Corpo Case Assignments

8/12/2019 Corpo Case Assignments

1/68

G.R. No. L-23145 November 29, 1968

TESTATE ESTATE OF IDONAH SLADE ER!INS, "e#e$%e". RENATO D. TA&AG, ancillary administrator-appellee,vs. 'ENG(ET )ONSOLIDATED, IN).,oppositor-appellant.

Confronted by an obstinate and adamant refusal of the domiciliary administrator, the County Trust Company ofNew York, United States of merica, of the estate of the deceased !donah Slade "erkins, who died in NewYork City on #arch $%, &'(), to surrender to the ancillary administrator in the "hilippines the stock certificates

owned by her in a "hilippine corporation, *en+uet Consolidated, !nc., to satisfy the le+itimate claims of localcreditors, the lower court, then presided by the onorable rsenio Santos, now retired, issued on #ay &,&'(, an order of this tenor/ 0fter considerin+ the motion of the ancillary administrator, dated 1ebruary &&,&'(, as well as the opposition filed by the *en+uet Consolidated, !nc., the Court hereby 2&3 considers as lostfor all purposes in connection with the administration and li4uidation of the "hilippine estate of !donah Slade"erkins the stock certificates coverin+ the 55,))$ shares of stock standin+ in her name in the books of the*en+uet Consolidated, !nc., 2$3 orders said certificates cancelled, and 253 directs said corporation to issue newcertificates in lieu thereof, the same to be delivered by said corporation to either the incumbent ancillaryadministrator or to the "robate 6ivision of this Court.0&

1rom such an order, an appeal was taken to this Court not by the domiciliary administrator, the County TrustCompany of New York, but by the "hilippine corporation, the *en+uet Consolidated, !nc. The appeal cannotpossibly prosper. The challen+ed order represents a response and e7presses a policy, to paraphrase1rankfurter, arisin+ out of a specific problem, addressed to the attainment of specific ends by the use ofspecific remedies, with full and ample support from le+al doctrines of wei+ht and si+nificance.

The facts will e7plain why. s set forth in the brief of appellant *en+uet Consolidated, !nc., !donah Slade"erkins, who died on #arch $%, &'() in New York City, left amon+ others, two stock certificates coverin+55,))$ shares of appellant, the certificates bein+ in the possession of the County Trust Company of New York,which as noted, is the domiciliary administrator of the estate of the deceased.$Then came this portion of theappellant8s brief/ 09n u+ust &$, &'(), "rospero Sanidad instituted ancillary administration proceedin+s in theCourt of 1irst !nstance of #anila: ;a


2/68

!t can truly be said then that the result arrived at upheld and vindicated the honor of the Audiciary no less thanthat of the country. Throu+h this challen+ed order, there is thus dispelled the atmosphere of contin+entfrustration brou+ht about by the persistence of the domiciliary administrator to hold on to the stock certificatesafter it had, as admitted, voluntarily submitted itself to the Aurisdiction of the lower court by enterin+ itsappearance throu+h counsel on =une $%, &'(5, and filin+ a petition for relief from a previous order of #arch &D,&'(5.

Thus did the lower court, in the order now on appeal, impart vitality and effectiveness to what was decreed. 1orwithout it, what it had been decided would be set at nau+ht and nullified. Unless such a blatant disre+ard by

the domiciliary administrator, with residence abroad, of what was previously ordained by a court order could bethus remedied, it would have entailed, insofar as this matter was concerned, not a partial but a well-ni+hcomplete paralysis of Audicial authority.

&. ppellant *en+uet Consolidated, !nc. did not dispute the power of the appellee ancillary administrator to+ain control and possession of all assets of the decedent within the Aurisdiction of the "hilippines. Nor could it.Such a power is inherent in his duty to settle her estate and satisfy the claims of local creditors. Ds =usticeTuason speakin+ for this Court made clear, it is a 0+eneral rule universally reco+nievenuefinds application. 0!n the instantcase, the actual situs of the shares of stock is in the "hilippines, the corporation bein+ domiciled [email protected] To theforce of the above undeniable proposition, not even appellant is insensible. !t does not dispute it. Nor could itsuccessfully do so even if it were so minded.

$. !n the face of such incontrovertible doctrines that ar+ue in a rather conclusive fashion for the le+ality of thechallen+ed order, how does appellant, *en+uet Consolidated, !nc. propose to carry the e7tremely heavyburden of persuasion of precisely demonstratin+ the contraryB !t would assi+n as the basic error alle+edlycommitted by the lower court its 0considerin+ as lost the stock certificates coverin+ 55,))$ shares of *en+uetbelon+in+ to the deceased !donah Slade "erkins, ...0'#ore specifically, appellant would stress that the 0lower

court could not 0consider as lost0 the stock certificates in 4uestion when, as a matter of fact, his onor the trial=ud+e knew, and does know, and it is admitted by the appellee, that the said stock certificates are in e7istenceand are today in the possession of the domiciliary administrator in New York.0&)

There may be an element of fiction in the above view of the lower court. That certainly does not suffice to callfor the reversal of the appealed order. Since there is a refusal, persistently adhered to by the domiciliaryadministrator in New York, to deliver the shares of stocks of appellant corporation owned by the decedent tothe ancillary administrator in the "hilippines, there was nothin+ unreasonable or arbitrary in considerin+ themas lost and re4uirin+ the appellant to issue new certificates in lieu thereof. Thereby, the task incumbent underthe law on the ancillary administrator could be dischar+ed and his responsibility fulfilled.

ny other view would result in the compliance to a valid Audicial order bein+ made to depend on the


3/68

uncontrolled discretion of the party or entity, in this case domiciled abroad, which thus far has shown theutmost persistence in refusin+ to yield obedience. Certainly, appellant would not be heard to contend in allseriousness that a Audicial decree could be treated as a mere scrap of paper, the court issuin+ it bein+powerless to remedy its fla+rant disre+ard.

!t may be admitted of course that such alle+ed loss as found by the lower court did not correspond e7actly withthe facts. To be more blunt, the 4uality of truth may be lackin+ in such a conclusion arrived at. !t is to beremembered however, a+ain to borrow from 1rankfurter, 0that fictions which the law may rely upon in thepursuit of le+itimate ends have played an important part in its development.0&&

Speakin+ of the common law in its earlier period, Cardo


4/68


5/68

honor maintained.

E>E19>E, the appealed order of the onorable rsenio Santos, the =ud+e of the Court of 1irst !nstance,dated #ay &, &'(, is affirmed. ith costs a+ainst oppositor-appelant *en+uet Consolidated, !nc.


6/68

'ATAAN SHI&ARD * ENGINEERING )O., IN). +'ASE)O, v%.)GG, )HAIRAN O/ITOSALONGA, )OISSIONER AR& )ON)E)ION 'A(TISTA, )OISSIONER RAON DIA0,)OISSIONER RA(L R. DA0A, )OISSIONER (INTIN S. DOROAL, )AT. ORGE '.SIA)(N)O, e $.,

Challen+ed in this special civil action of certiorari and prohibition by a private corporation known as the*ataan Shipyard and En+ineerin+ Co., !nc. are/ 2&3 E7ecutive 9rders Numbered & and $, promul+ated by"resident CoraE/ SEIUEST>T!9N 9>6E>

*y virtue of the powers vested in the "residential Commission on Food Fovernment, by authority of the"resident of the "hilippines, you are hereby directed to se4uester the followin+ companies.

