G.R. No.

128690 January 21, 1999 6 January 1992

ABS-CBN BROADCASTING CORPORATION, petitioner, Dear Vic,

From among the three packages I can only tick off 10 titles we can purchase.
DAVIDE, JR., CJ.: Please see attached. I hope you will understand my position. Most of the action
pictures in the list do not have big action stars in the cast. They are not for
In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp.
primetime. In line with this I wish to mention that I have not scheduled for
(hereafter ABS-CBN) seeks to reverse and set aside the decision 1 of 31 October
telecast several action pictures in out very first contract because of the cheap
1996 and the resolution 2 of 10 March 1997 of the Court of Appeals in CA-G.R. CV
production value of these movies as well as the lack of big action stars. As a film
No. 44125. The former affirmed with modification the decision 3 of 28 April 1993
producer, I am sure you understand what I am trying to say as Viva produces only
of the Regional Trial Court (RTC) of Quezon City, Branch 80, in Civil Case No. Q-
big action pictures.
92-12309. The latter denied the motion to reconsider the decision of 31 October
1996. 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
The antecedents, as found by the RTC and adopted by the Court of Appeals, are
that was paid for these movies because as you very well know that non-
as follows:
primetime advertising rates are very low. These are the unaired titles in the first
In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. "A") contract.
whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films.
1. Kontra Persa [sic].
Sometime in December 1991, in accordance with paragraph 2.4 [sic] of said
agreement stating that —. 2. Raider Platoon.

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva 3. Underground guerillas
films for TV telecast under such terms as may be agreed upon by the parties
4. Tiger Command
hereto, provided, however, that such right shall be exercised by ABS-CBN from
the actual offer in writing. 5. Boy de Sabog
Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president 6. Lady Commando
Charo Santos-Concio, a list of three(3) film packages (36 title) from which ABS-
CBN may exercise its right of first refusal under the afore-said agreement (Exhs. 7. Batang Matadero
"1" par, 2, "2," "2-A'' and "2-B"-Viva). ABS-CBN, however through Mrs. Concio, 8. Rebelyon
"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 I hope you will consider this request of mine.
ticked off by Mrs. Concio are not the subject of the case at bar except the film The other dramatic films have been offered to us before and have been rejected
''Maging Sino Ka Man." because of the ruling of MTRCB to have them aired at 9:00 p.m. due to their very
For further enlightenment, this rejection letter dated January 06, 1992 (Exh "3" - adult themes.
Viva) is hereby quoted:
As for the 10 titles I have choosen [sic] from the 3 packages please consider a draft exhibition agreement (Exh. "C''- ABS-CBN; Exh. "9" - Viva, p. 3) a counter-
including all the other Viva movies produced last year. I have quite an attractive proposal covering 53 films, 52 of which came from the list sent by defendant Del
offer to make. Rosario and one film was added by Ms. Concio, for a consideration of P35 million.
Exhibit "C" provides that ABS-CBN is granted films right to 53 films and contains a
Thanking you and with my warmest regards.
right of first refusal to "1992 Viva Films." The said counter proposal was however
(Signed) rejected by Viva's Board of 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
Charo Santos-Concio million pesos (Exh. "9" - Viva), and such rejection was relayed to Ms. Concio.
On February 27, 1992, defendant Del Rosario approached ABS-CBN's Ms. Concio, On April 29, 1992, after the rejection of ABS-CBN and following several
with a list consisting of 52 original movie titles (i.e. not yet aired on television) negotiations and meetings defendant Del Rosario and Viva's President Teresita
including the 14 titles subject of the present case, as well as 104 re-runs Cruz, in consideration of P60 million, signed a letter of agreement dated April 24,
(previously aired on television) from which ABS-CBN may choose another 52 1992. granting RBS the exclusive right to air 104 Viva-produced and/or acquired
titles, as a total of 156 titles, proposing to sell to ABS-CBN airing rights over this films (Exh. "7-A" - RBS; Exh. "4" - RBS) including the fourteen (14) films subject of
package of 52 originals and 52 re-runs for P60,000,000.00 of which the present case. 4
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). 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
On April 2, 1992, defendant Del Rosario and ABS-CBN general manager, Eugenio restraining order against private respondents Republic Broadcasting
Lopez III, met at the Tamarind Grill Restaurant in Quezon City to discuss the Corporation 5 (hereafter RBS ), Viva Production (hereafter VIVA), and Vicente Del
package proposal of Viva. What transpired in that lunch meeting is the subject of Rosario. The complaint was docketed as Civil Case No. Q-92-12309.
