ABS-CBN Broadcasting Corporation v. Hon. Court of Appeals G.R. No. 128690

8/9/2019 ABS-CBN Broadcasting Corporation v. Hon. Court of Appeals G.R. No. 128690

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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

G.R. No. 128690 January 21, 1999

ABS-CBN BROADCASTNG CORPORATON, petitioner,vs.!ONORAB"E COURT O# APPEA"S, REPUB"C BROADCASTNG CORP, $$A PRODUCTON,NC., an% $CENTE DE" ROSARO, respondents.

DA$DE, JR., CJ.:

In this petition for revie on certiorari , petitioner !"S#$"N "roadcastin% $orp. &hereafter !"S#$"N'see(s to reverse and set aside the decision 1 of )* October *++ and the resolution 2 of *- March *++of the $ourt of !ppeals in $!#/.R. $V No. 00*12. The for3er affir3ed ith 3odification the decision & of14 !pril *++) of the Re%ional Trial $ourt &RT$' of 5ue6on $it7, "ranch 4-, in $ivil $ase No. 5#+1#*1)-+.The latter denied the 3otion to reconsider the decision of )* October *++.

The antecedents, as found b7 the RT$ and adopted b7 the $ourt of !ppeals, are as follos8

In *++-, !"S#$"N and Viva e9ecuted a Fil3 :9hibition !%ree3ent &:9h. ;!;'hereb7 Viva %ave !"S#$"N an e9clusive ri%ht to e9hibit so3e Viva fil3s. So3eti3e

in Dece3ber *++*, in accordance ith para%raph 1.0 <sic = of said a%ree3ent statin%that >.

*.0 !"S#$"N shall have the ri%ht of first refusal to the ne9t tent7#four &10' Vivafil3s for TV telecast under such ter3s as 3a7 be a%reed upon b7 the parties hereto,provided, hoever, that such ri%ht shall be e9ercised b7 !"S#$"N fro3 the actualoffer in ritin%.

Viva, throu%h defendant Del Rosario, offered !"S#$"N, throu%h its vice#president$haro Santos#$oncio, a list of three&)' fil3 pac(a%es &) title' fro3 hich !"S#$"N3a7 e9ercise its ri%ht of first refusal under the afore#said a%ree3ent &:9hs. ;*; par, 1,;1,; ;1#!?? and ;1#";#Viva'. !"S#$"N, hoever throu%h Mrs. $oncio, ;can tic( off onl7

ten &*-' titles; &fro3 the list' ;e can purchase; &:9h. ;); # Viva' and therefore did notaccept said list &TSN, @une 4, *++1, pp. +#*-'. The titles tic(ed off b7 Mrs. $oncio arenot the subAect of the case at bar e9cept the fil3 ??Ma%in% Sino Ba Man.;

For further enli%hten3ent, this reAection letter dated @anuar7 -, *++1 &:9h ;); #Viva' is hereb7 Cuoted8

@anuar7 *++1



Dear Vic,

This is not a ver7 for3al business letter I a3 ritin% to 7ou as I ould li(e to e9press37 difficult7 in reco33endin% the purchase of the three fil3 pac(a%es 7ou areofferin% !"S#$"N.

Fro3 a3on% the three pac(a%es I can onl7 tic( off *- titles e can purchase. Pleasesee attached. I hope 7ou ill understand 37 position. Most of the action pictures inthe list do not have bi% action stars in the cast. The7 are not for pri3eti3e. In lineith this I ish to 3ention that I have not scheduled for telecast several actionpictures in out ver7 first contract because of the cheap production value of these3ovies as ell as the lac( of bi% action stars. !s a fil3 producer, I a3 sure 7ouunderstand hat I a3 tr7in% to sa7 as Viva produces onl7 bi% action pictures.

In fact, I ould li(e to reCuest to &1' additional runs for these 3ovies as I can onl7schedule the3 in our non#pri3eti3e slots. e have to cover the a3ount that aspaid for these 3ovies because as 7ou ver7 ell (no that non#pri3eti3e advertisin%rates are ver7 lo. These are the unaired titles in the first contract.

*. Bontra Persa <sic =.

1. Raider Platoon.

). Ender%round %uerillas

0. Ti%er $o33and

2. "o7 de Sabo%

. ad7 $o33ando

. "atan% Matadero

4. Rebel7on

I hope 7ou ill consider this reCuest of 3ine.

The other dra3atic fil3s have been offered to us before and have been reAectedbecause of the rulin% of MTR$" to have the3 aired at +8-- p.3. due to their ver7adult the3es.

!s for the *- titles I have choosen <sic = fro3 the ) pac(a%es please consider

includin% all the other Viva 3ovies produced last 7ear. I have Cuite an attractive offerto 3a(e.

Than(in% 7ou and ith 37 ar3est re%ards.

&Si%ned'



$haroSantos

#$oncio

On Februar7 1, *++1, defendant Del Rosario approached !"S#$"N?s Ms. $oncio,

ith a list consistin% of 21 ori%inal 3ovie titles &i .e. not 7et aired on television'includin% the *0 titles subAect of the present case, as ell as *-0 re#runs &previousl7aired on television' fro3 hich !"S#$"N 3a7 choose another 21 titles, as a total of*2 titles, proposin% to sell to !"S#$"N airin% ri%hts over this pac(a%e of 21 ori%inalsand 21 re#runs for P-,---,---.-- of hich P)-,---,---.-- ill be in cash andP)-,---,---.-- orth of television spots &:9h. ;0; to ;0#$; VivaG ;+; #Viva'.

On !pril 1, *++1, defendant Del Rosario and !"S#$"N %eneral 3ana%er, :u%enioope6 III, 3et at the Ta3arind /rill Restaurant in 5ue6on $it7 to discuss thepac(a%e proposal of Viva. hat transpired in that lunch 3eetin% is the subAect ofconflictin% versions. Mr. ope6 testified that he and Mr. Del Rosario alle%edl7 a%reedthat !"S#$RN as %ranted e9clusive fil3 ri%hts to fourteen &*0' fil3s for a total

consideration of P) 3illionG that he alle%edl7 put this a%ree3ent as to the price andnu3ber of fil3s in a ;nap(in?? and si%ned it and %ave it to Mr. Del Rosario &:9h. DGTSN, pp. 10#1, #4, @une 4, *++1'. On the other hand, Del Rosario denied havin%3ade an7 a%ree3ent ith ope6 re%ardin% the *0 Viva fil3sG denied the e9istence of a nap(in in hich ope6 rote so3ethin%G and insisted that hat he and ope6discussed at the lunch 3eetin% as Viva?s fil3 pac(a%e offer of *-0 fil3s &21ori%inals and 21 re#runs' for a total price of P- 3illion. Mr. ope6 pro3isin% <sic =to3a(e a counter proposal hich ca3e in the for3 of a proposal contract !nne9 ;$; ofthe co3plaint &:9h. ;*;H# VivaG :9h. ;$; # !"S#$"N'.

On !pril -, *++1, Del Rosario and Mr. /raciano /o6on of R"S Senior vice#president for Finance discussed the ter3s and conditions of Viva?s offer to sell the*-0 fil3s, after the reAection of the sa3e pac(a%e b7 !"S#$"N.

On !pril -, *++1, defendant Del Rosario received throu%h his secretar7, ahandritten note fro3 Ms. $oncio, &:9h. ;2; # Viva', hich reads8 ;ere?s the draft ofthe contract. I hope 7ou find ever7thin% in order,; to hich as attached a drafte9hibition a%ree3ent &:9h. ;$??# !"S#$"NG :9h. ;+; # Viva, p. )' a counter#proposalcoverin% 2) fil3s, 21 of hich ca3e fro3 the list sent b7 defendant Del Rosario andone fil3 as added b7 Ms. $oncio, for a consideration of P)2 3illion. :9hibit ;$;provides that !"S#$"N is %ranted fil3s ri%ht to 2) fil3s and contains a ri%ht of firstrefusal to ;*++1 Viva Fil3s.; The said counter proposal as hoever reAected b7Viva?s "oard of Directors <in the= evenin% of the sa3e da7, !pril , *++1, as Vivaould not sell an7thin% less than the pac(a%e of *-0 fil3s for P- 3illion pesos &:9h.;+; # Viva', and such reAection as rela7ed to Ms. $oncio.