&. *ataan Shipyard and En+ineerin+ Co., !nc. 2En+ineerin+ !sland Shipyard and #ariveles Shipyard3

$. *aseco Iuarry

5. "hilippine =ai-lai Corporation

. 1idelity #ana+ement Co., !nc.

D. >omson >ealty, !nc.

(. Trident #ana+ement Co.

%. New Trident #ana+ement. *ay Transport

'. nd all affiliate companies of lfredo 0*eAo0 >omualdeepublic of the "hilippines0: 39

c3 that 0said assets and properties are in the form of bank accounts. deposits, trust. accounts, shares of

stocks, buildin+s, shoppin+ centers, condominiums, mansions, residences, estates, and other kinds of realand personal properties in the "hilippines and in various countries of the world:0 4and

$3 that certain 0business enterprises and properties 2were3 taken over by the +overnment of the #arcosdministration or by entities or persons close to former "resident #arcos. 41

(. Fovernment8s >i+ht and 6uty to >ecover ll !ll-+otten ealth

There can be no debate about the validity and eminent propriety of the Fovernment8s plan 0to recover all ill-+otten wealth.0

Neither can there be any debate about the proposition that assumin+ the above described factual premisesof the E7ecutive 9rders and "roclamation No. 5 to be true, to be demonstrable by competent evidence, therecovery from #arcos, his family and his dominions of the assets and properties involved, is not only a ri+ht

but a duty on the part of Fovernment.

*ut however plain and valid that ri+ht and duty may be, still a balance must be sou+ht with the e4uallycompellin+ necessity that a proper respect be accorded and ade4uate protection assured, the fundamentalri+hts of private property and free enterprise which are deemed pillars of a free society such as ours, and towhich all members of that society may without e7ception lay claim.

L L 6emocracy, as a way of life enshrined in the Constitution, embraces as its necessary componentsfreedom of conscience, freedom of e7pression, and freedom in the pursuit of happiness. $long 0ith thesefreedoms are included economic freedom and freedom of enterprisewithin reasonable bounds and underproper control. L L Evincin+ much concern for the protection of property, the Constitution distinctlyreco+ni


12/68

Conse4uently, the factual premises of the E7ecutive 9rders cannot simply be assumed. They will have tobe duly established by ade4uate proof in each case, in a proper Audicial proceedin+, so that the recovery ofthe ill-+otten wealth may be validly and properly adAud+ed and consummated: althou+h there are some whomaintain that the fact-that an immense fortune, and 0vast resources of the +overnment have been amassedby former "resident 1erdinand E. #arcos, his immediate family, relatives, and close associates both hereand abroad,0 and they have resorted to all sorts of clever schemes and manipulations to dis+uise and hidetheir illicit ac4uisitions-is within the realm of Audicial notice, bein+ of so e7tensive notoriety as to dispensewith proof thereof, *e this as it may, the re4uirement of evidentiary substantiation has been e7pressly

acknowled+ed, and the procedure to be followed e7plicitly laid down, in E7ecutive 9rder No. &.b. eed of Provisional #easures to Collect and Conserve $ssets Pending Suits

Nor may it be +ainsaid that pendin+ the institution of the suits for the recovery of such 0ill-+otten wealth0 asthe evidence at hand may reveal, there is an obvious and imperative need for preliminary, provisionalmeasures to prevent the concealment, disappearance, destruction, dissipation, or loss of the assets andproperties subAect of the suits, or to restrain or foil acts that may render moot and academic, or effectivelyhamper, delay, or ne+ate efforts to recover the same.

%. "rovisional >emedies "rescribed by ;aw

To answer this need, the law has prescribed three 253 provisional remedies. These are/ 2&3 se4uestration:2$3 free


13/68

custody is not only the physical assets of the business enterprise or entity, but the business operation aswell. !t is in fine the assumption of control not only over thin+s, but over operations or on- +oin+ activities.*ut, to repeat, such a 0provisional takeover0 is allowed only as re+ards 0business enterprises L L taken over%" the government of the #arcos $dministration or %" entities or persons close to former President#arcos(/

d. o Divestment of Title Over Propert" Sei


14/68

+. Remedies, on;?udicial

"arenthetically, that writs of se4uestration or free


15/68

'. Constitutional Sanction of >emedies

!f any doubt should still persist in the face of the fore+oin+ considerations as to the validity and propriety ofse4uestration, freeoAas, 2$3 nthony ". ;ee, 253 Eduardo T. #arcelo, 23 =ose". 1ernande


16/68

$. Severino F. de la Cru< &,$ shares

5. Emilio T. Yap $,D) shares

. =ose 1ernande< &,$ shares

D. =ose 1rancisco &$ shares

(. #anuel S. #endo. !nes, as Feneral #ana+er. This a+reement bore, at the top ri+ht corner of the firstpa+e, the word 0"">9GE60 in the handwritin+ of President #arcos,followed by his usual full si+nature.The document recited that a down payment of "D,($,5&).)) had been made by *SEC9, and thebalance of "&',',$).)) was payable in e4ual semi-annual installments over nine 2'3 years after a +race

period of two 2$3 years, with interest at %P per annum.&D. $cquisition of 8@@ Aectares from xport Processing one $uthorit"

9n 9ctober &, &'%, *SEC9 ac4uired three hundred 25))3 hectares of land in #ariveles from the E7port"rocessin+ Kone uthority for the price of "&),)%,').)) of which, as set out in the document of sale,


17/68

"$,))).))).)) was paid upon its e7ecution, and the balance stipulated to be payable in installments. 8

&(. $cquisition of Other $ssets of $SSCO= !ntervention of #arcos

Some nine months afterwards, or on =uly &D, &'%D, to be precise, *SEC9, a+ain with the intervention of"resident #arcos, ac4uired ownership of the rest of the assets of NSSC9 which had not been included inthe first two 2$3 purchase documents. This was accomplished by a deed entitled 0Contract of "urchase andSale,0 9which, like the #emorandum of +reement dated 9ctober ', &'%5 supraalso bore at the upperri+ht-hand corner of its first pa+e, the handwritten notation of President #arcosreadin+, 0"">9GE6, =uly

$', &'%5,0 and underneath it, his usual full si+nature. Transferred to *SEC9 were NSSC98s 0ownershipand all its titles, ri+hts and interests over all e4uipment and facilities includin+ structures, buildin+s, shops,4uarters, houses, plants and e7pendable or semi-e7pendable assets, located at the En+ineer !sland, knownas the En+ineer !sland Shops, includin+ all the e4uipment of the *ataan National Shipyards 2*NS3 whichwere e7cluded from the sale of N*S to *SEC9 but retained by *SEC9 and all other selectede4uipment and machineries of NSSC9 at =. "an+aniban Smeltin+ "lant.0 !n the same deed, NSSC9committed itself to cooperate with *SEC9 for the ac4uisition from the National Fovernment or otherappropriate Fovernment entity of En+ineer !sland. Consideration for the sale was set at "D,))),))).)): adown payment of "&,))),))).)) appears to have been made, and the balance was stipulated to be paid at%P interest per annum in e4ual semi annual installments over a term of nine 2'3 years, to commence aftera +race period of two 2$3 years. #r. rturo "acificador a+ain si+ned for NSSC9, to+ether with the +eneralmana+er, #r. 6avid >. !nes.