conflicting versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly
agreed that ABS-CRN was granted exclusive film rights to fourteen (14) films for a On 27 May 1992, RTC issued a temporary restraining order 6 enjoining private
total consideration of P36 million; that he allegedly put this agreement as to the respondents from proceeding with the airing, broadcasting, and televising of the
price and number of films in a "napkin'' and signed it and gave it to Mr. Del fourteen VIVA films subject of the controversy, starting with the film Maging
Rosario (Exh. D; TSN, pp. 24-26, 77-78, June 8, 1992). On the other hand, Del Sino Ka Man, which was scheduled to be shown on private respondents RBS'
Rosario denied having made any agreement with Lopez regarding the 14 Viva channel 7 at seven o'clock in the evening of said date.
films; denied the existence of a napkin in which Lopez wrote something; and
On 17 June 1992, after appropriate proceedings, the RTC issued an
insisted that what he and Lopez discussed at the lunch meeting was Viva's film
order 7 directing the issuance of a writ of preliminary injunction upon ABS-CBN's
package offer of 104 films (52 originals and 52 re-runs) for a total price of P60
posting of P35 million bond. ABS-CBN moved for the reduction of the
million. Mr. Lopez promising [sic]to make a counter proposal which came in the
bond, 8 while private respondents moved for reconsideration of the order and
form of a proposal contract Annex "C" of the complaint (Exh. "1"·- Viva; Exh. "C" -
offered to put up a counterbound. 9
ABS-CBN).
In the meantime, private respondents filed separate answers with
On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-
counterclaim. 10 RBS also set up a cross-claim against VIVA..
president for Finance discussed the terms and conditions of Viva's offer to sell
the 104 films, after the rejection of the same package by ABS-CBN. On 3 August 1992, the RTC issued an order 11 dissolving the writ of preliminary
injunction upon the posting by RBS of a P30 million counterbond to answer for
On April 07, 1992, defendant Del Rosario received through his secretary, a
whatever damages ABS-CBN might suffer by virtue of such dissolution. However,
handwritten note from Ms. Concio, (Exh. "5" - Viva), which reads: "Here's the
it reduced petitioner's injunction bond to P15 million as a condition precedent
draft of the contract. I hope you find everything in order," to which was attached
for the reinstatement of the writ of preliminary injunction should private b) P191,843.00 for the amount of print advertisement for "Maging Sino Ka Man"
respondents be unable to post a counterbond. in various newspapers;

At the pre-trial 12 on 6 August 1992, the parties, upon suggestion of the court, c) Attorney's fees in the amount of P1 million;
agreed to explore the possibility of an amicable settlement. In the meantime,
d) P5 million as and by way of moral damages;
RBS prayed for and was granted reasonable time within which to put up a P30
million counterbond in the event that no settlement would be reached. e) P5 million as and by way of exemplary damages;
As the parties failed to enter into an amicable settlement RBS posted on 1 (3) For defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way
October 1992 a counterbond, which the RTC approved in its Order of 15 October of reasonable attorney's fees.
1992.13
(4) The cross-claim of defendant RBS against defendant VIVA is dismissed.
On 19 October 1992, ABS-CBN filed a motion for reconsideration 14 of the 3
August and 15 October 1992 Orders, which RBS opposed. 15 (5) Plaintiff to pay the costs.

On 29 October 1992, the RTC conducted a pre-trial. 16 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
Pending resolution of its motion for reconsideration, ABS-CBN filed with the to the approval of the VIVA Board of Directors, and said agreement was
Court of Appeals a petition17 challenging the RTC's Orders of 3 August and 15 disapproved during the meeting of the Board on 7 April 1992. Hence, there was
October 1992 and praying for the issuance of a writ of preliminary injunction to no basis for ABS-CBN's demand that VIVA signed the 1992 Film Exhibition
enjoin the RTC from enforcing said orders. The case was docketed as CA-G.R. SP Agreement. Furthermore, the right of first refusal under the 1990 Film Exhibition
No. 29300. Agreement had previously been exercised per Ms. Concio's letter to Del Rosario
ticking off ten titles acceptable to them, which would have made the 1992
On 3 November 1992, the Court of Appeals issued a temporary restraining
agreement an entirely new contract.
order18 to enjoin the airing, broadcasting, and televising of any or all of the films
involved in the controversy. On 21 June 1993, this Court denied21 ABS-CBN's petition for review in G.R. No.