On !pril 1+, *++1, after the reAection of !"S#$"N and folloin% several ne%otiationsand 3eetin%s defendant Del Rosario and Viva?s President Teresita $ru6, inconsideration of P- 3illion, si%ned a letter of a%ree3ent dated !pril 10, *++1.%rantin% R"S the e9clusive ri%ht to air *-0 Viva#produced andJor acCuired fil3s &:9h.;#!; # R"SG :9h. ;0; # R"S' includin% the fourteen &*0' fil3s subAect of the presentcase. '



On 1 Ma7 *++1, !"S#$"N filed before the RT$ a co3plaint for specific perfor3ance ith a pra7erfor a rit of preli3inar7 inAunction andJor te3porar7 restrainin% order a%ainst private respondentsRepublic "roadcastin% $orporation ( &hereafter R"S ', Viva Production &hereafter VIV!', and VicenteDel Rosario. The co3plaint as doc(eted as $ivil $ase No. 5#+1#*1)-+.

On 1 Ma7 *++1, RT$ issued a te3porar7 restrainin% order 6 enAoinin% private respondents fro3

proceedin% ith the airin%, broadcastin%, and televisin% of the fourteen VIV! fil3s subAect of thecontrovers7, startin% ith the fil3 Maging Sino Ka Man, hich as scheduled to be shon on privaterespondents R"S? channel at seven o?cloc( in the evenin% of said date.

On * @une *++1, after appropriate proceedin%s, the RT$ issued anorder ) directin% the issuance of a rit of preli3inar7 inAunction upon !"S#$"N?s postin% of P)2 3illionbond. !"S#$"N 3oved for the reduction of the bond, 8 hile private respondents 3oved forreconsideration of the order and offered to put up a counterbound. 9

In the 3eanti3e, private respondents filed separate ansers ith counterclai3. 10 R"S also set up across#clai3 a%ainst VIV!..

On ) !u%ust *++1, the RT$ issued an order 11 dissolvin% the rit of preli3inar7 inAunction upon thepostin% b7 R"S of a P)- 3illion counterbond to anser for hatever da3a%es !"S#$"N 3i%ht suffer b7virtue of such dissolution. oever, it reduced petitioner?s inAunction bond to P*2 3illion as a conditionprecedent for the reinstate3ent of the rit of preli3inar7 inAunction should private respondents be unableto post a counterbond.

!t the pre#trial 12 on !u%ust *++1, the parties, upon su%%estion of the court, a%reed to e9plore thepossibilit7 of an a3icable settle3ent. In the 3eanti3e, R"S pra7ed for and as %ranted reasonable ti3eithin hich to put up a P)- 3illion counterbond in the event that no settle3ent ould be reached.

!s the parties failed to enter into an a3icable settle3ent R"S posted on * October *++1 acounterbond, hich the RT$ approved in its Order of *2 October *++1. 1&

On *+ October *++1, !"S#$"N filed a 3otion for reconsideration 1' of the ) !u%ust and *2 October*++1 Orders, hich R"S opposed. 1(

On 1+ October *++1, the RT$ conducted a pre#trial. 16

Pendin% resolution of its 3otion for reconsideration, !"S#$"N filed ith the $ourt of !ppeals apetition 1)challen%in% the RT$?s Orders of ) !u%ust and *2 October *++1 and pra7in% for the issuance ofa rit of preli3inar7 inAunction to enAoin the RT$ fro3 enforcin% said orders. The case as doc(eted as$!#/.R. SP No. 1+)--.

On ) Nove3ber *++1, the $ourt of !ppeals issued a te3porar7 restrainin% order 18 to enAoin the airin%,broadcastin%, and televisin% of an7 or all of the fil3s involved in the controvers7.

On *4 Dece3ber *++1, the $ourt of !ppeals pro3ul%ated a decision 19 dis3issin% the petition in $!#/.R. No. 1+)-- for bein% pre3ature. !"S#$"N challen%ed the dis3issal in a petition for revie filed iththis $ourt on *+ @anuar7 *++), hich as doc(eted as /.R. No. *-4)).

In the 3eanti3e the RT$ received the evidence for the parties in $ivil $ase No. 5#*+1#*1-+.Thereafter, on 14 !pril *++), it rendered a decision 20 in favor of R"S and VIV! and a%ainst !"S#$"Ndisposin% as follos8



:R:FOR:, under cool reflection and prescindin% fro3 the fore%oin%, Aud%3entsis rendered in favor of defendants and a%ainst the plaintiff.

&*' The co3plaint is hereb7 dis3issedG

&1' Plaintiff !"S#$"N is ordered to pa7 defendant R"S the folloin%8

a' P*-,1.--, the a3ount of pre3iu3 paid b7 R"Sto the suret7 hich issued defendant R"S?s bond tolift the inAunctionG

b' P*+*,40).-- for the a3ount of print advertise3entfor ;Ma%in% Sino Ba Man; in various nespapersG

c' !ttorne7?s fees in the a3ount of P* 3illionG

d' P2 3illion as and b7 a7 of 3oral da3a%esG

e' P2 3illion as and b7 a7 of e9e3plar7 da3a%esG

&)' For defendant VIV!, plaintiff !"S#$"N is ordered to pa7P1*1,---.-- b7 a7 of reasonable attorne7?s fees.

&0' The cross#clai3 of defendant R"S a%ainst defendant VIV! isdis3issed.

&2' Plaintiff to pa7 the costs.

!ccordin% to the RT$, there as no 3eetin% of 3inds on the price and ter3s of the offer. Thealle%ed a%ree3ent beteen ope6 III and Del Rosario as subAect to the approval of the VIV! "oardof Directors, and said a%ree3ent as disapproved durin% the 3eetin% of the "oard on !pril *++1.ence, there as no basis for !"S#$"N?s de3and that VIV! si%ned the *++1 Fil3 :9hibition

!%ree3ent. Further3ore, the ri%ht of first refusal under the *++- Fil3 :9hibition !%ree3ent hadpreviousl7 been e9ercised per Ms. $oncio?s letter to Del Rosario tic(in% off ten titles acceptable tothe3, hich ould have 3ade the *++1 a%ree3ent an entirel7 ne contract.

On 1* @une *++), this $ourt denied 21 !"S#$"N?s petition for revie in /.R. No. *-4)), as noreversible error as co33itted b7 the $ourt of !ppeals in its challen%ed decision and the case had;beco3e 3oot and acade3ic in vie of the dis3issal of the 3ain action b7 the court a quo in its decision;of 14 !pril *++).

!%%rieved b7 the RT$?s decision, !"S#$"N appealed to the $ourt of !ppeals clai3in% that there

as a perfected contract beteen !"S#$"N and VIV! %rantin% !"S#$"N the e9clusive ri%ht toe9hibit the subAect fil3s. Private respondents VIV! and Del Rosario also appealed see(in% 3oraland e9e3plar7 da3a%es and additional attorne7?s fees.