&%. oans O%tained

!t further appears that on #ay $%, &'%D *SEC9 obtained a loan from the N6C, taken from 0the lastavailable =apanese war dama+e fund of Q&',))),))).)),0 to pay for 0=apanese made heavy e4uipment2brand new3.0 8 9n September 5, &'%D, it +ot another loan also from the N6C in the amount of"5),))),))).)) 9id(:(nd on =anuary $, &'%(, it +ot still another loan, this time from the FS!S, in the sumof "&$,)),))).)). 81The claim has been made that not a sin+le centavo has been paid on these loans. 82

&. Reports to President #arcos

!n September, &'%%, two 2$3 reports were submitted to "resident #arcos re+ardin+ *SEC9. The first wascontained in a letter dated September D, &'%% of ilario #. >uiE"C9# loan of*ay Shipyard and 6rydock, !nc., amountin+ to "5$.D5#.86

Romualdeomualde9#/ Capt. .T. >omualdeuiomualde< wrote that *SEC9 faced +reat difficulties in meetin+ its loan obli+ations due chieflyto the fact that 0orders to build ships as e7pected L L did not materiali


18/68

e advised that five stockholders had /0aived andor assigned their holdings in%lank,/ these bein+/ 2&3=ose . >oAas, 2$3 Severino de la Cruodolfo Torres, 23 #a+iliw Torres, and 2D3 nthony ". ;ee."ointin+ out that 0#r. #a+iliw Torres L L is already dead and #r. =ose . >oAas had a maAor heart attack,0 hemade the followin+ 4uite revealin+, and it may be added, 4uite cynical and indurate recommendation, to wit/

L L 2that3 their replacements 2be effected3 so we can re+ister their names in the stock book prior to theimplementation of "our instructions to pass a board resolution to le+alieparation3

$. ;USTEGEC9 "5$,D5,))) 2>eparation3


19/68

b. E4uity participation of +overnment shall be in the form of non- votin+ shares.

6or immediate compliance(92

#r. #arcos8 +uidelines were promptly complied with by his subordinates. Twenty-two 2$$3 days afterreceivin+ their president8s memorandum, #essrs. ilario #. >uiT!9NF>EE#ENT dated 9ctober $), &'%%. 93 !n it, they undertook to form a shipbuildin+ corporation to beknown as 0"!;-S! S!"*U!;6!NF C9>"9>T!9N,0 to brin+ to realiomualde


20/68

53 the deeds of assi+nment of 4@@ outstanding shares of Trident #anagement Co(, !nc(M which alle+edlyowns %,&$ shares of *SEC9 stock, assi+ned in blank: 98and

3 stock certificates correspondin+ to .@E,E.2 out of the .-4,4-3 outstanding shares of B$SCO stock=that is, all but D P M all endorsed in blank. 99

hile the petitioner8s counsel was 4uick to dispute this asserted fact, assurin+ this Court that the *SEC9stockholders were still in possession of their respective stock certificates and had 0never endorsed L L themin blank or to anyone else,0 1 that denial is e7posed by his own prior and subse4uent recorded

statements as a mere +esture of defiance rather than a verifiable factual declaration.*y resolution dated September $D, &'(, this Court +ranted *SEC98s counsel a period of &) days 0toSU*#!T, as undertaken %" him,L L the certificates of stock issued to the stockholders of L L *SEC9 as ofpril $5, &'(, as listed in nne7 8"8 of the petition.8 11Counsel thereafter moved for e7tension: and in hismotion dated 9ctober $, &'(, he declared inter aliathat 0said certificates of stock are in the possession ofthird parties, amon+ whom bein+ the respondents themselves L L and petitioner is still endeavoring tosecure copiesthereof from them.0 12 9n the same day he filed another motion prayin+ that he be allowed0to secure copiesof the Certificates of Stock in the name of #etro *ay 6rydock, !nc., and of all otherCertificates, of Stock of petitioner8s stockholders in possession of respondents.0 13

!n a #anifestation dated 9ctober &), &'(,, 14 the Solicitor Feneral not unreasonably ar+ued thatcounsel8s aforestated motion to secure copies of the stock certificates 0confirms the fact that stockholders

of petitioner corporation are not in possession of L L 2their3 certificates of stock,0 and the reason, accordin+to him, was 0that 'DP of said shares L L have been endorsed in blank and found in #alacaOan+ after theformer "resident and his family fled the country.0 To this manifestation *SEC98s counsel replied onNovember D, &'(, as already mentioned, Stubbornly insistin+ that the firm8s stockholders had not reallyassi+ned their stock. 15

!n view of the parties8 conflictin+ declarations, this Court resolved on November $%, &'( amon+ otherthin+s 0to re4uire L L the petitioner L L to deposit upon proper receipt with Clerk of Court =uanito >anAo theoriginals of the stock certificates alle+ed to be in its possession or accessible to it, mentioned anddescribed in nne7 8"8 of its petition, 2and other pleadin+s3 L L within ten 2&)3 days from notice.0 16!n amotion filed on 6ecember D, &'(, 1*SEC98s counsel made the statement, 4uite surprisin+ in thepremises, that 0it will ne+otiate with the owners 2of the *SEC9 stock in 4uestion3 to allow petitioner to

borrow from them, if available, the certificates referred to0 but that 0it needs a more sufficient time therefor02sic3. *SEC98s counsel however eventually had to confess inability to produce the ori+inals of the stockcertificates, puttin+ up the feeble e7cuse that while he had 0re4uested the stockholders to allow L L 2him3 toborrow said certificates, L L some of L L 2them3 claimed that they had delivered the certificates to thirdparties by way of pled+e andHor to secure performance of obli+ations, while others alle+edly have entrustedthem to third parties in view of last national emer+ency.0 18 e has conveniently omitted, nor has heoffered to +ive the details of the transactions adverted to by him, or to e7plain why he had not impressed onthe supposed stockholders the primordial importance of convincin+ this Court of their present custody ofthe ori+inals of the stock, or if he had done so, why the stockholders are unwillin+ to a+ree to some sort ofarran+ement so that the ori+inals of their certificates mi+ht at the very least be e7hibited to the Court. Underthe circumstances, the Court can only conclude that he could not +et the ori+inals from the stockholders forthe simple reason that, as the Solicitor Feneral maintains, said stockholders in truth no lon+er have them in

their possession, these havin+ already been assi+ned in blank to then "resident #arcos.

$&. 6acts ?ustif" !ssuance of Sequestration and Takeover Orders

!n the li+ht of the affirmative showin+ by the Fovernment that,prima facieat least, the stockholders anddirectors of *SEC9 as of pril, &'( 19were mere 0dummies,0 nominees or alter egosof "resident#arcos: at any rate, that they are no lon+er owners of any shares of stock in the corporation, theconclusion cannot be avoided that said stockholders and directors have no basis and no standin+ whateverto cause the filin+ and prosecution of the instant proceedin+: and to +rant relief to *SEC9, as prayed forin the petition, would in effect be to restore the assets, properties and business se4uestered and taken overby the "CFF to persons who are 0dummies,0 nominees or alter egosof the former president.