108363, as no reversible error was committed by the Court of Appeals in its
On 18 December 1992, the Court of Appeals promulgated a decision 19 dismissing
challenged decision and the case had "become moot and academic in view of the
the petition in CA -G.R. No. 29300 for being premature. ABS-CBN challenged the
dismissal of the main action by the court a quo  in its decision" of 28 April 1993.
dismissal in a petition for review filed with this Court on 19 January 1993, which
was docketed as G.R. No. 108363. Aggrieved by the RTC's decision, ABS-CBN appealed to the Court of Appeals
claiming that there was a perfected contract between ABS-CBN and VIVA
In the meantime the RTC received the evidence for the parties in Civil Case No.
granting ABS-CBN the exclusive right to exhibit the subject films. Private
Q-192-1209. Thereafter, on 28 April 1993, it rendered a decision 20 in favor of RBS
respondents VIVA and Del Rosario also appealed seeking moral and exemplary
and VIVA and against ABS-CBN disposing as follows:
damages and additional attorney's fees.
WHEREFORE, under cool reflection and prescinding from the foregoing,
In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that
judgments is rendered in favor of defendants and against the plaintiff.
the contract between ABS-CBN and VIVA had not been perfected, absent the
(1) The complaint is hereby dismissed; 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-
(2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:
CBN's evidence that Lopez III actually wrote down such an agreement on a
a) P107,727.00, the amount of premium paid by RBS to the surety which issued "napkin," as the same was never produced in court. It likewise rejected ABS-
defendant RBS's bond to lift the injunction; CBN's insistence on its right of first refusal and ratiocinated as follows:
As regards the matter of right of first refusal, it may be true that a Film Exhibition way of example or correction for the public good in view of the filing of the
Agreement was entered into between Appellant ABS-CBN and appellant VIVA complaint despite petitioner's knowledge that the contract with VIVA had not
under Exhibit "A" in 1990, and that parag. 1.4 thereof provides: been perfected, It also upheld the award of attorney's fees, reasoning that with
ABS-CBN's act of instituting Civil Case No, Q-92-1209, RBS was "unnecessarily
1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA
forced to litigate." The appellate court, however, reduced the awards of moral
films for TV telecast under such terms as may be agreed upon by the parties
damages to P2 million, exemplary damages to P2 million, and attorney's fees to
hereto, provided, however, that such right shall be exercised by ABS-CBN within
P500, 000.00.
a period of fifteen (15) days from the actual offer in writing (Records, p. 14).
On the other hand, respondent Court of Appeals denied VIVA and Del Rosario's
[H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall
appeal because it was "RBS and not VIVA which was actually prejudiced when
still be subject to such terms as may be agreed upon by the parties thereto, and
the complaint was filed by ABS-CBN."
that the said right shall be exercised by ABS-CBN within fifteen (15) days from the
actual offer in writing. Its motion for reconsideration having been denied, ABS-CBN filed the petition in
this case, contending that the Court of Appeals gravely erred in
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 I
terms thereof. The same are still left to be agreed upon by the parties.
. . . RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER
In the instant case, ABS-CBN's letter of rejection Exhibit 3 (Records, p. 89) stated AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONDERANCE OF
that it can only tick off ten (10) films, and the draft contract Exhibit "C" accepted EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY.
only fourteen (14) films, while parag. 1.4 of Exhibit "A'' speaks of the next
II
twenty-four (24) films.
. . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF
The offer of V1VA was sometime in December 1991 (Exhibits 2, 2-A. 2-B; Records,
PRIVATE RESPONDENT RBS.
pp. 86-88; 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 III
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 offer of VIVA.. As . . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE
aptly observed by the trial court, with the said letter of Mrs. Concio of January 6, RESPONDENT RBS.
1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen IV
(15) day period from February 27, 1992 (Exhibit 4 to 4-C) when another list was
sent to ABS-CBN after the letter of Mrs. Concio, still the fifteen (15) day period . . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS.
within which ABS-CBN shall exercise its right of first refusal has already expired. 22 ABS-CBN claims that it had yet to fully exercise its right of first refusal over
Accordingly, respondent court sustained the award of actual damages consisting twenty-four titles under the 1990 Film Exhibition Agreement, as it had chosen
in the cost of print advertisements and the premium payments for the only ten titles from the first list. It insists that we give credence to Lopez's
counterbond, there being adequate proof of the pecuniary loss which RBS had testimony that he and Del Rosario met at the Tamarind Grill Restaurant,
suffered as a result of the filing of the complaint by ABS-CBN. As to the award of discussed the terms and conditions of the second list (the 1992 Film Exhibition
moral damages, the Court of Appeals found reasonable basis therefor, holding Agreement) and upon agreement thereon, wrote the same on a paper napkin. It
that RBS's reputation was debased by the filing of the complaint in Civil Case No. also asserts that the contract has already been effective, as the elements thereof,
Q-92-12309 and by the non-showing of the film "Maging Sino Ka Man." namely, consent, object, and consideration were established. It then concludes
Respondent court also held that exemplary damages were correctly imposed by that the Court of Appeals' pronouncements were not supported by law and
jurisprudence, as per our decision of 1 December 1995 in Limketkai Sons Milling, the Court of Appeals acted in clear disregard of the doctrines laid down in Buan
Inc. v. Court of Appeals, 23 which cited Toyota Shaw, Inc. v. Court of v.  Camaganacan  32 that the text of the decision should state the reason why
Appeals, 24 Ang Yu Asuncion v. Court of Appeals, 25 and Villonco Realty Company attorney's fees are being awarded; otherwise, the award should be disallowed.