In its decision of )* October *++, the $ourt of !ppeals a%reed ith the RT$ that the contractbeteen !"S#$"N and VIV! had not been perfected, absent the approval b7 the VIV! "oard ofDirectors of hatever Del Rosario, it?s a%ent, 3i%ht have a%reed ith ope6 III. The appellate courtdid not even believe !"S#$"N?s evidence that ope6 III actuall7 rote don such an a%ree3ent on



a ;nap(in,; as the sa3e as never produced in court. It li(eise reAected !"S#$"N?s insistence onits ri%ht of first refusal and ratiocinated as follos8

!s re%ards the 3atter of ri%ht of first refusal, it 3a7 be true that a Fil3 :9hibition !%ree3ent as entered into beteen !ppellant !"S#$"N and appellant VIV! under:9hibit ;!; in *++-, and that para%. *.0 thereof provides8

*.0 !"S#$"N shall have the ri%ht of first refusal to the ne9t tent7#four &10' VIV! fil3s for TV telecast under such ter3s as 3a7 bea%reed upon b7 the parties hereto, provided, hoever, that such ri%htshall be e9ercised b7 !"S#$"N ithin a period of fifteen &*2' da7sfro3 the actual offer in ritin% &Records, p. *0'.

<=oever, it is ver7 clear that said ri%ht of first refusal in favor of !"S#$"N shall stillbe subAect to such ter3s as 3a7 be a%reed upon b7 the parties thereto, and that thesaid ri%ht shall be e9ercised b7 !"S#$"N ithin fifteen &*2' da7s fro3 the actualoffer in ritin%.

Said para%. *.0 of the a%ree3ent :9hibit ;!; on the ri%ht of first refusal did not fi9 theprice of the fil3 ri%ht to the tent7#four &10' fil3s, nor did it specif7 the ter3s thereof.The sa3e are still left to be a%reed upon b7 the parties.

In the instant case, !"S#$"N?s letter of reAection :9hibit ) &Records, p. 4+' statedthat it can onl7 tic( off ten &*-' fil3s, and the draft contract :9hibit ;$; accepted onl7fourteen &*0' fil3s, hile para%. *.0 of :9hibit ;!?? spea(s of the ne9t tent7#four &10'fil3s.

The offer of V*V! as so3eti3e in Dece3ber *++* &:9hibits 1, 1#!. 1#"G Records,pp. 4#44G Decision, p. **, Records, p. **2-', hen the first list of VIV! fil3s assent b7 Mr. Del Rosario to !"S#$"N. The Vice President of !"S#$"N, Ms. $haro

Santos#$oncio, sent a letter dated @anuar7 , *++1 &:9hibit ), Records, p. 4+' here !"S#$"N e9ercised its ri%ht of refusal b7 reAectin% the offer of VIV!.. !s aptl7observed b7 the trial court, ith the said letter of Mrs. $oncio of @anuar7 , *++1,

!"S#$"N had lost its ri%ht of first refusal. !nd even if e rec(on the fifteen &*2' da7period fro3 Februar7 1, *++1 &:9hibit 0 to 0#$' hen another list as sent to !"S#$"N after the letter of Mrs. $oncio, still the fifteen &*2' da7 period ithin hich !"S#$"N shall e9ercise its ri%ht of first refusal has alread7 e9pired.22

!ccordin%l7, respondent court sustained the aard of actual da3a%es consistin% in the cost of printadvertise3ents and the pre3iu3 pa73ents for the counterbond, there bein% adeCuate proof of thepecuniar7 loss hich R"S had suffered as a result of the filin% of the co3plaint b7 !"S#$"N. !s tothe aard of 3oral da3a%es, the $ourt of !ppeals found reasonable basis therefor, holdin% thatR"S?s reputation as debased b7 the filin% of the co3plaint in $ivil $ase No. 5#+1#*1)-+ and b7 the

non#shoin% of the fil3 ;Ma%in% Sino Ba Man.; Respondent court also held that e9e3plar7 da3a%esere correctl7 i3posed b7 a7 of e9a3ple or correction for the public %ood in vie of the filin% of theco3plaint despite petitioner?s (noled%e that the contract ith VIV! had not been perfected, It alsoupheld the aard of attorne7?s fees, reasonin% that ith !"S#$"N?s act of institutin% $ivil $ase No,5#+1#*1-+, R"S as ;unnecessaril7 forced to liti%ate.; The appellate court, hoever, reduced theaards of 3oral da3a%es to P1 3illion, e9e3plar7 da3a%es to P1 3illion, and attorne7?s fees toP2--, ---.--.



On the other hand, respondent $ourt of !ppeals denied VIV! and Del Rosario?s appeal because itas ;R"S and not VIV! hich as actuall7 preAudiced hen the co3plaint as filed b7 !"S#$"N.;

Its 3otion for reconsideration havin% been denied, !"S#$"N filed the petition in this case,contendin% that the $ourt of !ppeals %ravel7 erred in

I

. . . REIN/ T!T T:R: !S NO P:RF:$T:D $ONTR!$T ":T::NP:TITION:R !ND PRIV!T: R:SPOND:NT VIV! NOTITST!NDIN/PR:POND:R!N$: OF :VID:N$: !DDE$:D "K P:TITION:R TO T:$ONTR!RK.

II

. . . IN !!RDIN/ !$TE! !ND $OMP:NS!TORK D!M!/:S IN F!VOR OFPRIV!T: R:SPOND:NT R"S.

III

. . . IN !!RDIN/ MOR! !ND :L:MP!RK D!M!/:S IN F!VOR OF PRIV!T:R:SPOND:NT R"S.

IV

. . . IN !!RDIN/ !TTORN:K?S F::S IN F!VOR OF R"S.

!"S#$"N clai3s that it had 7et to full7 e9ercise its ri%ht of first refusal over tent7#four titles underthe *++- Fil3 :9hibition !%ree3ent, as it had chosen onl7 ten titles fro3 the first list. It insists thate %ive credence to ope6?s testi3on7 that he and Del Rosario 3et at the Ta3arind /rill Restaurant,

discussed the ter3s and conditions of the second list &the *++1 Fil3 :9hibition !%ree3ent' andupon a%ree3ent thereon, rote the sa3e on a paper nap(in. It also asserts that the contract hasalread7 been effective, as the ele3ents thereof, na3el7, consent, obAect, and consideration ereestablished. It then concludes that the $ourt of !ppeals? pronounce3ents ere not supported b7 laand Aurisprudence, as per our decision of * Dece3ber *++2 in Limketkai Sons Milling, Inc. v. Courtof Appeals,2& hich cited Toyota Sha, Inc. v. Court of Appeals, 2' Ang !u Asuncion v. Court of

Appeals, 2( and "illonco #ealty Company v. $ormaheco. Inc . 26

!nent the actual da3a%es aarded to R"S, !"S#$"N disavos liabilit7 therefor. R"S spent for thepre3iu3 on the counterbond of its on volition in order to ne%ate the inAunction issued b7 the trialcourt after the parties had ventilated their respective positions durin% the hearin%s for the purpose.The filin% of the counterbond as an option available to R"S, but it can hardl7 be ar%ued that !"S#

$"N co3pelled R"S to incur such e9pense. "esides, R"S had another available option, i .e., 3ovefor the dissolution or the inAunctionG or if it as deter3ined to put up a counterbond, it could havepresented a cash bond. Further3ore under !rticle 11-) of the $ivil $ode, the part7 sufferin% loss orinAur7 is also reCuired to e9ercise the dili%ence of a %ood father of a fa3il7 to 3ini3i6e the da3a%esresultin% fro3 the act or o3ission. !s re%ards the cost of print advertise3ents, R"S had notconvincin%l7 established that this as a loss attributable to the non shoin% ;Ma%in% Sino Ba Man;Gon the contrar7, it as brou%ht out durin% trial that ith or ithout the case or the inAunction, R"Sould have spent such an a3ount to %enerate interest in the fil3.