1rom the standpoint of the "CFF, the facts herein stated at some len+th do indeed show that the private

corporation known as *SEC9 was 0owned or controlled by former "resident 1erdinand E. #arcos L Ldurin+ his administration, L L throu+h nominees, by takin+ advanta+e of L L 2his3 public office andHor usin+ L L2his3 powers, authority, influence L L,0 and that NSSC9 and other property of the +overnment had beentaken over by *SEC9: and the situation Austified the se4uestration as well as the provisional takeover ofthe corporation in the public interest, in accordance with the terms of E7ecutive 9rders No. & and $,


21/68

pendin+ the filin+ of the re4uisite actions with the Sandi+anbayan to cause divestment of title thereto from#arcos, and its adAudication in favor of the >epublic pursuant to E7ecutive 9rder No. &.

s already earlier stated, this Court a+rees that this assessment of the facts is correct: accordin+ly, itsustains the acts of se4uestration and takeover by the "CFF as bein+ in accord with the law, and, in viewof what has thus far been set out in this opinion, pronounces to be without merit the theory that said acts,and the e7ecutive orders pursuant to which they were done, are fatally defective in not accordin+ to theparties affected prior notice and hearin+, or an ade4uate remedy to impu+n, set aside or otherwise obtainrelief therefrom, or that the "CFF had acted as prosecutor and Aud+e at the same time.

$$. xecutive Orders ot a Bill of $ttainder

Neither will this Court sustain the theory that the e7ecutive orders in 4uestion are a bill of attainder. 110bill of attainder is a le+islative act which inflicts punishment without Audicial trial.0 1110!ts essence is thesubstitution of a le+islative for a Audicial determination of +uilt.0 112

!n the first place, nothin+ in the e7ecutive orders can be reasonably construed as a determination ordeclaration of +uilt. 9n the contrary, the e7ecutive orders, inclusive of E7ecutive 9rder No. &, make itperfectly clear that any Aud+ment of +uilt in the amassin+ or ac4uisition of 0ill-+otten wealth0 is to be handeddown by a Audicial tribunal, in this case, the Sandigan%a"an,upon complaint filed and prosecuted by the"CFF. !n the second place, no punishment is inflicted by the e7ecutive orders, as the merest +lance attheir provisions will immediately make apparent. !n no sense, therefore, may the e7ecutive orders be

re+arded as a bill of attainder.

$5. o *iolation of Right against Self;!ncrimination and Hnreasona%le Searches and Sei


22/68

t any rate, E7ecutive 9rder No. &-, amendin+ Section of E7ecutive 9rder No. & assures protection toindividuals re4uired to produce evidence before the "CFF a+ainst any possible violation of his ri+hta+ainst self-incrimination. !t +ives them immunity from prosecution on the basis of testimony or informationhe is compelled to present. s amended, said Section now provides that M

777 777 777

The witness may not refuse to comply with the order on the basis of his privile+e a+ainst self-incrimination:but no testimony or other information compelled under the order 2or any information directly or indirectly

derived from such testimony, or other information3 may be used a+ainst the witness in any criminal case,e7cept a prosecution for perAury, +ivin+ a false statement, or otherwise failin+ to comply with the order.

The constitutional safe+uard a+ainst unreasonable searches and seiules of Court: and seek and secure the assistance ofany office, a+ency or instrumentality of the +overnment. 116 !n the case of se4uestered businesses+enerally 2i.e., +oin+ concerns, businesses in current operation3, as in the case of se4uestered obAects, itsessential role, as already discussed, is that of conservator, caretaker, 0watchdo+0 or overseer. !t is not thatof mana+er, or innovator, much less an owner.

c. Po0ers over Business nterprises Taken Over %" #arcos or ntities or Persons Close to him=imitations Thereon

Now, in the special instance of a business enterprise shown by evidence to have been 0taken over by the+overnment of the #arcos dministration or by entities or persons close to former "resident #arcos,0 11the "CFF is +iven power and authority, as already adverted to, to 0provisionally take 2it3 over in the publicinterest or to prevent L L 2its3 disposal or dissipation:0 and since the term is obviously employed in reference

to +oin+ concerns, or business enterprises in operation, somethin+ more than mere physical custody isconnoted: the "CFF may in this case e7ercise some measure of control in the operation, runnin+, ormana+ement of the business itself. *ut even in this special situation, the intrusion into mana+ement shouldbe restricted to the minimum de+ree necessary to accomplish the le+islative will, which is 0to prevent thedisposal or dissipation0 of the business enterprise. There should be no hasty, indiscriminate, unreasoned


23/68

replacement or substitution of mana+ement officials or chan+e of policies, particularly in respect of viableestablishments. !n fact, such a replacement or substitution should be avoided if at all possible, andundertaken only when Austified by demonstrably tenable +rounds and in line with the stated obAectives ofthe "CFF. nd it +oes without sayin+ that where replacement of mana+ement officers may be called for,the +reatest prudence, circumspection, care and attention - should accompany that undertakin+ to the endthat truly competent, e7perienced and honest mana+ers may be recruited. There should be no role to beplayed in this area by rank amateurs, no matter how wen meanin+. The road to hell, it has been said, ispaved with +ood intentions. The business is not to be e7perimented or played around with, not run into the

+round, not driven to bankruptcy, not fleeced, not ruined. Si+ht should never be lost si+ht of the ultimateobAective of the whole e7ercise, which is to turn over the business to the >epublic, once Audiciallyestablished to be 0ill-+otten.0 >eason dictates that it is only under these conditions and circumstances thatthe supervision, administration and control of business enterprises provisionally taken over may le+itimatelybe e7ercised.

d. *oting of Sequestered Stock= Conditions Therefor

So, too, it is within the parameters of these conditions and circumstances that the "CFF may properlye7ercise the prero+ative to vote se4uestered stock of corporations, +ranted to it by the "resident of the"hilippines throu+h a #emorandum dated =une $(, &'(. That #emorandum authoriesolution of 9ctober $, &'(: 118this Court declared that M

"etitioner has failed to make out a case of +rave abuse or e7cess of Aurisdiction in respondents8 callin+ andholdin+ of a stockholders8 meetin+ for the election of directors as authori


24/68

E>E19>E, the petition is dismissed. The temporary restrainin+ order issued on 9ctober &, &'( islifted


25/68

G.R. No. 12869. $7$r 21, 1999:A'S-)'N 'ROAD)ASTING )ORORATION, v%. )A , RE('LI) 'ROAD)ASTING )OR., /I/AROD()TIONS, IN)., $7" /I)ENTE DEL ROSARIO,!n this petition for review on certiorari, petitioners *S-C*N *roadcastin+ Corp. 2hereinafter *S-C*N3seeks to reverse and set aside the decision?&@ of 5& 9ctober &''( and the resolution?$@ of &) #arch &''%of the Court of ppeals in C-F.>. CG No. &$D. The former affirmed with modification the decision?5@ of$ pril &''5 of the >e+ional Trial Court 2>TC3 of Iueaider "latoon5. Under+round +uerillas. Ti+er CommandD. *oy de Sabo+(. lady Commando%. *atan+ #atadero. >ebelyon! hope you will consider this re4uest of mine.The other dramatic films have been offered to us before and have been reAected because of the rulin+ of#T>C* to have them aired at '/)) p.m. due to their very adult themes.s for the &) titles ! have choosen ?sic@ from the 5 packa+es please consider includin+ all the other Givamovies produced last year, ! have 4uite an attractive offer to make.Thankin+ you and with my warmest re+ards.2Si+ned3Charo Santos-Concio9n 1ebruary $%, &''$, defendant 6el >osario approached *S-C*NVs #s. Concio, with a list consistin+ ofD$ ori+inal movie titles 2i.e., not yet aired on television3 includin+ the & titles subAect of the present case, aswell as &) re-runs 2previously aired on television3 from which *S-C*N may choose another D$ titles, as a

total of &D( titles, proposin+ to sell to *S-C*N airin+ ri+hts over this packa+e of D$ ori+inals and D$ re-runs for "(),))),))).)) of which "5),))),))).)) will be in cash and "5),))),))).)) worth of televisionspots 2E7h. R to R-C Giva: R' Giva3.9n pril $, &''$, defendant 6el >osario and *S-C*NVs +eneral mana+er, Eu+enio ;ope< !!!, met at theTamarind Frill >estaurant in Iue