v. Bormaheco. Inc.26 Besides, no bad faith has been imputed on, much less proved as having been
committed by, ABS-CBN. It has been held that "where no sufficient showing of
Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor.
bad faith would be reflected in a party' s persistence in a case other than an
RBS spent for the premium on the counterbond of its own volition in order to
erroneous conviction of the righteousness of his cause, attorney's fees shall not
negate the injunction issued by the trial court after the parties had ventilated
be recovered as cost." 33
their respective positions during the hearings for the purpose. The filing of the
counterbond was an option available to RBS, but it can hardly be argued that On the other hand, RBS asserts that there was no perfected contract between
ABS-CBN compelled RBS to incur such expense. Besides, RBS had another ABS-CBN and VIVA absent any meeting of minds between them regarding the
available option, i.e., move for the dissolution or the injunction; or if it was object and consideration of the alleged contract. It affirms that the ABS-CBN's
determined to put up a counterbond, it could have presented a cash bond. claim of a right of first refusal was correctly rejected by the trial court. RBS insist
Furthermore under Article 2203 of the Civil Code, the party suffering loss or the premium it had paid for the counterbond constituted a pecuniary loss upon
injury is also required to exercise the diligence of a good father of a family to which it may recover. It was obliged to put up the counterbound due to the
minimize the damages resulting from the act or omission. As regards the cost of injunction procured by ABS-CBN. Since the trial court found that ABS-CBN had no
print advertisements, RBS had not convincingly established that this was a loss cause of action or valid claim against RBS and, therefore not entitled to the writ
attributable to the non showing "Maging Sino Ka Man"; on the contrary, it was of injunction, RBS could recover from ABS-CBN the premium paid on the
brought out during trial that with or without the case or the injunction, RBS counterbond. Contrary to the claim of ABS-CBN, the cash bond would prove to
would have spent such an amount to generate interest in the film. be more expensive, as the loss would be equivalent to the cost of money RBS
would forego in case the P30 million came from its funds or was borrowed from
ABS-CBN further contends that there was no clear basis for the awards of moral
banks.
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 RBS likewise asserts that it was entitled to the cost of advertisements for the
damages did not arise from any contractual dealings or from specific acts cancelled showing of the film "Maging Sino Ka Man" because the print
committed by ABS-CBN against RBS that may be characterized as wanton, advertisements were put out to announce the showing on a particular day and
fraudulent, or reckless; they arose by virtue only of the filing of the complaint, An hour on Channel 7, i.e., in its entirety at one time, not a series to be shown on a
award of moral and exemplary damages is not warranted where the record is periodic basis. Hence, the print advertisement were good and relevant for the
bereft of any proof that a party acted maliciously or in bad faith in filing an particular date showing, and since the film could not be shown on that particular
action. 27 In any case, free resort to courts for redress of wrongs is a matter of date and hour because of the injunction, the expenses for the advertisements
public policy. The law recognizes the right of every one to sue for that which he had gone to waste.
honestly believes to be his right without fear of standing trial for damages where
As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the
by lack of sufficient evidence, legal technicalities, or a different interpretation of
case and secured injunctions purely for the purpose of harassing and prejudicing
the laws on the matter, the case would lose ground. 28 One who makes use of his
RBS. Pursuant then to Article 19 and 21 of the Civil Code, ABS-CBN must be held
own legal right does no injury. 29 If damage results front the filing of the
liable for such damages. Citing  Tolentino,34 damages may be awarded in cases of
complaint, it is damnum absque injuria. 30 Besides, moral damages are generally
abuse of rights even if the act done is not illicit and there is abuse of rights were
not awarded in favor of a juridical person, unless it enjoys a good reputation that
plaintiff institutes and action purely for the purpose of harassing or prejudicing
was debased by the offending party resulting in social humiliation. 31
the defendant.