!"S#$"N further contends that there as no clear basis for the aards of 3oral and e9e3plar7da3a%es. The controvers7 involvin% !"S#$"N and R"S did not in an7 a7 ori%inate fro3 businesstransaction beteen the3. The clai3s for such da3a%es did not arise fro3 an7 contractual dealin%sor fro3 specific acts co33itted b7 !"S#$"N a%ainst R"S that 3a7 be characteri6ed as anton,fraudulent, or rec(lessG the7 arose b7 virtue onl7 of the filin% of the co3plaint, !n aard of 3oral ande9e3plar7 da3a%es is not arranted here the record is bereft of an7 proof that a part7 acted

3aliciousl7 or in bad faith in filin% an action.2)

In an7 case, free resort to courts for redress of ron%s isa 3atter of public polic7. The la reco%ni6es the ri%ht of ever7 one to sue for that hich he honestl7believes to be his ri%ht ithout fear of standin% trial for da3a%es here b7 lac( of sufficient evidence,le%al technicalities, or a different interpretation of the las on the 3atter, the case ould lose%round. 28 One ho 3a(es use of his on le%al ri%ht does no inAur7. 29 If da3a%e results front the filin% ofthe co3plaint, it is %amnum a&sque in'uria. &0 "esides, 3oral da3a%es are %enerall7 not aarded in favorof a Auridical person, unless it enAo7s a %ood reputation that as debased b7 the offendin% part7 resultin%in social hu3iliation. &1

!s re%ards the aard of attorne7?s fees, !"S#$"N 3aintains that the sa3e had no factual, le%al, oreCuitable Austification. In sustainin% the trial court?s aard, the $ourt of !ppeals acted in cleardisre%ard of the doctrines laid don in $uan v . Camaganacan &2 that the te9t of the decision shouldstate the reason h7 attorne7?s fees are bein% aardedG otherise, the aard should be disalloed.

"esides, no bad faith has been i3puted on, 3uch less proved as havin% been co33itted b7, !"S#$"N. Ithas been held that ;here no sufficient shoin% of bad faith ould be reflected in a part7? s persistence ina case other than an erroneous conviction of the ri%hteousness of his cause, attorne7?s fees shall not berecovered as cost.; &&

On the other hand, R"S asserts that there as no perfected contract beteen !"S#$"N and VIV!absent an7 3eetin% of 3inds beteen the3 re%ardin% the obAect and consideration of the alle%edcontract. It affir3s that the !"S#$"N?s clai3 of a ri%ht of first refusal as correctl7 reAected b7 thetrial court. R"S insist the pre3iu3 it had paid for the counterbond constituted a pecuniar7 loss uponhich it 3a7 recover. It as obli%ed to put up the counterbound due to the inAunction procured b7

!"S#$"N. Since the trial court found that !"S#$"N had no cause of action or valid clai3 a%ainstR"S and, therefore not entitled to the rit of inAunction, R"S could recover fro3 !"S#$"N thepre3iu3 paid on the counterbond. $ontrar7 to the clai3 of !"S#$"N, the cash bond ould prove to

be 3ore e9pensive, as the loss ould be eCuivalent to the cost of 3one7 R"S ould fore%o in casethe P)- 3illion ca3e fro3 its funds or as borroed fro3 ban(s.

R"S li(eise asserts that it as entitled to the cost of advertise3ents for the cancelled shoin% ofthe fil3 ;Ma%in% Sino Ba Man; because the print advertise3ents ere put out to announce theshoin% on a particular da7 and hour on $hannel , i .e., in its entiret7 at one ti3e, not a series to beshon on a periodic basis. ence, the print advertise3ent ere %ood and relevant for the particulardate shoin%, and since the fil3 could not be shon on that particular date and hour because of theinAunction, the e9penses for the advertise3ents had %one to aste.

!s re%ards 3oral and e9e3plar7 da3a%es, R"S asserts that !"S#$"N filed the case and securedinAunctions purel7 for the purpose of harassin% and preAudicin% R"S. Pursuant then to !rticle *+ and

1* of the $ivil $ode, !"S#$"N 3ust be held liable for such da3a%es. Citing Tolentino, &' da3a%es3a7 be aarded in cases of abuse of ri%hts even if the act done is not illicit and there is abuse of ri%htsere plaintiff institutes and action purel7 for the purpose of harassin% or preAudicin% the defendant.

In support of its stand that a Auridical entit7 can recover 3oral and e9e3plar7 da3a%es, privaterespondents R"Scite% (eople v . Manero, &( here it as stated that such entit7 3a7 recover 3oral ande9e3plar7 da3a%es if it has a %ood reputation that is debased resultin% in social hu3iliation. it thenratiocinatesG thus8



There can be no doubt that R"S? reputation has been debased b7 !"S#$"N?s acts inthis case. hen R"S as not able to fulfill its co33it3ent to the viein% public tosho the fil3 ;Ma%in% Sino Ba Man; on the scheduled dates and ti3es &and on tooccasions that R"S advertised', it suffered serious e3barrass3ent and socialhu3iliation. hen the shoin% as canceled, late vieers called up R"S? offices andsubAected R"S to verbal abuse &;!nnounce (a7o nan% announce, hindi nin7o na3an

ilalabas,; ;nanlolo(o 7ata (a7o;' &:9h. )#R"S, par. )'. This alone as not so3ethin%R"S brou%ht upon itself. it as e9actl7 hat !"S#$"N had planned to happen.

The a3ount of 3oral and e9e3plar7 da3a%es cannot be said to be e9cessive. Toreasons Austif7 the a3ount of the aard.

The first is that the hu3iliation suffered b7 R"S is national e9tent. R"S operations asa broadcastin% co3pan7 is <sic = nationide. Its clientele, li(e that of !"S#$"N,consists of those ho on and atch television. It is not an e9a%%eration to state,and it is a 3atter of Audicial notice that al3ost ever7 other person in the countr7atches television. The hu3iliation suffered b7 R"S is 3ultiplied b7 the nu3ber oftelevieers ho had anticipated the shoin% of the fil3 ;Ma%in% Sino Ba Man; on

Ma7 14 and Nove3ber ), *++1 but did not see it oin% to the cancellation. !dded tothis are the advertisers ho had placed co33ercial spots for the telecast and toho3 R"S had a co33it3ent in consideration of the place3ent to sho the fil3 inthe dates and ti3es specified.

The second is that it is a co3petitor that caused R"S to suffer the hu3iliation. Thehu3iliation and inAur7 are far %reater in de%ree hen caused b7 an entit7 hoseulti3ate business obAective is to lure custo3ers &vieers in this case' aa7 fro3 theco3petition. &6

For their part, VIV! and Vicente del Rosario contend that the findin%s of fact of the trial court and the$ourt of !ppeals do not support !"S#$"N?s clai3 that there as a perfected contract. Such factualfindin%s can no lon%er be disturbed in this petition for revie under Rule 02, as onl7 Cuestions of la

can be raised, not Cuestions of fact. On the issue of da3a%es and attorne7s fees, the7 adopted thear%u3ents of R"S.

The (e7 issues for our consideration are &*' hether there as a perfected contract beteen VIV!and !"S#$"N, and &1' hether R"S is entitled to da3a%es and attorne7?s fees. It 3a7 be noted thatthe aard of attorne7?s fees of P1*1,--- in favor of VIV! is not assi%ned as another error.

I.