26/68

lunch meetin+ is the subAect of conflictin+ versions. #r. ;ope< testified that he and #r. 6el >osarioalle+edly a+reed that *S-C*N was +ranted e7clusive film ri+hts to fourteen 2&3 films for a totalconsideration of "5( million: that he alle+edly put this a+reement as to the price and number of films in aRnapkin and si+ned it and +ave it to #r. 6el >osario 2E7h. 6: TSN, pp. $-$(, %%-%, =une , &''$3. 9n theother hand. 6el >osario denied havin+ made any a+reement with ;ope< re+ardin+ the & Giva films:denied the e7istence of a napkin in which ;ope< wrote somethin+: and insisted that what he and ;opeTC issued a temporary restrainin+ order?(@ enAoinin+ private respondents fromproceedin+ with the airin+, broadcastin+, and televisin+ of the fourteen G!G films subAect of thecontroversy, startin+ with the film #a+in+ Sino a #an, which was scheduled to be shown on private

respondent >*SV channel % at seven oVclock in the evenin+ of said date.9n &% =une &''$, after appropriate proceedin+s, the >TC issued an order?%@ directin+ the issuance of a writof preliminary inAunction upon *S-C*NVs postin+ of a "5D million bond. *S-C*N moved for the reductionof the bond,?@ while private respondents moved for reconsideration of the order and offered to put up acounterbond.?'@!n the meantime, private respondents filed separate answer with counterclaim.?&)@ >*S also set up a cross-claim a+ainst G!G.9n 5 u+ust &''$, the >TC issued an order?&&@ dissolvin+ the writ of preliminary inAunction upon thepostin+ by >*S of a "5) million counterbond to answer for whatever dama+es *S-C*N mi+ht suffer byvirtue of such dissolution. owever, it reduced petitionerVs inAunction bond to "&D million as a conditionprecedent for the reinstatement of the writ of preliminary inAunction should private respondents be unable topost a counterbond.t the pre-trial?&$@ on ( u+ust &''$, the parties upon su++estion of the court, a+reed to e7plore thepossibility of an amicable settlement. !n the meantime, >*S prayed for and was +ranted reasonable timewithin which to put up a "5) million counterbond in the event that no settlement would be reached.s the parties failed to enter into an amicable settlement, >*S posted on & 9ctober &''$ a counterbond,which the >TC approved in its 9rder of &D 9ctober &''$.?&5@9n &' 9ctober &''$, *S-C*N filed a motion for reconsideration?&@ of the 5 u+ust and &D 9ctober &''$9rders, which >*S opposed.?&D@9n $' 9ctober, the >TC conducted a pre-trial.?&(@"endin+ resolution of its motion for reconsideration, *S-C*N filed with the Court of ppeals a petition?&%@challen+in+ the >TCVs 9rder of 5 u+ust and &D 9ctober &''$ and prayin+ for the issuance of a writ ofpreliminary inAunction to enAoin the >TC from enforcin+ said orders. The case was docketed as C-F.>.

S" No. $'5)).9n 5 November &''$, the Court of ppeals issued a temporary restrainin+ order?&@ to enAoin the airin+,broadcastin+, and televisin+ of any or all of the films involved in the controversy.9n & 6ecember &''$, the Court of ppeals promul+ated a decision?&'@ dismissin+ the petition in C-F.>.S" No. $'5)) for bein+ premature. *S-C*N challen+ed the dismissal in a petition for review filed with


27/68

this Court on &' =anuary &''5, which was docketed s F.>. No. &)5(5.!n the meantime the >TC received the evidence for the parties in Civil Case No. I-'$-&$5)'. Thereafter,on $ pril &''5, it rendered a decision?$)@ in favor of >*S and G!G and a+ainst *S-C*N disposin+ asfollows/E>E19>E, under cool reflection and prescindin+ from the fore+oin+, Aud+ment is rendered in favor ofdefendants and a+ainst the plaintiff.2&3 The complaint is hereby dismissed:2$3 "laintiff *S-C*N is ordered to pay defendant >*S the followin+/

a3 "&)%,%$%.)) the amount of premium paid by >*S to the surety which issued defendants >*SVs bond tolift the inAunction:b3 "&'&,5.)) for the amount of print advertisement for R#a+in+ Sino a #an in various newspapers:c3 ttorneyVs fees in the amount of "& million:d3 "D million as and by way of moral dama+es:e3 "D million as and by way of e7emplary dama+es:253 1or the defendant G!G, plaintiff *S-C*N is ordered to pay "$&$,))).)) by way of reasonableattorneyVs fees.23 The cross-claim of defendant >*S a+ainst defendant G!G is dismissed.2D3 "laintiff to pay the costs.ccordin+ to the >TC, there was no meetin+ of minds on the price and terms of the offer. The alle+eda+reement between ;ope< !!! and 6el >osario was subAect to the approval of the G!G *oard of 6irectors,

and said a+reement was disapproved durin+ the meetin+ of the *oard on % pril &''$. ence, there wasno basis for *S-C*NVs demand that G!G si+ned the &''$ 1ilm E7hibition +reement. 1urthermore, theri+ht of first refusal under the &'') 1ilm E7hibition +reement had previously been e7ercised per #s.ConcioVs letter to 6el >osario tickin+ off ten titles acceptable to them, which would have made the &''$a+reement an entirely new contract.9n $& =une &''5, this Court denied?$&@ *S-C*NVs petition for review in F.>. No. &)5(5, as no reversibleerror was committed by the Court of ppeals in its challen+ed decision and the case had Rbecome mootand academic in view of the dismissal of the main action by the court a 4uoin its decision of $ pril &''5.++rieved by the >TCVs decision, *S-C*N appealed to the Court of ppeals claimin+ that there was aperfected contract between *S-C*N and G!G +rantin+ *S-C*N the e7clusive ri+ht to e7hibit the subAectfilms. "rivate respondents G!G and 6el >osario also appealed seekin+ moral and e7emplary dama+esand additional attorneyVs fees.

