refrain from using libelous and indecent language.
Moreover, FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster sa Pilipinas (KBP) accreditation test and
to secure a KBP permit. On 14 December 1992, the trial court rendered a Decision finding FBNI and Alegre liable for libel
except Rima. The trial court held that the broadcasts are libelous per se. The trial court rejected the broadcasters claim that
their utterances were the result of straight reporting because it had no factual basis. The broadcasters did not even verify
their reports before airing them to show good faith. In holding FBNI liable for libel, the trial court found that FBNI failed to
exercise diligence in the selection and supervision of its employees.
In absolving Rima from the charge, the trial court ruled that Rimas only participation was when he agreed with Alegres
expos. The trial court found Rimas statement within the bounds of freedom of speech, expression, and of the press. Both
parties, namely, FBNI, Rima and Alegre, on one hand, and AMEC and Ago, on the other, appealed the decision to the Court of
The Court of Appeals affirmed the trial courts judgment with modification. The appellate court made Rima solidarily liable
with FBNI and Alegre. The appellate court denied Agos claim for damages and attorneys fees because the broadcasts were
directed against AMEC, and not against her. FBNI, Rima and Alegre filed a motion for reconsideration which the Court of
Appeals denied in its 26 January 2000 Resolution. Hence, FBNI filed the petition for review.
Whether AMEC is entitled to moral damages.
A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical
suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. The Court of Appeals cites
Mambulao Lumber Co. v. PNB, et al. to justify the award of moral damages. However, the Courts statement in Mambulao that
a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages is an
obiter dictum.
Nevertheless, AMECs claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision expressly
authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not
qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly
complain for libel or any other form of defamation and claim for moral damages. Moreover, where the broadcast is libelous
per se, the law implies damages.
In such a case, evidence of an honest mistake or the want of character or reputation of the party libeled goes only in
mitigation of damages. Neither in such a case is the plaintiff required to introduce evidence of actual damages as a condition
precedent to the recovery of some damages. In this case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral
damages. However, the Court found the award of P300,000 moral damages unreasonable.
The record shows that even though the broadcasts were libelous per se, AMEC has not suffered any substantial or material
damage to its reputation. Therefore, the Court reduced the award of moral damages from P300,000 to P150,000.


GR 171182
August 23, 2013

The UP, through its then President Jose V. Abueva, entered into a General Construction Agreement with respondent Stern
Builders Corporation (Stern Builders), for the construction of the extension building and the renovation of the College of
Arts and Sciences Building in the campus of the University of the Philippines in Los Baos (UPLB). In the course of the
implementation of the contract, Stern Builders submitted three progress billings corresponding to the work accomplished,
but the UP paid only two of the billings. The third billing worth P273,729.47 was not paid due to its disallowance by the
Commission on Audit (COA). Despite the lifting of the disallowance, the UP failed to pay the billing, prompting Stern
Builders and dela Cruz to sue the UP and its co-respondent officials to collect the unpaid billing and to recover various
damages (actual and moral) and attorneys fees. After trial, the RTC rendered its decision in favor of the plaintiffs.
Following the RTCs denial of its motion for reconsideration, UP filed a notice of appeal. The RTC denied due course to
the notice of appeal for having been filed out of time and granted the private respondents motion for execution. The RTC
issued the writ of execution and the sheriff of the RTC served the writ of execution and notice of demand upon the
UP. The UP filed an urgent motion to reconsider the order, to quash the writ of execution and to restrain the
proceedings. However, the RTC denied the urgent motion. UP assailed the denial of due course to its appeal through a
petition for certiorari in the Court of Appeals but the latter dismissed the petition for certiorari upon finding that the UPs
notice of appeal had been filed late. The UP sought a reconsideration, but the CA denied the UPs motion for
reconsideration. The UP appealed to the Court by petition for review on certiorari. The Court denied the petition for
review. The UP moved for the reconsideration of the denial of its petition for review but the Court denied the motion which
denial became final and executory. In the meanwhile that the UP was exhausting the available remedies to overturn the
denial of due course to the appeal and the issuance of the writ of execution, Stern Builders and dela Cruz filed in the RTC
their motions for execution despite their previous motion having already been granted and despite the writ of execution
having already issued. The RTC granted another motion for execution filed. The sheriff served notices of garnishment on
the UPs depository banks. The UP assailed the garnishment through an urgent motion to quash the notices of
garnishment; and a motion to quash the writ of execution but was denied by the RTC. UP moved for the reconsideration of
the order but was denied by the same court. On their part, Stern Builders and dela Cruz filed their ex parte motion for
issuance of a release order which the RTC granted and authorized the release of the garnished funds of the UP. The UP
brought a petition for certiorari in the CA to challenge the jurisdiction of the RTC in issuing the order of December 21,
2004. While pending resolution, CA issued a temporary restraining order (TRO) upon application by the UP. In its decision
CA dismissed the UPs petition for certiorari, ruling that the UP had been given ample opportunity to contest the motion to
direct the DBP to deposit the check in the name of Stern Builders and dela Cruz; and that the garnished funds could be
the proper subject of garnishment because they had been already earmarked for the project, with the UP holding the
funds only in a fiduciary capacity. After the CA denied their motion for reconsideration on December 23, 2005, the
petitioners appealed by petition for review.
1. Whether the funds of the UP were the proper subject of garnishment in order to satisfy the judgment award.
2. Whether the UPs prayer for the deletion of the awards of actual damages, moral damages and attorneys fees could be
granted despite the finality of the judgment of the RTC.
UPs funds, being government funds,
are not subject to garnishment
Despite its establishment as a body corporate, the UP remains to be a "chartered institution" performing a legitimate
government function. It is an institution of higher learning, not a corporation established for profit and declaring any
dividends. In enacting Republic Act No. 9500 (The University of the Philippines Charter of 2008), Congress has declared
the UP as the national university67 "dedicated to the search for truth and knowledge as well as the development of future