The first issue should be resolved a%ainst !"S#$"N. ! contract is a 3eetin% of 3inds beteen topersons hereb7 one binds hi3self to %ive so3ethin% or to render so3e service to another &) for aconsideration. there is no contract unless the folloin% reCuisites concur8 &*' consent of the contractin%

partiesG &1' obAect certain hich is the subAect of the contractG and &)' cause of the obli%ation, hich isestablished. &8 ! contract under%oes three sta%es8

&a' preparation, conception, or %eneration, hich is the period of ne%otiation andbar%ainin%, endin% at the 3o3ent of a%ree3ent of the partiesG

&b' perfection or birth of the contract, hich is the 3o3ent hen the parties co3e toa%ree on the ter3s of the contractG and



&c' consu33ation or death, hich is the fulfill3ent or perfor3ance of the ter3sa%reed upon in the contract. &9

$ontracts that are consensual in nature are perfected upon 3ere 3eetin% of the 3inds, Once thereis concurrence beteen the offer and the acceptance upon the subAect 3atter, consideration, andter3s of pa73ent a contract is produced. The offer 3ust be certain. To convert the offer into a

contract, the acceptance 3ust be absolute and 3ust not Cualif7 the ter3s of the offerG it 3ust beplain, uneCuivocal, unconditional, and ithout variance of an7 sort fro3 the proposal. ! Cualifiedacceptance, or one that involves a ne proposal, constitutes a counter#offer and is a reAection of theori%inal offer. $onseCuentl7, hen so3ethin% is desired hich is not e9actl7 hat is proposed in theoffer, such acceptance is not sufficient to %enerate consent because an7 3odification or variationfro3 the ter3s of the offer annuls the offer. '0

hen Mr. Del Rosario of VIV! 3et ith Mr. ope6 of !"S#$"N at the Ta3arind /rill on 1 !pril *++1to discuss the pac(a%e of fil3s, said pac(a%e of *-0 VIV! fil3s as VIV!?s offer to !"S#$"N toenter into a ne Fil3 :9hibition !%ree3ent. "ut !"S#$"N, sent, throu%h Ms. $oncio, a counter#proposal in the for3 of a draft contract proposin% e9hibition of 2) fil3s for a consideration of P)23illion. This counter#proposal could be nothin% less than the counter#offer of Mr. ope6 durin% his

conference ith Del Rosario at Ta3arind /rill Restaurant. $learl7, there as no acceptance ofVIV!?s offer, for it as 3et b7 a counter#offer hich substantiall7 varied the ter3s of the offer.

!"S#$"N?s reliance in Limketkai Sons Milling, Inc. v . Court of Appeals '1 and "illonco #ealty Company v . $ormaheco, Inc ., '2 is 3isplaced. In these cases, it as heldthat an acceptance 3a7 contain a reCuest for certain chan%es in the ter3s of the offer and 7et be abindin% acceptance as lon% as ;it is clear that the 3eanin% of the acceptance is positivel7 anduneCuivocall7 to accept the offer, hether such reCuest is %ranted or not.; This rulin% as, hoever,reversed in the resolution of 1+ March *++, '& hich ruled that the acceptance of all offer 3ust beunCualified and absolute, i .e., it ;3ust be identical in all respects ith that of the offer so as to produceconsent or 3eetin% of the 3inds.;

On the other hand, in Villonco, cite% in i3(et(ai, the alle%ed chan%es in the revised counter#offer

ere not 3aterial but 3erel7 clarificator7 of hat had previousl7 been a%reed upon. It cite% thestate3ent in Stuart v . )ranklin Life Insurance Co. '' that ;a vendor?s chan%e in a phrase of the offer topurchase, hich chan%e does not essentiall7 chan%e the ter3s of the offer, does not a3ount to areAection of the offer and the tender of a counter#offer.; '( oever, hen an7 of the ele3ents of thecontract is 3odified upon acceptance, such alteration a3ounts to a counter#offer.

In the case at bar, !"S#$"N 3ade no unCualified acceptance of VIV!?s offer. ence, the7underent a period of bar%ainin%. !"S#$"N then for3ali6ed its counter#proposals or counter#offer ina draft contract, VIV! throu%h its "oard of Directors, reAected such counter#offer, :ven if it beconceded arguen%o that Del Rosario had accepted the counter#offer, the acceptance did not bindVIV!, as there as no proof hatsoever that Del Rosario had the specific authorit7 to do so.

Ender $orporation $ode, '6 unless otherise provided b7 said $ode, corporate poers, such as thepoerG to enter into contractsG are e9ercised b7 the "oard of Directors. oever, the "oard 3a7 dele%atesuch poers to either an e9ecutive co33ittee or officials or contracted 3ana%ers. The dele%ation, e9ceptfor the e9ecutive co33ittee, 3ust be for specific purposes, ') Dele%ation to officers 3a(es the lattera%ents of the corporationG accordin%l7, the %eneral rules of a%enc7 as to the bindin%s effects of their actsouldappl7. '8 For such officers to be dee3ed full7 clothed b7 the corporation to e9ercise a poer of the "oard,the latter 3ust speciall7 authori6e the3 to do so. That Del Rosario did not have the authorit7 to accept

!"S#$"N?s counter#offer as best evidenced b7 his sub3ission of the draft contract to VIV!?s "oard of



Directors for the latter?s approval. In an7 event, there as beteen Del Rosario and ope6 III no 3eetin%of 3inds. The folloin% findin%s of the trial court are instructive8

! nu3ber of considerations 3ilitate a%ainst !"S#$"N?s clai3 that a contract asperfected at that lunch 3eetin% on !pril -1, *++1 at the Ta3arind /rill.

FIRST, Mr. ope6 clai3ed that hat as a%reed upon at the Ta3arind /rill referredto the price and the nu3ber of fil3s, hich he rote on a nap(in. oever, :9hibit;$; contains numerous provisions hich, ere not %iscusse% at the Tamarin% *rill , ifope6 testi3on7 as to be believed nor could the7 have been ph7sicall7 ritten on anap(in. There as even doubt as to hether it as a paper nap(in or a cloth nap(in.In short hat ere ritten in :9hibit ;$?? ere not discussed, and therefore could nothave been a%reed upon, b7 the parties. o then could this court co3pel the partiesto si%n :9hibit ;$; hen the provisions thereof ere not previousl7 a%reed upon

S:$OND, Mr. ope6 clai3ed that hat as a%reed upon as the subAect 3atter of thecontract as *0 fil3s. The co3plaint in fact pra7s for deliver7 of *0 fil3s. "ut :9hibit;$; 3entions 2) fil3s as its subAect 3atter. hich is hich If :9hibits ;$; reflected

the true intent of the parties, then !"S#$"N?s clai3 for *0 fil3s in its co3plaint isfalse or if hat it alle%ed in the co3plaint is true, then :9hibit ;$; did not reflect hatas a%reed upon b7 the parties. This underscores the fact that there as no 3eetin%of the 3inds as to the subAect 3atter of the contracts, so as to preclude perfectionthereof. For settled is the rule that there can be no contract here there is no obAecthich is its subAect 3atter &!rt. *)*4, N$$'.

TIRD, Mr. ope6 <sic = anser to Cuestion 1+ of his affidavit testi3on7 &:9h. ;D;'states8

e ere able to reach an a%ree3ent. VIV! %ave us the e9clusivelicense to sho these fourteen &*0' fil3s, and e a%reed to pa7 Vivathe a3ount of P*,-2-,---.-- as ell as %rant Viva co33ercial slots

orth P*+,+2-,---.--. e had alread7 ear3ar(ed this P*,-2-,---.--.

hich %ives a total consideration of P) 3illion &P*+,+2-,---.-- plusP*,-2-,---.--. eCuals P),---,---.--'.

On cross#e9a3ination Mr. ope6 testified8

5. hat as ritten in this nap(in

!. The total price, the brea(don the (non Viva 3ovies, the bloc(buster 3ovies and the other Viva 3ovies because the price

as bro(en don accordin%l7. The none <sic = Viva and the sevenother Viva 3ovies and the sharin% beteen the cash portion and theconcerned spot portion in the total a3ount of P)2 3illion pesos.

No, hich is hich P) 3illion or P)2 3illion This ea(ens !"S#$"N?s clai3.

FOERT. Mrs. $oncio, testif7in% for !"S#$"N stated that she trans3itted :9hibit ;$;to Mr. Del Rosario ith a handritten note, describin% said :9hibit ;$; as a ;draft.;



&:9h. ;2; # VivaG tsn pp. 1)#10 @une -4, *++1'. The said draft has a ell defined3eanin%.