!n its decision of 5& 9ctober &''(, the Court of ppeals a+reed with the >TC that the contract between*S-C*N and G!G had not been perfected, absent the approval by the G!G *oard of 6irectors ofwhatever 6el >osario, itVs a+ent, mi+ht have a+reed with ;ope< !!!. The appellate court did not evenbelieve *S-C*NVs evidence that ;ope< !!! actually wrote down such an a+reement on a Rnapkin, as thesame was never produced in court. !t likewise reAected *S-C*NVs insistence on its ri+ht of first refusal andratiocinated as follows/s re+ards the matter of ri+ht of first refusal, it may be true that a 1ilm E7hibition +reement was enteredinto between ppellant *S-C*N and appellant G!G under E7hibit R in &'') and that para+. &. thereofprovides/&. *S-C*N shall have the ri+ht of first refusal to the ne7t twenty-four 2$3 G!G films for TG telecastunder such terms as may be a+reed upon by the parties hereto, provided, however, that such ri+ht shall bee7ercised by *S-C*N within a period of fifteen 2&D3 days from the actual offer in writin+ 2>ecords, p. &3.?@owever, it is very clear that said ri+ht of first refusal in favor of *S-C*N shall still be subAected to suchterms as may be a+reed upon by the parties thereto, and that the said ri+ht shall be e7ercised by *S-C*Nwithin fifteen 2&D3 days from the actual offer in writin+.Said para+. &. of the a+reement E7hibit R on the ri+ht of first refusal did not fi7 the price of the film ri+htto the twenty-four 2$3 films, nor did it specify the terms thereof. The same are still left to be a+reed uponby the parties.!n the instant case, *S-C*NVs letter of reAection E7hibit 5 2>ecords, p. '3 stated that it can only tick off ten2&)3 films, and the draft contract E7hibit RC accepted only fourteen 2&3 films, while para+. &. of E7hibit Rspeaks of the ne7t twenty-four 2$3 films.The offer of G!G was sometime in 6ecember &''&, 2E7hibits $, $-, $-*: >ecords, pp. (-: 6ecision, p.&&, >ecords, p. &&D)3, when the first list of G!G films was sent by #r. 6el >osario to *S-C*N. The Gice

"resident of *S-C*N, #rs. Charo Santos-Concio, sent a letter dated =anuary (, &''$ 2E7hibit 5, >ecords,p. '3 where *S-C*N e7ercised its ri+ht of refusal by reAectin+ the offer of G!G. s aptly observed by thetrial court, with the said letter of #rs. Concio of =anuary (, &''$, *S-C*N had lost its ri+ht of first refusal.nd even if e reckon the fifteen 2&D3 day period from 1ebruary $%, &''$ 2E7hibit to -C3 when anotherlist was sent to *S-C*N after the letter of #rs. Concio, still the fifteen 2&D3 day period within which *S-


28/68

C*N shall e7ercise its ri+ht of first refusal has already e7pired.?$$@ccordin+ly, respondent court sustained the award factual dama+es consistin+ in the cost of printadvertisements and the premium payments for the counterbond, there bein+ ade4uate proof of thepecuniary loss which >*S has suffered as a result of the filin+ of the complaint by *S-C*N. s to theaward of moral dama+es, the Court of ppeals found reasonable basis therefor, holdin+ that >*SVsreputation was debased by the filin+ of the complaint in Civil Case No. I-'$-&$5)' and by the non-showin+of the film R#a+in+ Sino a #an. >espondent court also held that e7emplary dama+es were correctlyimposed by way of e7ample or correction for the public +ood in view of the filin+ of the complaint despite

petitionerVs knowled+e that the contract with G!G had not been perfected. !t also upheld the award ofattorneyVs fees, reasonin+ that with *S-C*NVs act of institutin+ Civil Case No. I-'$-&$5)', >*S wasRunnecessarily forced to liti+ate. The appellate court, however, reduced the awards of moral dama+es to "$ million, e7emplary dama+es to "$ million, and attorneyVs fees to "D)),))).)).9n the other hand, respondent Court of ppeals denied G!G and 6el >osarioVs appeal because it wasR>*S and not G!G which was actually preAudiced when the complaint was filed by *S-C*N.!ts motion for reconsideration havin+ been denied, *S-C*N filed the petition in this case, contendin+ thatthe Court of ppeals +ravely erred in!W >U;!NF TT TE>E S N9 "E>1ECTE6 C9NT>CT *ETEEN "ET!T!9NE> N6 ">!GTE>ES"9N6ENT G!G N9T!TSTN6!NF ">E"9N1E>NCE 91 EG!6ENCE 66UCE6 *Y"ET!T!9NE> T9 TE C9NT>>Y.

!!W !N >6!NF CTU; N6 C9#"ENST9>Y 6#FES !N 1G9> 91 ">!GTE >ES"9N6ENT>*S.!!!W !N >6!NF #9>; N6 EE#";>Y 6#FES !N 1G9> 91 ">!GTE >ES"9N6ENT >*S.!GW !N >6!NF T9>NEYVS 1EES 91 >*S.*S-C*N claims that it had yet to fully e7ercise its ri+ht of first refusal over twenty-four titles under the&'') 1ilm E7hibition +reement, as it had chosen only ten titles from the first list. !t insists that we +ivecredence to ;opeosario met at the Tamarind Frill >estaurant, discussed theterms and conditions of the second list 2the &''$ 1ilm E7hibition +reement3 and upon a+reement thereon,wrote the same on a paper napkin. !t also asserts that the contract has already been effective, as the

elements thereof, namely, consent, obAect, and consideration were established. !t then concludes that theCourt of ppealsV pronouncements were not supported by law and Aurisprudence, as per our decision of &6ecember &''D in ;imketkai Sons #illin+, !nc. v. Court of ppeals,?$5@ which cited Toyota Shaw, !nc. v.Court of ppeals:?$@n+ Yu suncion v. Court of ppeals,?$D@ and Gillonco >ealty Company v.*ormaheco, !nc.?$(@nent the actual dama+es awarded to >*S, *S-C*N disavows liability therefor. >*S spent for thepremium on the counterbond of its own volition in order to ne+ate the inAunction issued by the trial courtafter the parties had ventilated their respective positions durin+ the hearin+s for the purpose. The filin+ ofthe counterbond was an option available to >*S, but it can hardly be ar+ued that *S-C*N compelled >*Sto incur such e7pense. *esides, >*S had another available option, i.e., move for the dissolution of theinAunction: or if it was determined to put up a counterbond, it could have presented a cash bond.1urthermore under rticle $$)5 of the Civil Code, the party sufferin+ loss inAury is also re4uired to e7ercisethe dili+ence of a +ood father of a family to minimi*S had not convincin+ly established that this was a lossattributable to the non-showin+ of R#a+in+ Sino a #an: on the contrary, it was brou+ht out durin+ trial thatwith or without the case or inAunction, >*S would have spent such an amount to +enerate interest in thefilm.*S-C*N further contends that there was no other clear basis for the awards of moral and e7emplarydama+es. The controversy involvin+ *S-C*N and >*S did not in any way ori+inate from businesstransaction between them. The claims for such dama+es did not arise from any contractual dealin+s orfrom specific acts committed by *S-C*N a+ainst >*S that may be characteri


29/68

inAuria.?5)@ *esides, moral dama+es are +enerally not awarded in favor of a Auridical person, unless itenAoys a +ood reputation that was debased by the offendin+ party resultin+ in social humiliation.?5&@s re+ards the award of attorneyVs fees, *S-C*N maintains that the same had no factual, le+al, ore4uitable Austification. !n sustainin+ the trial courtVs award, the Court of ppeals acted in clear disre+ard ofthe doctrine laid down in *uan v. Cama+anacan?5$@ that the te7t of the decision should state the reasonwhy attorneyVs fees are bein+ awarded: otherwise, the award should be disallowed. *esides, no bad faithhas been imputed on, much less proved as havin+ been committed by, *S-C*N. !t has been held thatRwhere no sufficient showin+ of bad faith would be reflected in a partyVs persistence in a case other than an

