Case No. 4. ABS-CBN vs.

Court of Appeals
FACTS: 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 Vivas
representative (Vicente Del Rosario) and ABS-CBNs Eugenio Lopez (General Manager)
and Santos-Concio was held 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 Vivas 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. ABSCBN 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 Rosarios 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

theres 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 Vivas Board. Hence, even if Del Rosario accepted the counteroffer, 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.