Since :9hibit ;$; is onl7 a draft, or a tentative, provisional or preparator7 ritin%prepared for discussion, the ter3s and conditions thereof could not have beenpreviousl7 a%reed upon b7 !"S#$"N and Viva :9hibit ;$?? could not therefore le%all7

bind Viva, not havin% a%reed thereto. In fact, Ms. $oncio ad3itted that the ter3s andconditions e3bodied in :9hibit ;$; ere prepared b7 !"S#$"N?s la7ers and thereas no discussion on said ter3s and conditions. . . .

!s the parties had not 7et discussed the proposed ter3s and conditions in :9hibit;$,; and there as no evidence hatsoever that Viva a%reed to the ter3s andconditions thereof, said docu3ent cannot be a bindin% contract. The fact that Vivarefused to si%n :9hibit ;$; reveals onl7 to <sic = ell that it did not a%ree on its ter3sand conditions, and this court has no authorit7 to co3pel Viva to a%ree thereto.

FIFT. Mr. ope6 understand <sic = that hat he and Mr. Del Rosario a%reed upon atthe Ta3arind /rill as onl7 provisional, in the sense that it as subAect to approval

b7 the "oard of Directors of Viva. e testified8

5. No, Mr. itness, and after that Ta3arind 3eetin% ... the second3eetin% herein 7ou clai3ed that 7ou have the 3eetin% of the 3indsbeteen 7ou and Mr. Vic del Rosario, hat happened

!. Vic Del Rosario as supposed to call us up and tell us specificall7the result of the discussion ith the "oard of Directors.

5. !nd 7ou are referrin% to the so#called a%ree3ent hich 7ou rotein <sic = a piece of paper

!. Kes, sir.

5. So, he as %oin% to forard that to the board of Directors forapproval

!. Kes, sir. &Tsn, pp. 01#0), @une 4, *++1'

5. Did Mr. Del Rosario tell 7ou that he ill sub3it it to his "oard forapproval

!. Kes, sir. &Tsn, p. +, @une 4, *++1'.

The above testi3on7 of Mr. ope6 shos be7ond doubt that he (ne Mr. Del Rosariohad no authorit7 to bind Viva to a contract ith !"S#$"N until and unless its "oardof Directors approved it. The co3plaint, in fact, alle%es that Mr. Del Rosario ;is the:9ecutive Producer of defendant Viva; hich ;is a corporation.; &par. 1, co3plaint'.

!s a 3ere a%ent of Viva, Del Rosario could not bind Viva unless hat he did isratified b7 its "oard of Directors. &"icente vs. *eral%e+ , 21 S$R! 1*-G Arnol%vs. illetsand Paterson, 00 Phil. )0'. !s a 3ere a%ent, reco%ni6ed as such b7plaintiff, Del Rosario could not be held liable Aointl7 and severall7 ith Viva and his



inclusion as part7 defendant has no le%al basis. &Salonga vs. arner $arner <sic = ,$OT! , 44 Phil. *12G Sal3on vs. Tan, ) Phil. 22'.

The testi3on7 of Mr. ope6 and the alle%ations in the co3plaint are clear ad3issionsthat hat as supposed to have been a%reed upon at the Ta3arind /rill beteen Mr.ope6 and Del Rosario as not a bindin% a%ree3ent. It is as it should be because

corporate poer to enter into a contract is lod%ed in the "oard of Directors. &Sec. 1),$orporation $ode'. ithout such board approval b7 the Viva board, hatevera%ree3ent ope6 and Del Rosario arrived at could not ripen into a valid contractbindin% upon Viva &!ao Ka Sin Tra%ing vs. Court of Appeals, 1-+ S$R! )'. Theevidence adduced shos that the "oard of Directors of Viva reAected :9hibit ;$; andinsisted that the fil3 pac(a%e for *0- fil3s be 3aintained &:9h. ;#*; # Viva '. '9

The contention that !"S#$"N had 7et to full7 e9ercise its ri%ht of first refusal over tent7#four fil3sunder the *++- Fil3 :9hibition !%ree3ent and that the 3eetin% beteen ope6 and Del Rosarioas a continuation of said previous contract is untenable. !s observed b7 the trial court, !"S#$"Nri%ht of first refusal had alread7 been e9ercised hen Ms. $oncio rote to VIV! tic(in% off ten fil3s,Thus8

<T=he subseCuent ne%otiation ith !"S#$"N to &1' 3onths after this letter as sent,as for an entirel7 different pac(a%e. Ms. $oncio herself ad3itted on cross#e9a3ination to havin% used or e9ercised the ri%ht of first refusal. She stated that thelist as not acceptable and as indeed not accepted b7 !"S#$"N, &TSN, @une 4,*++1, pp. 4#*-'. :ven Mr. ope6 hi3self ad3itted that the ri%ht of the first refusal3a7 have been alread7 e9ercised b7 Ms. $oncio &as she had'. &TSN, @une 4, *++1,pp. *#2'. Del Rosario hi3self (ne and understand <sic = that !"S#$"N has lost itsri%hts of the first refusal hen his list of ) titles ere reAected &Tsn, @une +, *++1, pp.*-#**' (0

II

oever, e find for !"S#$"N on the issue of da3a%es. e shall first ta(e up actual da3a%es.$hapter 1, Title LVIII, "oo( IV of the $ivil $ode is the specific la on actual or co3pensator7da3a%es. :9cept as provided b7 la or b7 stipulation, one is entitled to co3pensation for actualda3a%es onl7 for such pecuniar7 loss suffered b7 hi3 as he has dul7 proved. (1 The inde3nificationshall co3prehend not onl7 the value of the loss suffered, but also that of the profits that the obli%ee failedto obtain. (2 In contracts and Cuasi#contracts the da3a%es hich 3a7 be aarded are dependent onhether the obli%or acted ith %ood faith or otherise, It case of %ood faith, the da3a%es recoverable arethose hich are the natural and probable conseCuences of the breach of the obli%ation and hich theparties have foreseen or could have reasonabl7 foreseen at the ti3e of the constitution of the obli%ation. If the obli%or acted ith fraud, bad faith, 3alice, or anton attitude, he shall be responsible for all da3a%eshich 3a7 be reasonabl7 attributed to the non#perfor3ance of the obli%ation. (& In cri3es and Cuasi#delicts, the defendant shall be liable for all da3a%es hich are the natural and probable conseCuences ofthe act or o3ission co3plained of, hether or not such da3a%es has been foreseen or could have

reasonabl7 been foreseen b7 the defendant. ('

!ctual da3a%es 3a7 li(eise be recovered for loss or i3pair3ent of earnin% capacit7 in cases ofte3porar7 or per3anent personal inAur7, or for inAur7 to the plaintiff?s business standin% orco33ercial credit. ((

The clai3 of R"S for actual da3a%es did not arise fro3 contract, Cuasi#contract, delict, or Cuasi#delict. It arose fro3 the fact of filin% of the co3plaint despite !"S#$"N?s alle%ed (noled%e of lac( of



cause of action. Thus para%raph *1 of R"S?s !nser ith $ounterclai3 and $ross#clai3 under theheadin% $OENT:R$!IM specificall7 alle%es8

*1. !"S#$"N filed the co3plaint (noin% full7 ell that it has no cause of actionR"S. !s a result thereof, R"S suffered actual da3a%es in the a3ount ofP,1*,*+2.)1. (6

Needless to state the aard of actual da3a%es cannot be co3prehended under the above la onactual da3a%es. R"S could onl7 probabl7 ta(e refu%e under !rticles *+, 1-, and 1* of the $ivil$ode, hich read as follos8

!rt. *+. :ver7 person 3ust, in the e9ercise of his ri%hts and in the perfor3ance of hisduties, act ith Austice, %ive ever7one his due, and observe honest7 and %ood faith.