leaders." UP is a government instrumentality, performing the States constitutional mandate of promoting quality and
accessible education. As a government instrumentality, the UP administers special funds sourced from the fees and
income enumerated under Act No. 1870 and Section 1 of Executive Order No. 714, and from the yearly appropriations, to
achieve the purposes laid down by Section 2 of Act 1870, as expanded in Republic Act No. 9500. All the funds going
into the possession of the UP, including any interest accruing from the deposit of such funds in any banking
institution, constitute a "special trust fund," the disbursement of which should always be aligned with the UPs
mission and purpose, and should always be subject to auditing by the COA.
"Trust fund" as a fund that officially comes in the possession of an agency of the government or of a public officer as
trustee, agent or administrator, or that is received for the fulfillment of some obligation. 75 A trust fund may be utilized only
for the "specific purpose for which the trust was created or the funds received."
The funds of the UP are government funds that are public in character. Hence, the funds subject of this action could
not be validly made the subject of the RTCs writ of execution or garnishment. The adverse judgment rendered against the
UP in a suit to which it had impliedly consented was not immediately enforceable by execution against the UP, because
suability of the State did not necessarily mean its liability.
A distinction should first be made between suability and liability. "Suability depends on the consent of the state to be
sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not
necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be
sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does
waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is
liable. (Municipality of San Fernando, La Union v. Firme)
The UP correctly submits here that the garnishment of its funds to satisfy the judgment awards of actual and moral
damages (including attorneys fees) was not validly made if there was no special appropriation by Congress to cover the
liability. The Constitution strictly mandated that "(n)o money shall be paid out of the Treasury except in pursuance of an
appropriation made by law."
COA must adjudicate private respondents claim
before execution should proceed
The execution of the monetary judgment against the UP was within the primary jurisdiction of the COA.
It was of no moment that a final and executory decision already validated the claim against the UP. The settlement of the
monetary claim was still subject to the primary jurisdiction of the COA despite the final decision of the RTC having already
validated the claim. As such, Stern Builders and dela Cruz as the claimants had no alternative except to first seek the
approval of the COA of their monetary claim.
However, notwithstanding the rule that government properties are not subject to levy and execution unless otherwise
provided for by statute (Republic v. Palacio, 23 SCRA 899 1968; Commissioner of Public Highways v. San Diego, supra)
or municipal ordinance (Municipality of Makati v. Court of Appeals, 190 SCRA 206 1990), the Court has, in various
instances, distinguished between government funds and properties for public use and those not held for public use. Thus,
in Viuda de Tan Toco v. Municipal Council of Iloilo (49 Phil 52 1926, the Court ruled that "where property of a municipal
or other public corporation is sought to be subjected to execution to satisfy judgments recovered against such
corporation, the question as to whether such property is leviable or not is to be determined by the usage and
purposes for which it is held." The following can be culled from Viuda de Tan Toco v. Municipal Council of Iloilo:
1. Properties held for public uses and generally everything held for governmental purposes are not subject to
levy and sale under execution against such corporation. The same rule applies to funds in the hands of a public
officer and taxes due to a municipal corporation.
2. Where a municipal corporation owns in its proprietary capacity, as distinguished from its public or government capacity,
property not used or used for a public purpose but for quasi-private purposes, it is the general rule that such property may
be seized and sold under execution against the corporation.

3. Property held for public purposes is not subject to execution merely because it is temporarily used for private purposes.
If the public use is wholly abandoned, such property becomes subject to execution.
This Administrative Circular shall take effect immediately and the Court Administrator shall see to it that it is faithfully
Although Judge Yadao pointed out that neither the CA nor the Court had issued as of then any writ of preliminary
injunction to enjoin the release or withdrawal of the garnished amount, she did not need any writ of injunction
from a superior court to compel her obedience to the law.

