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BS CBN Broadcasting Corporation vs. CA [301 SCRA 572 (Jan 21 1999)]

Power of the Board of Directors

Delegation to Executive Committee

Facts: In 1990, ABS CBN and Viva executed a Film Exhibition Agreementwhereby Viva gave ABS CBN an exclusive right to exhibit some Viva films. Said

agreement contained a stipulation that ABS shall have the right of first refusal to

the next 24 Viva films for TV telecast, provided that such right shall be exercised

by ABS from the actual offer in writing.

Hence, through this agreement, Viva offered ABS a list of 36 films from which

ABS may exercise its right of first refusal. ABS however, through VP Concio, did

not accept the list since she could only tick off 10 films. This rejection was

embodied in a letter.

In 1992, Viva again approached ABS with a list consisting of 52 original filmswhere Viva proposed to sell these airing rights for P60M.

Vivas Vic del Rosario and ABS general manager Eugenio Lopez III met at the

Tamarind Grill to discuss this package proposal. What transcribed at that

meeting was subject to conflicting versions.

According to Lopez, he and del Rosario agreed that ABS was granted exclusive

film rights to 14 films for P36M, and that this was put in writing in a napkin,

signed by Lopez and given to del Rosario. On the other hand, del Rosario denied

the existence of the napkin in which Lopez wrote something, and insisted that

what he and Lopez discussed was Vivas film package of the 52 original films forP60M stated above, and that Lopez refused said offer, allegedly signifying his

intent to send a counter proposal. When the counter proposal arrived, Vivas

BoD rejected it, hence, he sold the rights to the 52 original films to RBS.

Thus, ABS filed before RTC a complaint for specific performance with prayer for

TRO against RBS and Viva. RTC issued the TRO enjoining the airing of the films

subject of controversy. After hearing, RTC rendered its decision in favor of RBS

and Viva contending that there was no meeting of minds on the price and terms

of the offer. The agreement between Lopez and del Rosario was subject to Viva

BoD approval, and since this was rejected by the board, then, there was no basisfor ABS demand that a contract was entered into between them. That the 1990

Agreement with the right of first refusal was already exercised by Ms. Concio

when it rejected the offer, and such 1990 Agreement was an entirely new

contract other than the 1992 alleged agreement at the Tamarind Grill. CA

affirmed. Hence, this petition for certiorari with SC.

Lopez claims that it had not fully exercised its right of first refusal over 24 films

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since it only chose 10. He insists that SC give credence to his testimony that he

and del Rosario discussed the airing of the remaining 14 films under the right of

first refusal agreement in Tamarind Grill where there was a contract written in

the alleged napkin.

Issue: Whether or not there was a perfected contract between Lopez and del

Rosario.

Held: NO. A contract is a meeting of minds between 2 persons whereby one

binds himself to give something or to render some service to another for a

consideration. There is no contract unless the following requisites concur: (1)

consent of the contracting parties (2) object certain which is the subject of the

contract (3) cause of the obligation, which is established.

Contracts that are consensual in nature are perfected upon mere meeting of theminds. Once there is concurrence between the offer and the acceptance upon

the subject matter, consideration, and terms of payment, a contract is

produced. The offer must be certain. To convert the offer into a contract, the

acceptance must be absolute and must not qualify the terms of the offer; it must

be plain, unequivocal, unconditional, and without variance of any sort from the

proposal. A qualified acceptance, or one that involves a new proposal,

constitutes a counter offer and is a rejection of the original offer. Consequently,

when something is desired which is not exactly what is proposed in the offer,

such acceptance is not sufficient to generate consent because any modificationor variation from the terms of the offer annuls the offer.

In the case at bar, when del Rosario met with Lopez at the Tamarind Grill, the

package of 52 films was Vivas offer to enter into a new Exhibition Agreement.

But ABS, through its counter proposal sent to Viva, actually made a counter

offer. Clearly, there was no acceptance. The acceptance should be unqualified.

When Vivas BoD rejected the counter proposal, then no contract could have

been executed. Assuming arguendo that del Rosario did enter into a contract

with Lopez at Tamarind Grill, this acceptance did not bind Viva since there was

no proof whatsoever that del Rosario had specific authority to do so. Under theCorporation Code, unless otherwise provided by said law, corporate powers, such

as the power to enter into contracts, are exercised by the BoD. However, the

board may delegate such powers to either an executive committee or officials or

contracted managers. The delegation, except for the executive committee, must

be for specific purposes. Delegation to officers makes the latter agents of the

corporation, and accordingly, the general rules of agency ad to the binding

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effects of their acts would apply. For such officers to be deemed fully clothed by

the corporation to exercise a power of the Board, the latter must specially

authorize them to do so. That del Rosario did not have the authority to accept

ABS counter offer was best evidenced by his submission of the counter proposal

to Vivas BoD for the latters approval. In any event, there was no meeting ofthe minds between del Rosario and Lopez.

The contention of Lopez that their meeting in Tamarind Grill was a continuation

of their right of first refusal agreement over the remaining 14 films is untenable.

ABS right of first refusal had already been exercised when Ms. Concio wrote to

Viva choosing only 10 out of the 36 films offered by del Rosario. It already

refused the 26 films.