!rt. 1-. :ver7 person ho, contrar7 to la, ilfull7 or ne%li%entl7 causes da3a%e toanother, shall inde3nif7 the latter for tile sa3e.

!rt. 1*. !n7 person ho ilfull7 causes loss or inAur7 to another in a 3anner that is

contrar7 to 3orals, %ood custo3s or public polic7 shall co3pensate the latter for theda3a%e.

It 3a7 further be observed that in cases here a rit of preli3inar7 inAunction is issued, the da3a%eshich the defendant 3a7 suffer b7 reason of the rit are recoverable fro3 the inAunctive bond. () Inthis case, !"S#$"N had not 7et filed the reCuired bondG as a 3atter of fact, it as(ed for reduction of thebond and even ent to the $ourt of !ppeals to challen%e the order on the 3atter, $learl7 then, it as notnecessar7 for R"S to file a counterbond. ence, !"S#$"N cannot be held responsible for the pre3iu3R"S paid for the counterbond.

Neither could !"S#$"N be liable for the print advertise3ents for ;Ma%in% Sino Ba Man; for lac( ofsufficient le%al basis. The RT$ issued a te3porar7 restrainin% order and later, a rit of preli3inar7inAunction on the basis of its deter3ination that there e9isted sufficient %round for the issuancethereof. Notabl7, the RT$ did not dissolve the inAunction on the %round of lac( of le%al and factualbasis, but because of the plea of R"S that it be alloed to put up a counterbond.

!s re%ards attorne7?s fees, the la is clear that in the absence of stipulation, attorne7?s fees 3a7 berecovered as actual or co3pensator7 da3a%es under an7 of the circu3stances provided for in

!rticle 11-4 of the $ivil $ode. (8

The %eneral rule is that attorne7?s fees cannot be recovered as part of da3a%es because of thepolic7 that no pre3iu3 should be placed on the ri%ht to liti%ate. (9 The7 are not to be aarded ever7ti3e a part7 ins a suit. The poer of the court to aard attorne7?s fees under !rticle 11-4 de3andsfactual, le%al, and eCuitable Austification. 60 :ven hen clai3ant is co3pelled to liti%ate ith third personsor to incur e9penses to protect his ri%hts, still attorne7?s fees 3a7 not be aarded here no sufficient

shoin% of bad faith could be reflected in a part7?s persistence in a case other than erroneous convictionof the ri%hteousness of his cause. 61

!s to 3oral da3a%es the la is Section *, $hapter ), Title LVIII, "oo( IV of the $ivil $ode. !rticle11* thereof defines hat are included in 3oral da3a%es, hile !rticle 11*+ enu3erates the caseshere the7 3a7 be recovered, !rticle 111- provides that 3oral da3a%es 3a7 be recovered inbreaches of contract here the defendant acted fraudulentl7 or in bad faith. R"S?s clai3 for 3oralda3a%es could possibl7 fall onl7 under ite3 &*-' of !rticle 11*+, thereof hich reads8



&*-' !cts and actions referred to in !rticles 1*, 1, 1, 14, 1+, )-, )1, )0, and )2.

Moral da3a%es are in the cate%or7 of an aard desi%ned to co3pensate the clai3ant for actualinAur7 suffered. and not to i3pose a penalt7 on the ron%doer. 62 The aard is not 3eant to enrich theco3plainant at the e9pense of the defendant, but to enable the inAured part7 to obtain 3eans, diversion,or a3use3ents that ill serve to obviate then 3oral sufferin% he has under%one. It is ai3ed at the

restoration, ithin the li3its of the possible, of the spiritual status quo ante, and should be proportionate tothe sufferin% inflicted. 6& Trial courts 3ust then %uard a%ainst the aard of e9orbitant da3a%esG the7should e9ercise balanced restrained and 3easured obAectivit7 to avoid suspicion that it as due topassion, preAudice, or corruption on the part of the trial court. 6'

The aard of 3oral da3a%es cannot be %ranted in favor of a corporation because, bein% an artificialperson and havin% e9istence onl7 in le%al conte3plation, it has no feelin%s, no e3otions, no senses,It cannot, therefore, e9perience ph7sical sufferin% and 3ental an%uish, hich call be e9periencedonl7 b7 one havin% a nervous s7ste3.6( The state3ent in (eople v . Manero 66 and Mam&ulao Lum&erCo. v . (-$ 6) that a corporation 3a7 recover 3oral da3a%es if it ;has a %ood reputation that is debased,resultin% in social hu3iliation; is an o&iter %ictum. On this score alone the aard for da3a%es 3ust be setaside, since R"S is a corporation.

The basic la on e9e3plar7 da3a%es is Section 2, $hapter ), Title LVIII, "oo( IV of the $ivil $ode.These are i3posed b7 a7 of e9a3ple or correction for the public %ood, in addition to 3oral,te3perate, liCuidated or co3pensator7 da3a%es. 68 The7 are recoverable in cri3inal cases as part ofthe civil liabilit7 hen the cri3e as co33itted ith one or 3ore a%%ravatin% circu3stancesG 69 in Cuasi#contracts, if the defendant acted ith %ross ne%li%enceG)0 and in contracts and Cuasi#contracts, if thedefendant acted in a anton, fraudulent, rec(less, oppressive, or 3alevolent 3anner. )1

It 3a7 be reiterated that the clai3 of R"S a%ainst !"S#$"N is not based on contract, Cuasi#contract,delict, or Cuasi#delict, ence, the clai3s for 3oral and e9e3plar7 da3a%es can onl7 be based on

!rticles *+, 1-, and 1* of the $ivil $ode.

The ele3ents of abuse of ri%ht under !rticle *+ are the folloin%8 &*' the e9istence of a le%al ri%ht or

dut7, &1' hich is e9ercised in bad faith, and &)' for the sole intent of preAudicin% or inAurin% another. !rticle 1- spea(s of the %eneral sanction for all other provisions of la hich do not especiall7provide for their on sanctionG hile !rticle 1* deals ith acts contra &onus mores, and has thefolloin% ele3entsG &*' there is an act hich is le%al, &1' but hich is contrar7 to 3orals, %oodcusto3, public order, or public polic7, and &)' and it is done ith intent to inAure. )2

Veril7 then, 3alice or bad faith is at the core of !rticles *+, 1-, and 1*. Malice or bad faith i3plies aconscious and intentional desi%n to do a ron%ful act for a dishonest purpose or 3oralobliCuit7. )& Such 3ust be substantiated b7 evidence. )'

There is no adeCuate proof that !"S#$"N as inspired b7 3alice or bad faith. It as honestl7convinced of the 3erits of its cause after it had under%one serious ne%otiations cul3inatin% in itsfor3al sub3ission of a draft contract. Settled is the rule that the adverse result of an action doesnot per se 3a(e the action ron%ful and subAect the actor to da3a%es, for the la could not have3eant to i3pose a penalt7 on the ri%ht to liti%ate. If da3a%es result fro3 a person?s e9ercise of ari%ht, it is %amnum a&sque in'uria. )(

:R:FOR:, the instant petition is /R!NT:D. The challen%ed decision of the $ourt of !ppeals in$!#/.R. $V No, 00*12 is hereb7 R:V:RS:D e9cept as to unappealed aard of attorne7?s fees infavor of VIV! Productions, Inc. /phi.n0t



No pronounce3ent as to costs.

SO ORD:R:D.

Melo, Kapunan, Martine+ an% (ar%o 11., concur.

#oo*no*+

* Per !defuin#Dela $ru6, @., ith antin and Ta7ao#@a%uros, @@., concurrin%G #ollo,0+#-.

1 #ollo, 1.

) Per @ud%e :fren N. !3brosioG #ollo, *)0#**.