As regards the award of attorney's fees, ABS-CBN maintains that the same had
no factual, legal, or equitable justification. In sustaining the trial court's award,
In support of its stand that a juridical entity can recover moral and exemplary The key issues for our consideration are (1) whether there was a perfected
damages, private respondents RBS cited People v.  Manero,35 where it was stated contract between VIVA and ABS-CBN, and (2) whether RBS is entitled to damages
that such entity may recover moral and exemplary damages if it has a good and attorney's fees. It may be noted that the award of attorney's fees of
reputation that is debased resulting in social humiliation. it then ratiocinates; P212,000 in favor of VIVA is not assigned as another error.
thus:
I.
There can be no doubt that RBS' reputation has been debased by ABS-CBN's acts
The first issue should be resolved against ABS-CBN. A contract is a meeting of
in this case. When RBS was not able to fulfill its commitment to the viewing
minds between two persons whereby one binds himself to give something or to
public to show the film "Maging Sino Ka Man" on the scheduled dates and times
render some service to another 37 for a consideration. there is no contract unless
(and on two occasions that RBS advertised), it suffered serious embarrassment
the following requisites concur: (1) consent of the contracting parties; (2) object
and social humiliation. When the showing was canceled, late viewers called up
certain which is the subject of the contract; and (3) cause of the obligation, which
RBS' offices and subjected RBS to verbal abuse ("Announce kayo nang announce,
is established.38 A contract undergoes three stages:
hindi ninyo naman ilalabas," "nanloloko yata kayo") (Exh. 3-RBS, par. 3). This
alone was not something RBS brought upon itself. it was exactly what ABS-CBN (a) preparation, conception, or generation, which is the period of negotiation and
had planned to happen. bargaining, ending at the moment of agreement of the parties;
The amount of moral and exemplary damages cannot be said to be excessive. (b) perfection or birth of the contract, which is the moment when the parties
Two reasons justify the amount of the award. come to agree on the terms of the contract; and
The first is that the humiliation suffered by RBS is national extent. RBS operations (c) consummation or death, which is the fulfillment or performance of the terms
as a broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN, agreed upon in the contract. 39
consists of those who own and watch television. It is not an exaggeration to
state, and it is a matter of judicial notice that almost every other person in the Contracts that are consensual in nature are perfected upon mere meeting of the
country watches television. The humiliation suffered by RBS is multiplied by the minds, Once there is concurrence between the offer and the acceptance upon
number of televiewers who had anticipated the showing of the film "Maging Sino the subject matter, consideration, and terms of payment a contract is produced.
Ka Man" on May 28 and November 3, 1992 but did not see it owing to the The offer must be certain. To convert the offer into a contract, the acceptance
cancellation. Added to this are the advertisers who had placed commercial spots must be absolute and must not qualify the terms of the offer; it must be plain,
for the telecast and to whom RBS had a commitment in consideration of the unequivocal, unconditional, and without variance of any sort from the proposal.
placement to show the film in the dates and times specified. A qualified acceptance, or one that involves a new proposal, constitutes a
counter-offer and is a rejection of the original offer. Consequently, when
The second is that it is a competitor that caused RBS to suffer the humiliation. something is desired which is not exactly what is proposed in the offer, such
The humiliation and injury are far greater in degree when caused by an entity acceptance is not sufficient to generate consent because any modification or
whose ultimate business objective is to lure customers (viewers in this case) variation from the terms of the offer annuls the offer. 40
away from the competition. 36
When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the Tamarind
For their part, VIVA and Vicente del Rosario contend that the findings of fact of Grill on 2 April 1992 to discuss the package of films, said package of 104 VIVA
the trial court and the Court of Appeals do not support ABS-CBN's claim that films was VIVA's offer to ABS-CBN to enter into a new Film Exhibition Agreement.
there was a perfected contract. Such factual findings can no longer be disturbed But ABS-CBN, sent, through Ms. Concio, a counter-proposal in the form of a draft
in this petition for review under Rule 45, as only questions of law can be raised, contract proposing exhibition of 53 films for a consideration of P35 million. This
not questions of fact. On the issue of damages and attorneys fees, they adopted counter-proposal could be nothing less than the counter-offer of Mr. Lopez
the arguments of RBS. during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly,
there was no acceptance of VIVA's offer, for it was met by a counter-offer which was best evidenced by his submission of the draft contract to VIVA's Board of
substantially varied the terms of the offer. Directors for the latter's approval. In any event, there was between Del Rosario
and Lopez III no meeting of minds. The following findings of the trial court are
ABS-CBN's reliance in Limketkai Sons Milling, Inc. v.  Court of
instructive:
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 A number of considerations militate against ABS-CBN's claim that a contract was
changes in the terms of the offer and yet be a binding acceptance as long as "it is perfected at that lunch meeting on April 02, 1992 at the Tamarind Grill.
clear that the meaning of the acceptance is positively and unequivocally to
FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill
accept the offer, whether such request is granted or not." This ruling was,
referred to the price and the number of films, which he wrote on a napkin.