erroneous conviction of the ri+hteousness of his cause, attorneyVs fees shall not be recovered as cost.?55@9n the other hand, >*S asserts that there was no perfected contract between *S-C*N and G!G absentmeetin+ of minds between them re+ardin+ the obAect and consideration of the alle+ed contract. !t affirmsthat *S-C*NVs claim of a ri+ht of first refusal was correctly reAected by the trial court. >*S insists thepremium it had paid for the counterbond constituted a pecuniary loss upon which it may recover. !t wasobli+ed to put up the counterbond due to the inAunction procured by *S-C*N. Since the trial court foundthat *S-C*N had no cause of action or valid claim a+ainst >*S and, therefore not entitled to the writ ofinAunction, >*S could recover from *S-C*N the premium paid on the counterbond. Contrary to the claimof *S-C*N, the cash bond would prove to be more e7pensive, as the loss would be e4uivalent to the costof money >*S would fore+o in case the "5) million came from its funds or was borrowed from banks.>*S likewise asserts that it was entitled to the cost of advertisements for the cancelled showin+ of the filmR#a+in+ Sino a #an because the print advertisements were out to announce the showin+ on a particular

day and hour on Channel %, i.e., in its entirety at one time, not as series to be shown on a periodic basis.ence, the print advertisements were +ood and relevant for the particular date of showin+, and since thefilm could not be shown on that particular date and hour because of the inAunction, the e7penses for theadvertisements had +one to waste.s re+ards moral and e7emplary dama+es, >*S asserts that *S-C*N filed the case and securedinAunctions purely for the purpose of harassin+ and preAudicin+ >*S. "ursuant then to rticles &' and $& ofthe Civil Code, *S-C*N must be held liable for such dama+es. Citin+Tolentino,?5@ dama+es may beawarded in cases of abuse of ri+hts even if the done is not illicit, and there is abuse of ri+hts where aplaintiff institutes an action purely for the purpose of harassin+ or preAudicin+ the defendant.!n support of its stand that a Auridical entity can recover moral and e7emplary dama+es, private respondent>*S cited "eople v. #anero,?5D@where it was stated that such entity may recover moral and e7emplarydama+es if it has a +ood reputation that is debased resultin+ in social humiliation. !t then ratiocinates: thus/

There can be no doubt that >*SV reputation has been debased by *S-C*NVs acts in this case. hen>*S was not able to fulfill its commitment to the viewin+ public to show the film R#a+in+ Sino a #an onthe scheduled dates and times 2and on two occasions that >*S advertised3, it suffered seriousembarrassment and social humiliation. hen the showin+ was cancelled, irate viewers called up >*SVoffices and subAected >*S to verbal abuse 2Rnnounce kayo n+ announce, hindi ninyo naman ilalabas,Rnanloloko yata kayo3 2E7h. 5->*S, par.53. This alone was not somethin+ >*S brou+ht upon itself. !t wase7actly what *S-C*N had planted to happen.The amount of moral and e7emplary dama+es cannot be said to be e7cessive. Two reasons Austify theamount of the award.The first is that the humiliation suffered by >*S, is national in e7tent. >*SV operations as a broadcastin+company is ?sic@ nationwide. !ts clientele, like that of *S-C*N, consists of those who own and watchtelevision. !t is not an e7a++eration to state, and it is a matter of Audicial notice that almost every otherperson in the country watches television. The humiliation suffered by >*S is multiplied by the number ofteleviewers who had anticipated the showin+ of the film, R#a+in+ Sino a #an on #ay $ and November5, &''$ but did not see it owin+ to the cancellation. dded to this are the advertisers who had placedcommercial spots for the telecast and to whom >*S had a commitment in consideration of the placement toshow the film in the dates and times specified.The second is that it is a competitor that caused >*S suffer the humiliation. The humiliation and inAury arefar +reater in de+ree when caused by an entity whose ultimate business obAective is to lure customers2viewers in this case3 away from the competition.?5(@1or their part, G!G and Gicente del >osario contend that the findin+s of fact of the trial court and the Courtof ppeals do not support *S-C*NVs claim that there was a perfected contract. Such factual findin+s canno lon+er be disturbed in this petition for review under >ule D, as only 4uestions of law can be raised, not

4uestions of fact. 9n the issue of dama+es and attorneys fees, they adopted the ar+uments of >*S.The key issues for our consideration are 2&3 whether there was a perfected contract between G!G and*S-C*N, and 2$3 whether >*S is entitled to dama+es and attorneyVs fees. !t may be noted that thataward of attorneyVs fees of "$&$,))) in favor of G!G is not assi+ned as another error.!


30/68

The first issue should be resolved a+ainst *S-C*N. contract is a meetin+ of minds between twopersons whereby one binds himself to +ive somethin+ or render some service to another?5%@ for aconsideration. There is no contract unless the followin+ re4uisites concur/ 2&3 consent of the contractin+parties: 2$3 obAect certain which is the subAect of the contract: and 253 cause of the obli+ation, which isestablished.?5@ contract under+oes three sta+es/2a3 preparation, conception, or +eneration, which is the period of ne+otiation and bar+ainin+, endin+ at themoment of a+reement of the parties:2b3 perfection or birth of the contract, which is the moment when the parties come to a+ree on the terms

of the contract: and2c3 consummation or death, which is the fulfillment or performance of the terms a+reed upon in thecontract.?5'@Contracts that are consensual in nature are perfected upon mere meetin+ of the minds. 9nce there isconcurrence between the offer and the acceptance upon the subAect matter, consideration, and terms ofpayment a contract is produced. The offer must be certain. To convert the offer into a contract, theacceptance must be absolute and must not 4ualify the terms of the offer: it must be plain, une4uivocal,unconditional, and without variance of any sort from the proposal. 4ualified acceptance, or one thatinvolves a new proposal, constitutes a counter-offer and is a reAection of the ori+inal offer. Conse4uently,when somethin+ is desired which is not e7actly what is proposed in the offer, such acceptance is notsufficient to +enerate consent because any modification or variation from the terms of the offer annuls theoffer.?)@

hen #r. 6el >osario of Giva met #r. ;ope< of *S-C*N at the Tamarind Frill on $ pril &''$ to discussthe packa+e of films, said packa+e of &) G!G films was G!GVs offer to *S-C*N to enter into a new 1ilmE7hibition +reement. *ut *S-C*N, sent throu+h #s. Concio, counter-proposal in the form a draftcontract proposin+ e7hibition of D5 films for a consideration of "5D million. This counter-proposal could benothin+ less than the counter-offer of #r. ;ope< durin+ his conference with 6el >osario at Tamarind Frill>estaurant. Clearly, there was no acceptance of G!GVs offer, for it was met by a counter-offer whichsubstantially varied the terms of the offer.*S-C*NVs reliance in ;imketkai Sons #illin+, !nc. v. Court of ppeals?&@ and Gillonco >ealty Company v.*ormaheco, !nc.,?$@ is misplaced. !n these cases, it was held that an acceptance may contain a re4uestfor certain chan+es in the terms of the offer and yet be a bindin+ acceptance as lon+ as Rit is clear that themeanin+ of the acceptance is positively and une4uivocally to accept the offer, whether such re4uest is+ranted or not. This rulin+ was, however, reversed in the resolution of $' #arch &''(,?5@ which ruled that