0 RT$ Decision, #ollo, *0#*0+.

2. This should be Republic "roadcastin% S7ste3, no /M! Netor( Inc., uponapproval b7 the Securities and :9chan%e $o33ission of the chan%e in corporatena3e on 1- Februar7 *++.

Vol. *, Ori%inal Record &OR', $ivil $ase No. 5#+1#*1)-+, 1#14, ereafter, ORshall refer to the record of this case.

Vol, * OR, *-#*).

4 Vol. *, OR, 1*#11-.

+ I% ., *40#1*.

*- I% ., *#*4) &VIV! and Del Rosario'G 111#114 &R"S'.

** I% ., ))*#))1.

*1 I% ., )+.

*) I% ., )+.

*0 I% ., )+4#0-1, 0-)#0-0.

*2 I% ., 0-#0-+.

* I% ., 02)#020.

* Vol. 1, OR, 02#040.

*4 I% ., 00.

*+ I% ., +*)#+14.



1- I% ., **0-#**G #ollo, *)0#**.

1* Vol. 1, OR, 1-)-#1-)2.

11 #ollo, 22.

1) 1+- S$R! 21) <*++2=.

10 100 S$R! )1- <*++2=.

12 1)4 S$R! <*++0=.

1 2 S$R! )21 <*+2=.

1 Citing Francel Realt7 $orp. v. $ourt of !ppeals, 121 S$R! *1, *)0 <*++=.

14 Citing Tan v. $ourt of !ppeals, *)* S$R! )+, 0-0 <*+40=.

1+ Citing !u7on% ian v. $ourt of Ta9 !ppeals, 2+ S$R! **-, *)0 <*+0=.

)- Citing Ilocos Norte :lectric $o3pan7 v. $ourt of !ppeals, *+ S$R! 2 <*+4+=.

)* Citing People v. Manero, 1*4 S$R! 42,+#+ <*++)=G citing Si3e9 InternationalManila' Inc. v. $ourt of !ppeals, *4) S$R! )- <*++-=.

)1 * S$R! )1* <*+=.

)) See /on6ales v. National ousin% $orp., +0 S$R! 4 <*++=G ServiceideSpecialist, Inc. v. $ourt of !ppeals, 12 S$R! 0+ <*++=.

)0 I !RTETRO M. TO:NTINO, $OMM:NT!RI:S !ND @ERISPRED:N$: ONT: $IVI $OD: OF T: PIIPPIN:S )# <*+4) :d'.

)2 Supra note )*.

) #ollo, *+*.

) !rt. *)-2, $ivil $ode.

)4 !rt. *)*4, $ivil $ode.

)+ To7ota Sha, Inc. v. $ourt of !ppeals, Supra note 10, at )1+.

0- See IV !RTERO M. TO:NTINO, $OMM:NT!RI:S !ND @ERISPRED:N$: ONT: $IVI $OD: OF T: PIIPPIN:S 02- &th ed., *++'.

0* Supra note 1).

01 Supra note 1.



0) 122 S$R! 1, )+ <*++=.

00 *2 Fed. 1nd +2, Citing Sec. + illiston on $ontracts.

02 Villonco Realt7 $o3pan7 v. "or3aheco, Inc. Supra note 12, at )2#).

0 ".P. "l%. 4, Sec. 1).

0 @ose $. VITE/, P!ND:$T OF $OMM:R$I! ! !ND @ERISPRED:N$: )2&Reviced edG *++-'.

04 I @OS: $. $!MPOS, @R., and M!RI! $!R! OP:#$!MPOS, T:$ORPOR!TION $OD:, )04#)42 &*++- ed.'

0+ RT$ Decision, #ollo, *2)#*2.

2- I% ., *24.

2* !rt. 1*++, $ivil $ode.

21 !rt. 11--, I% .

2) !rt. 11-*, i% .

20 !rt. 11-1, i% .

22 !rt. 11-2, i% .

2 Vol. *, OR, 112.

2 Sec. 0 in relation to Section 4, Rule 24 *++ Rules of $ivil Procedure.

24 It reads as follos8

!rt. 11-4. In the absence of stipulation, attorne7?s fees and e9penses of liti%ation,other than Audicial costs, cannot be recovered, e9cept8

&*' hen e9e3plar7 da3a%es are aardedG

&1' hen the defendant?s act or o3ission has co3pelled the plaintiff to liti%ate iththird persons or to incur e9penses to protect his interestG

&)' In cri3inal cases of 3alicious prosecution a%ainst the plaintiffG

&0' In case of a clearl7 unfounded civil action or proceedin% a%ainst the plaintiffG

&2' here the defendant acted in %ross and evident bad faith in refusin% to satisf7 theplaintiffs plainl7 valid, Aust and de3andable clai3G

&' In actions for le%al supportG



&' In actions for the recover7 of a%es of household helpers, laborers and s(illedor(ersG

&4' In actions for inde3nit7 under or(3en?s co3pensation and e3plo7er?s liabilit7lasG

&+' In a separate civil action to recover civil liabilit7 arisin% fro3 a cri3eG

&*-' hen at least double Audicial costs are aardedG

&**' In an7 other case here the court dee3s it Aust and eCuitable that attorne7?s feesand e9penses of liti%ation should be recovered.

In all cases, the attorne7?s fees and e9penses of liti%ation 3ust be reasonable.

2+ Firestone Tire Rubber $o3pan7 of the Philippines v. Ines $haves $o. td., *4S$R! )2,)24 <*+=G Philippine !ir ines v. Miano, 101 S$R! 1)2, 10- <*++2=.

- Scott $onsultants Resource Develop3ent $orporation, Inc. v. $ourt of !ppeals,101 S$R! )+) . 0- <*++2=.

* /on6ales v. National ousin% $orp., +0 S$R! 4, +1 <*++=G ServiceideSpecialists, Inc. v. $ourt of !ppeals, supra note ,), at 22.

1 Pa%su7uin v. Inter3ediate !ppellate $ourt, *+) S$R! 20, 222 <*++*=.

) Visa7an Sa3ill $o3pan7 v. $ourt of !ppeals, 1*+ S$R! )4, )+1<*++)=, citing R" Securit7 Insurance $o., Inc. v. Inter3ediate appellate $ourt *1+S$R! ) <*+40=G De la Serna v. $ourt of !ppeals, 1)) S$R! )12, )1+#))- <*++0=.

0 People v. enceslao, 1*1 S$R! 2-, 2+ <*++1=, citing Filinvest $redit $orp. v.Inter3ediate !ppellate $ourt, * S$R! *22<*++4=.

2 Pri3e hite $e3ent $orp. v. Inter3ediate !ppellate $ourt, 11- S$R! *-), **)#**0 <*++)= "$ :9press Inc. v. $ourt of !ppeals, 1) S$R! -1, - <*++0=G !c3eShoe, Rubber and Plastic $orp. v. $ourt of !ppeals, 1- S$R! *0, 11 <*++=.

Supra note )*.

*)- Phil. ) <*+4=.

4 !rt. 111+, $ivil $ode.

+ !rt. 11)-, i% .

- !rt. 11)*, i% .

* !rt. 11)1, i% .

1 !lbenson :nterprises $orp. v. $ourt of !ppeals, 1* S$R! I *, 12 <*++)=.



) Far :ast "an( and Trust $o3pan7 v. $ourt of !ppeals, 10* S$R! *, 2<*++2=.

0 Philippine !ir ines v. Miano, supra note 2+.

2 Tiera International $onstruction $orp. v. NR$, 1** S$R! ), 4*

<*++1= citing Saba v. $ourt of !ppeals, *4+ S$R! 2-, 22 <*++-=.

ABS-CBN Broadcasting Corporation v. Hon. Court of Appeals G.R. No. 128690

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Transcript of ABS-CBN Broadcasting Corporation v. Hon. Court of Appeals G.R. No. 128690