however, reversed in the resolution of 29 March 1996, 43 which ruled that the
However, Exhibit "C" contains numerous provisions which, were not discussed at
acceptance of all offer must be unqualified and absolute, i.e., it "must be
the Tamarind Grill, if Lopez testimony was to be believed nor could they have
identical in all respects with that of the offer so as to produce consent or meeting
been physically written on a napkin. There was even doubt as to whether it was a
of the minds."
paper napkin or a cloth napkin. In short what were written in Exhibit "C'' were
On the other hand, in Villonco, cited in Limketkai, the alleged changes in the not discussed, and therefore could not have been agreed upon, by the parties.
revised counter-offer were not material but merely clarificatory of what had How then could this court compel the parties to sign Exhibit "C" when the
previously been agreed upon. It cited the statement in Stuart v.  Franklin Life provisions thereof were not previously agreed upon?
Insurance Co.44 that "a vendor's change in a phrase of the offer to purchase,
SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of
which change does not essentially change the terms of the offer, does not
the contract was 14 films. The complaint in fact prays for delivery of 14 films. But
amount to a rejection of the offer and the tender of a counter-offer." 45 However,
Exhibit "C" mentions 53 films as its subject matter. Which is which If Exhibits "C"
when any of the elements of the contract is modified upon acceptance, such
reflected the true intent of the parties, then ABS-CBN's claim for 14 films in its
alteration amounts to a counter-offer.
complaint is false or if what it alleged in the complaint is true, then Exhibit "C"
In the case at bar, ABS-CBN made no unqualified acceptance of VIVA's offer. did not reflect what was agreed upon by the parties. This underscores the fact
Hence, they underwent a period of bargaining. ABS-CBN then formalized its that there was no meeting of the minds as to the subject matter of the contracts,
counter-proposals or counter-offer in a draft contract, VIVA through its Board of so as to preclude perfection thereof. For settled is the rule that there can be no
Directors, rejected such counter-offer, Even if it be conceded arguendo that Del contract where there is no object which is its subject matter (Art. 1318, NCC).
Rosario had accepted the counter-offer, the acceptance did not bind VIVA, as
THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. "D")
there was no proof whatsoever that Del Rosario had the specific authority to do
states:
so.
We were able to reach an agreement. VIVA gave us the exclusive license to show
Under Corporation Code,46 unless otherwise provided by said Code, corporate
these fourteen (14) films, and we agreed to pay Viva the amount of
powers, such as the power; to enter into contracts; are exercised by the Board of
P16,050,000.00 as well as grant Viva commercial slots worth P19,950,000.00. We
Directors. However, the Board may delegate such powers to either an executive
had already earmarked this P16, 050,000.00.
committee or officials or contracted managers. The delegation, except for the
executive committee, must be for specific purposes, 47 Delegation to officers which gives a total consideration of P36 million (P19,950,000.00 plus
makes the latter agents of the corporation; accordingly, the general rules of P16,050,000.00. equals P36,000,000.00).
agency as to the bindings effects of their acts would
apply. 48 For such officers to be deemed fully clothed by the corporation to On cross-examination Mr. Lopez testified:
exercise a power of the Board, the latter must specially authorize them to do so. Q. What was written in this napkin?
That Del Rosario did not have the authority to accept ABS-CBN's counter-offer
A. The total price, the breakdown the known Viva movies, the 7 blockbuster A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992)
movies and the other 7 Viva movies because the price was broken down
Q. Did Mr. Del Rosario tell you that he will submit it to his Board for approval?
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 A. Yes, sir. (Tsn, p. 69, June 8, 1992).
P35 million pesos.
The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del
Now, which is which? P36 million or P35 million? This weakens ABS-CBN's claim. Rosario had no authority to bind Viva to a contract with ABS-CBN until and unless
its Board of Directors approved it. The complaint, in fact, alleges that Mr. Del
FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit
Rosario "is the Executive Producer of defendant Viva" which "is a corporation."
"C" to Mr. Del Rosario with a handwritten note, describing said Exhibit "C" as a
(par. 2, complaint). As a mere agent of Viva, Del Rosario could not bind Viva
"draft." (Exh. "5" - Viva; tsn pp. 23-24 June 08, 1992). The said draft has a well
unless what he did is ratified by its Board of Directors. (Vicente vs.  Geraldez, 52
defined meaning.
