Case: ABS-CBN BROADCASTING CORP. v. CA, REPUBLIC BROADCASTING CORP.

, VIVA
PRODUCTIONS, INC., and VICENTE DEL ROSARIO (301 SCRA 589)
Date: January 21, 1999
Ponente: C.J. Davide, Jr.

Doctrines: Corporation Code; Board of Directors; Under the Corporation Code, unless otherwise provided by said
Code, corporate powers, such as the power to enter into contracts, are exercised by the Board of Directors.
However, the Board may delegate such powers to either an executive committee or officials or
contracted managers. -Under the Corporation Code, unless otherwise provided by said Code, corporate powers,
such as the power to enter into contracts, are exercised by the Board of Directors. However, the Board may
delegate such powers to either an executive committee or officials or contracted managers. The delegation, except
for the executive committee, must be for specific purposes. Delegation to officers makes the latter agents of the
corporation; accordingly, the general rules of agency as to the
binding effects of their acts would apply. For such officers to be deemed fully clothed by the corporation to
exercise a power of the Board, the latter must specially authorize them to do so. That Del Rosario did not have the
authority to accept ABS-CBN’s counteroffer was best evidenced by his submission of the draft contract to VIVA’s
Board of Directors for the latter’s approval. In any event, there was between Del Rosario and Lopez III no meeting
of minds.

The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and
having existence only in legal contemplation, it has no feelings, no emotions, no senses. It cannot, therefore,
experience physical suffering and mental anguish, which can be experienced only by one ha ving a nervous
system. -The award of moral damages cannot be granted in favor of a corporation because, being an artificial
person and having existence only in legal contemplation, it has no feelings,
no emotions, no senses. It cannot, therefore, experienc e physical suffering and mental anguish, which can be
experienced only by one having a nervous system. The statement in People v. Manero and
Mambulao Lumber Co. v. PNB that a corporation may recover moral damages if it „has a good reputation that is
debased, resulting in social humiliation‰ is an obiter dictum. On this score
alone the award for damages must be set aside, since RBS is a corporation.

Parties to the case: petitioner: ABS-CBN, private Respondent: Republic Broadcasting Corp., VIVA
productions Inc., and Mr. Vicente Del Rosario (executive producer f or VIVA)

Facts:
In 1990, ABS-CBN and VIVA executed a Film Exhibition Agreement whereby VIVA gave ABS -
CBN an exclusive right to exhibit some VIVA f ilms. According to the agreement, ABS -CBN shall have the
right of f irst ref usal to the next 24 VIVA f ilms f or TV telecast under such terms as may be agreed upon by
the parties, however, such right shall be exercised by ABS-CBN f rom the actual of f er in writing.

Sometime in December 1991, VIVA, through Vicente Del Rosario (Executive Producer), of f ered
ABS-CBN through VP Charo Santos-Concio, a list of 3 f ilm packages f rom which ABS-CBN may exercise
its right of f irst ref usal. ABS-CBN, however through Mrs. Concio, tick of f only 10 titles they can purchase
among which is the f ilm “Maging Sino Ka Man” which is one of the subjects of the present case, theref ore,
it did not accept the said list as per the rejection letter authored by Mrs. Concio sent to Del Rosario.

Subsequently, Del Rosario approached Mrs. Concio with another list consisting of 52 original
movie titles and 104 re-runs, proposing to sell to ABS-CBN airing rights f or P60M (P30M in cash and
P30M worth of television spots). Del Rosario and ABS-CBN’s General Manager, Eugenio Lopez III, met
at the Tamarind Grill Restaurant in QC to discuss the package proposal but to no avail.

Four days later, Del Rosario and Mr. Graciano Gozon, Senior VP of Finance of Republic
Broadcasting Corporation (RBS/Channel 7) discussed the terms and conditions of VIVA’s o ffer. A day
af ter that, Mrs. Concio sent the draf t of the contract between ABS -CBN and VIVA which contained a
counter-proposal covering 53 f ilms f or P35M. VIVA’s Board of Directors rejected the counter-proposal as
it would not sell anything less than the p ackage of 104 f ilms f or P60M. Af ter said rejection, ABS-CBN
closed a deal with RBS including the 14 f ilms previously ticked off by ABS -CBN.