Period of appeal did not start without effective
service of decision upon counsel of record;
Fresh-period rule announced in
Neypes v. Court of Appeals
can be given retroactive application
It is true that a decision that has attained finality becomes immutable and unalterable, and cannot be modified in any
respect, even if the modification is meant to correct erroneous conclusions of fact and law, and whether the modification is
made by the court that rendered it or by this Court as the highest court of the land. Public policy dictates that once a
judgment becomes final, executory and unappealable, the prevailing party should not be deprived of the fruits of victory by
some subterfuge devised by the losing party. Unjustified delay in the enforcement of such judgment sets at naught the role
and purpose of the courts to resolve justiciable controversies with finality. Indeed, all litigations must at some time end,
even at the risk of occasional errors.
But the doctrine of immutability of a final judgment has not been absolute, and has admitted several exceptions,
among them: (a) the correction of clerical errors; (b) the so-called nunc pro tunc entries that cause no prejudice to
any party; (c) void judgments; and (d) whenever circumstances transpire after the finality of the decision that
render its execution unjust and inequitable. Despite the absence of the preceding circumstances, the Court is not
precluded from brushing aside procedural norms if only to serve the higher interests of justice and equity.
It is settled that where a party has appeared by counsel, service must be made upon such counsel. 95 Service on the party
or the partys employee is not effective because such notice is not notice in law.
Equity calls for the retroactive application in the UPs favor of the fresh-period rule that the Court first announced in its
ruling in Neypes v. Court of Appeals that to standardize the appeal periods provided in the Rules and to afford litigants fair
opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the
notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion
for reconsideration.
The retroactive application of the fresh-period rule, a procedural law that aims "to regiment or make the appeal period
uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full
or partial) or any final order or resolution," 99 is impervious to any serious challenge. This is because there are no vested
rights in rules of procedure.
Awards of monetary damages,
being devoid of factual and legal bases,
did not attain finality and should be deleted
Section 14 of Article VIII of the Constitution prescribes that express findings of fact and of law should be made in the
decision rendered by any court, to wit:

The Constitution and the Rules of Court apparently delineate two main essential parts of a judgment, namely: the body
and the decretal portion. Although the latter is the controlling part, the importance of the former is not to be
lightly regarded because it is there where the court clearly and distinctly states its findings of fact and of law on
which the decision is based. To state it differently, one without the other is ineffectual and useless. The omission
of either inevitably results in a judgment that violates the letter and the spirit of the Constitution and the Rules of
The term findings of fact that must be found in the body of the decision refers to statements of fact, not to conclusions of
law. Unlike in pleadings where ultimate facts alone need to be stated, the Constitution and the Rules of Court require not
only that a decision should state the ultimate facts but also that it should specify the supporting evidentiary
facts, for they are what are called the findings of fact.
The statement that "due to defendants unjustified refusal to pay their outstanding obligation to plaintiff, the same suffered
losses and incurred expenses as he was forced to re-mortgage his house and lot located in Quezon City to Metrobank
(Exh. "CC") and BPI Bank just to pay its monetary obligations in the form of interest and penalties incurred in the course of
the construction of the subject project" was only a conclusion of fact and law that did not comply with the
constitutional and statutory prescription. The statement specified no detailed expenses. The omission of such
expenses or losses directly indicated that Stern Builders did not prove them at all.
Like the actual damages, the moral damages constituted another judicial ipse dixit, the inevitable consequence of which
was to render the award of moral damages incapable of attaining finality. The contravention of the law was manifest
considering that Stern Builders, as an artificial person, was incapable of experiencing pain and moral sufferings.
Lastly, the RTC violated the basic principle that moral damages were not intended to enrich the plaintiff at the expense of
the defendant, but to restore the plaintiff to his status quo ante as much as possible.
The general rule is that a successful litigant cannot recover attorneys fees as part of the damages to be assessed against
the losing party because of the policy that no premium should be placed on the right to litigate. Nonetheless, with
attorneys fees being allowed in the concept of actual damages, their amounts must be factually and legally
justified in the body of the decision and not stated for the first time in the decretal portion.
That the attorneys fees granted to the private respondents did not satisfy the foregoing requirement suffices for the Court
to undo them.121 The grant was ineffectual for being contrary to law and public policy, it being clear that the express
findings of fact and law were intended to bring the case within the exception and thereby justify the award of the attorneys
Nonetheless, the absence of findings of fact and of any statement of the law and jurisprudence on which the awards of
actual and moral damages, as well as of attorneys fees, were based was a fatal flaw that invalidated the decision of the
RTC only as to such awards. As the Court declared in Velarde v. Social Justice Society,123 the failure to comply with the
constitutional requirement for a clear and distinct statement of the supporting facts and law "is a grave abuse of discretion
amounting to lack or excess of jurisdiction" and that "(d)ecisions or orders issued in careless disregard of the
constitutional mandate are a patent nullity and must be struck down as void."