SCRA 210; Arnold vs.  Willets and Paterson, 44 Phil. 634). As a mere agent,
Since Exhibit "C" is only a draft, or a tentative, provisional or preparatory writing recognized as such by plaintiff, Del Rosario could not be held liable jointly and
prepared for discussion, the terms and conditions thereof could not have been severally with Viva and his inclusion as party defendant has no legal basis.
previously agreed upon by ABS-CBN and Viva Exhibit "C'' could not therefore (Salonga vs.  Warner Barner  [sic] , COLTA , 88 Phil. 125; Salmon vs. Tan, 36 Phil.
legally bind Viva, not having agreed thereto. In fact, Ms. Concio admitted that the 556).
terms and conditions embodied in Exhibit "C" were prepared by ABS-CBN's
The testimony of Mr. Lopez and the allegations in the complaint are clear
lawyers and there was no discussion on said terms and conditions. . . .
admissions that what was supposed to have been agreed upon at the Tamarind
As the parties had not yet discussed the proposed terms and conditions in Exhibit Grill between Mr. Lopez and Del Rosario was not a binding agreement. It is as it
"C," and there was no evidence whatsoever that Viva agreed to the terms and should be because corporate power to enter into a contract is lodged in the
conditions thereof, said document cannot be a binding contract. The fact that Board of Directors. (Sec. 23, Corporation Code). Without such board approval by
Viva refused to sign Exhibit "C" reveals only two [sic] well that it did not agree on the Viva board, whatever agreement Lopez and Del Rosario arrived at could not
its terms and conditions, and this court has no authority to compel Viva to agree ripen into a valid contract binding upon Viva (Yao Ka Sin Trading vs.  Court of
thereto. Appeals, 209 SCRA 763). The evidence adduced shows that the Board of
Directors of Viva rejected Exhibit "C" and insisted that the film package for 140
FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon
films be maintained (Exh. "7-1" - Viva ). 49
at the Tamarind Grill was only provisional, in the sense that it was subject to
approval by the Board of Directors of Viva. He testified: The contention that ABS-CBN had yet to fully exercise its right of first refusal over
twenty-four films under the 1990 Film Exhibition Agreement and that the
Q. Now, Mr. Witness, and after that Tamarind meeting ... the second meeting
meeting between Lopez and Del Rosario was a continuation of said previous
wherein you claimed that you have the meeting of the minds between you and
contract is untenable. As observed by the trial court, ABS-CBN right of first
Mr. Vic del Rosario, what happened?
refusal had already been exercised when Ms. Concio wrote to VIVA ticking off ten
A. Vic Del Rosario was supposed to call us up and tell us specifically the result of films, Thus:
the discussion with the Board of Directors.
[T]he subsequent negotiation with ABS-CBN two (2) months after this letter was
Q. And you are referring to the so-called agreement which you wrote in [sic] a sent, was for an entirely different package. Ms. Concio herself admitted on cross-
piece of paper? examination to having used or exercised the right of first refusal. She stated that
the list was not acceptable and was indeed not accepted by ABS-CBN, (TSN, June
A. Yes, sir. 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the right of the first
Q. So, he was going to forward that to the board of Directors for approval? refusal may have been already exercised by Ms. Concio (as she had). (TSN, June
8, 1992, pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN Art. 19. Every person must, in the exercise of his rights and in the performance of
has lost its rights of the first refusal when his list of 36 titles were rejected (Tsn, his duties, act with justice, give everyone his due, and observe honesty and good
June 9, 1992, pp. 10-11) 50 faith.

II Art. 20. Every person who, contrary to law, wilfully or negligently causes damage
to another, shall indemnify the latter for tile same.
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 Art. 21. Any person who wilfully causes loss or injury to another in a manner that
on actual or compensatory damages. Except as provided by law or by stipulation, is contrary to morals, good customs or public policy shall compensate the latter
one is entitled to compensation for actual damages only for such pecuniary loss for the damage.
suffered by him as he has duly proved. 51 The indemnification shall comprehend
It may further be observed that in cases where a writ of preliminary injunction is
not only the value of the loss suffered, but also that of the profits that the
issued, the damages which the defendant may suffer by reason of the writ are
obligee failed to obtain. 52 In contracts and quasi-contracts the damages which
recoverable from the injunctive bond. 57 In this case, ABS-CBN had not yet filed
may be awarded are dependent on whether the obligor acted with good faith or
the required bond; as a matter of fact, it asked for reduction of the bond and
otherwise, It case of good faith, the damages recoverable are those which are
even went to the Court of Appeals to challenge the order on the matter, Clearly
the natural and probable consequences of the breach of the obligation and
then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN cannot
which the parties have foreseen or could have reasonably foreseen at the time of
be held responsible for the premium RBS paid for the counterbond.
the constitution of the obligation. If the obligor acted with fraud, bad faith,
malice, or wanton attitude, he shall be responsible for all damages which may be Neither could ABS-CBN be liable for the print advertisements for "Maging Sino Ka
reasonably attributed to the non-performance of the obligation. 53 In crimes and Man" for lack of sufficient legal basis. The RTC issued a temporary restraining
quasi-delicts, the defendant shall be liable for all damages which are the natural order and later, a writ of preliminary injunction on the basis of its determination
and probable consequences of the act or omission complained of, whether or that there existed sufficient ground for the issuance thereof. Notably, the RTC did
not such damages has been foreseen or could have reasonably been foreseen by not dissolve the injunction on the ground of lack of legal and factual basis, but
the defendant.54 because of the plea of RBS that it be allowed to put up a counterbond.