Consequently, ABS-CBN f iled a complaint f or specif ic perf ormance with prayer f or a writ of
preliminary injunction and/or TRO against RBS, VIVA and Del Rosario. RTC then enjoined the latter f rom
airing the subject f ilms. RBS posted a P30M counterbond to dissolve the injunction. Later on, the trial
court as well as the CA dismissed the complaint holding that there was no meeting of minds between
ABS-CBN and VIVA, hence, there was no basis f or ABS-CBN’s demand, f urthermore, the right of f irst
ref usal had previously been exercised.

Hence, the present petition, ABS-CBN argued that an agreement was made during the meeting
of Mr. Lopez and Del Rosario jotted down on a “napkin” (this was never produced in court). Moreover, it
had yet to f ully exercise its right of f irst ref usal since only 10 titles were chosen f rom the f irst list. As to
actual, moral and exemplary damages, there was no clear basis in awarding the same.

Issue: WON a contract was perf ected between ABS-CBN and VIVA and WON moral damages may be
awarded to a corporation

Held: Both NO.

Ratio:
Contracts that are consensual in nature are perf ected upon mere meeting of the minds. Once
there is concurrence between the of f er and the acceptance upon the subject matter, consideration, and
terms of payment a contract is produced. The of f er must be certain. To convert the of fer into a contract,
the acceptance must be absolute and must not qualif y the terms of the of f er; it must be plain,
unequivocal, unconditional, and without variance of any sort f rom the proposal. A qualif ied acceptance,
or one that involves a new proposal, constitutes a counter-of f er and is a rejection of the original
of f er. Consequently, when something is desired which is not exactly what is proposed in the of f er, such
acceptance is not suf f icient to generate consent because any modif ication or variation f rom the terms of
the of f er annuls the of f er.

Af ter Mr. Del Rosario of Viva met Mr. Lopez of ABS-CBN to discuss the package of f ilms, ABS-
CBN, sent through Ms. Concio, counter-proposal in the f orm a draf t contract. This counter-proposal could
be nothing less than the counter-of f er of Mr. Lopez during his conf erence with Del Rosario. Clearly, there
was no acceptance of VIVA’s of fer, f or it was met by a counter-of f er which substantially varied the terms
of the of f er.
In the case at bar, VIVA through its Board of Directors, rejected such counter-offer. Even if
it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not
bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so.
Under the Corporation Code, unless otherwise provided by said Code, corporate powers,
such as the power to enter into contracts, are exercised by the Board of Directors. However, the
Board may delegate such powers to either an executive committee or officials or contracted
managers. The delegation, except for the executive committee, must be for specific purposes.
Delegation to of f icers makes the latter agents of the corporation; accordingly, the general rules of agency
as to the binding ef f ects of their acts would apply. For such of f icers to be deemed f ully 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-CBN’s counter-offer was best evidenced by his
submission of the draft contract to VIVA’s Board of Directors for the latter’s approval. In any event,
there was between Del Rosario and Lopez III no meeting of minds.

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what
was supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was
not a binding agreement. It is as it should be because corporate power to enter into a contract is
lodged in the Board of Directors. (Sec. 23, Corporation Code). Without such board approval by
the Viva board, whatever agreement Lopez and Del Rosario arrived at could not ripen into a valid
contact binding upon Viva.

However, the Court f ind f or ABS-CBN on the issue of damages. Moral damages are in the
category of an award designed to compensate the claimant f or actual injury suf f ered and not to impose a
penalty on the wrongdoer. The award of moral damages cannot be granted in favor of a corporation
because, being an artificial person and having existence only in legal contemplation, it has no
feelings, no emotions, no senses. It cannot, therefore, experience physical suffering and mental
anguish, which can be experienced only by one having a nervous system. The statement that a
corporation may recover moral damages if it “has a good reputation that is debased, resulting in social
humiliation” is an obiter dictum. On this score alone the award f or damages must be set aside, since
RBS is a corporation.