Actual damages may likewise be recovered for loss or impairment of earning As regards attorney's fees, the law is clear that in the absence of stipulation,
capacity in cases of temporary or permanent personal injury, or for injury to the attorney's fees may be recovered as actual or compensatory damages under any
plaintiff's business standing or commercial credit. 55 of the circumstances provided for in Article 2208 of the Civil Code. 58
The claim of RBS for actual damages did not arise from contract, quasi-contract, The general rule is that attorney's fees cannot be recovered as part of damages
delict, or quasi-delict. It arose from the fact of filing of the complaint despite because of the policy that no premium should be placed on the right to
ABS-CBN's alleged knowledge of lack of cause of action. Thus paragraph 12 of litigate.59 They are not to be awarded every time a party wins a suit. The power
RBS's Answer with Counterclaim and Cross-claim under the heading of the court to award attorney's fees under Article 2208 demands factual, legal,
COUNTERCLAIM specifically alleges: 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
12. ABS-CBN filed the complaint knowing fully well that it has no cause of action
not be awarded where no sufficient showing of bad faith could be reflected in a
RBS. As a result thereof, RBS suffered actual damages in the amount of
party's persistence in a case other than erroneous conviction of the
P6,621,195.32. 56
righteousness of his cause. 61
Needless to state the award of actual damages cannot be comprehended under
As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the
the above law on actual damages. RBS could only probably take refuge under
Civil Code. Article 2217 thereof defines what are included in moral damages,
Articles 19, 20, and 21 of the Civil Code, which read as follows:
while Article 2219 enumerates the cases where they may be recovered, Article exemplary damages can only be based on Articles 19, 20, and 21 of the Civil
2220 provides that moral damages may be recovered in breaches of contract Code.
where the defendant acted fraudulently or in bad faith. RBS's claim for moral
The elements of abuse of right under Article 19 are the following: (1) the
damages could possibly fall only under item (10) of Article 2219, thereof which
existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for
reads:
the sole intent of prejudicing or injuring another. Article 20 speaks of the general
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. 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
Moral damages are in the category of an award designed to compensate the
following elements; (1) there is an act which is legal, (2) but which is contrary to
claimant for actual injury suffered. and not to impose a penalty on the
morals, good custom, public order, or public policy, and (3) and it is done with
wrongdoer.62 The award is not meant to enrich the complainant at the expense
intent to injure. 72
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 Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or
is aimed at the restoration, within the limits of the possible, of the bad faith implies a conscious and intentional design to do a wrongful act for a
spiritual status quo ante, and should be proportionate to the suffering dishonest purpose or moral obliquity. 73 Such must be substantiated by
inflicted.63 Trial courts must then guard against the award of exorbitant damages; evidence. 74
they should exercise balanced restrained and measured objectivity to avoid
There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It
suspicion that it was due to passion, prejudice, or corruption on the part of the
was honestly convinced of the merits of its cause after it had undergone serious
trial court. 64
negotiations culminating in its formal submission of a draft contract. Settled is
The award of moral damages cannot be granted in favor of a corporation the rule that the adverse result of an action does not  per se make the action
because, being an artificial person and having existence only in legal wrongful and subject the actor to damages, for the law could not have meant to
contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, impose a penalty on the right to litigate. If damages result from a person's
experience physical suffering and mental anguish, which call be experienced only exercise of a right, it is damnum absque injuria.75
by one having a nervous system. 65 The statement in People
WHEREFORE, the instant petition is GRANTED. The challenged decision of the
v.  Manero 66 and Mambulao Lumber Co.  v.  PNB  67 that a corporation may
Court of Appeals in CA-G.R. CV No, 44125 is hereby REVERSED except as to
recover moral damages if it "has a good reputation that is debased, resulting in
unappealed award of attorney's fees in favor of VIVA Productions,
social humiliation" is an obiter dictum. On this score alone the award for
Inc.1âwphi1.nêt
damages must be set aside, since RBS is a corporation.
No pronouncement as to costs.
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 SO ORDERED.
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