the acceptance of an offer must be un4ualified and absolute, i.e., it Rmust be identical in all respects withthat of the offer so as to produce consent or meetin+s of the minds.9n the other hand, in Gillonco, cited in ;imketkai, the alle+ed chan+es in the revised counter-offer were notmaterial but merely clarificatory of what had previously been a+reed upon. !t cited the statement in Stuart v.1ranklin ;ife !nsurance Co.?@ that Ra vendorVs chan+e in a phrase of the offer to purchase, which chan+edoes not essentially chan+e the terms of the offer, does not amount to a reAection of the offer and the tenderof a counter-offer.?D@ owever, when any of the elements of the contract is modified upon acceptance,such alteration amounts to a counter-offer.!n the case at bar, *S-C*N made no un4ualified acceptance of G!GVs offer hence, they underwent periodof bar+ainin+. *S-C*N then formaliosario had accepted the counter-offer, the acceptance did not bind G!G, as there was no proofwhatsoever that 6el >osario had the specific authority to do so.Under the Corporation Code,?(@ unless otherwise provided by said Code, corporate powers, such as thepower to enter into contracts, are e7ercised by the *oard of 6irectors. owever, the *oard may dele+atesuch powers to either an e7ecutive committee or officials or contracted mana+ers. The dele+ation, e7ceptfor the e7ecutive committee, must be for specific purposes.?%@ 6ele+ation to officers makes the lattera+ents of the corporation: accordin+ly, the +eneral rules of a+ency as to the bindin+ effects of their actswould apply.?@ 1or such officers to be deemed fully clothed by the corporation to e7ercise a power of the*oard, the latter must specially authoriosario did not have the authority toaccept *S-C*NVs counter-offer was best evidenced by his submission of the draft contract to G!GVs *oardof 6irectors for the latterVs approval. !n any event, there was between 6el >osario and ;ope< !!! nomeetin+ of minds. The followin+ findin+s of the trial court are instructive/

number of considerations militate a+ainst *S-C*NVs claim that a contract was perfected at that lunchmeetin+ on pril )$, &''$ at the Tamarind Frill.1!>ST, #r. ;ope< claimed that what was a+reed upon at the Tamarind Frill referred to the price and thenumber of films, which he wrote on a napkin. owever, E7hibit RC contains numerous provisions whichwere not discussed at the Tamarind Frill, if ;ope< testimony was to be believed nor could they have been


31/68

physically written on a napkin. There was even doubt as to whether it was a paper napkin or cloth napkin.!n short what were written in E7hibit RC were not discussed, and therefore could not have been a+reedupon, by the parties. ow then could this court compel the parties to si+n E7hibit RC when the provisionsthereof were not previously a+reed uponBSEC9N6, #r. ;ope< claimed that what was a+reed upon as the subAect matter of the contract was & films.The complaint in fact prays for delivery of & films. *ut E7hibit RC mentions D5 films as its subAect matter.hich is whichB !f E7hibit RC reflected the true intent of the parties, then *S-C*NVs claim for & films inits complaint is false or if what it alle+ed in the complaint is true, then E7hibit RC did not reflect what was

a+reed upon by the parties. This underscores the fact that there was no meetin+ of the minds as to thesubAect matter of the contract, so as to preclude perfection thereof. 1or settled is the rule that there can beno contract where there is no obAect certain which is its subAect matter 2rt. &5&, NCC3.T!>6, #r. ;ope< ?sic@ answer to 4uestion $' of his affidavit testimony 2E7h. R63 States/Re were able to reach an a+reement. G!G +ave us the e7clusive license to show these fourteen 2&3films, and we a+reed to pay Giva the amount of"&(,)D),))).)) as well as +rant Giva commercial slotsworth "&','D),))).)). e had already earmarked this "&(,)D),))).)).which +ives a total consideration of "5( million 2"&','D&,))).)) plus "&(,)D),))).)) e4uals"5(,))),))).))3.9n cross-e7amination #r. ;ope< testified/I hat was written in this napkin The total price, the breakdown the known Giva movies, the % blockbuster movies and the other % Giva

movies because the price was broken down accordin+ly. The none ?sic@ Giva and the seven other Givamovies and the sharin+ between the cash portion and the concerned spot portion in the total amount of "5Dmillion pesos.Now, which is whichB "5( million or "5D millionB This weakens *S-C*NVs claim.19U>T. #rs. Concio, testifyin+ for *S-C*N stated that she transmitted E7hibit RC to #r. 6el >osariowith a handwritten note, describin+ said E7hibit RC as a draft. 2E7h. RD Giva: tsn pp. $5-$, =une ),&''$3. The said draft has a well defined meanin+Since E7hibit RC is only a draft, or a tentative, provisional or preparatory writin+ prepared for discussion,the terms and conditions thereof could not have been previously a+reed upon by *S-C*N and Giva.E7hibit RC could not therefore le+ally bind Giva, not havin+ a+reed thereto. !n fact, #s. Concio admittedthat the terms and conditions embodied in E7hibit RC were prepared by *S-C*NVs lawyers and there wasno discussion on said terms and conditions

s the parties had not yet discussed the proposed terms and conditions in E7hibit RC, and there was noevidence whatsoever that Giva a+reed to the terms and conditions thereof, said document cannot be abindin+ contract. The fact that Giva refused to si+n E7hibit RC reveals only two ?sic@ well that it did nota+ree on its terms and conditions, and this court has no authority to compel Giva to a+ree thereto.1!1T. #r. ;ope< understand ?sic@ that what he and #r. 6el >osario a+reed upon at the Tamarind Frill wasonly provisional, in the sense that it was subAect to approval by the *oard of 6irectors of Giva. e testified/I Now, #r. itness, and after that Tamarinf meetin+ W the second meetin+ wherein you claimed that youhave the meetin+ of the minds between you and #r. Gic del >osario, what happenedB Gic 6el >osario was supposed to call us up and tell us specifically the result of the discussion with the*oard of 6irectors.I nd you are referrin+ to the so-called a+reement which you wrote in ?sic@ a piece of paperB Yes, sir.I So, he was +oin+ to forward that to the board of 6irectors for approvalB Yes, sir 2I 6id #r. 6el >osario tell you that he will submit it to his *oard for approvalB Yes, sir.The above testimony of #r. ;ope< shows beyond doubt that he knew #r. 6el >osario had no authority tobind Giva to a contract with *S-C*N until and unless its *oard of 6irectors approved it. The complaint, infact, alle+es that #r. 6el >osario Ris the E7ecutive "roducer of defendant Giva which Ris a corporation.2par. $, complaint3. s a mere a+ent of Giva, 6el >osario could not bind Giva unless what he did is ratifiedby its 6irectors. 2Gicente vs.Feralde $&): rnold vs. illets and "aterson, "hil. (53. s amere a+ent, reco+niosario could not be held liable Aointly and severally withGiva and his inclusion as party defendant has no le+al basis. 2Salon+a vs. arner *arnes ?sic@,C9;T, "hil. &$D: Salmon vs. Tan, 5( "hil. DD(3.The testimony of #r. ;ope< and the alle+ations in the complaint are clear admissions that what wassupposed to have been a+reed upon at the Tamarind Frill between #r. ;ope< and 6el >osario was not a

bindin+ a+reement. !t is as it should be because corporate power to enter into a contract is lod+ed in the*oard of 6irectors. 2Sec. $5, Corporation Code3. ithout such board approval by the Giva board,whatever a+reement ;ope< and 6el >osario arrived at could not ripen into a valid bindin+ upon Giva 2Yaoa Sin Tradin+ vs. Court of ppeals, $)' SC> %(53. The evidence adduced shows that the *oard of6irectors of Giva reAected E7hibit RC and insisted that the film packa+e for &) films be maintained 2E7h.


32/68

R%-& Cica3.?'@The contention that *S-C*N had yet to fully e7ercise its ri+ht of first refusal over twenty-four films underthe &'') 1ilm E7hibition +reement and that the meetin+ between ;ope< and 6el >osario was acontinuation of said previous contract is untenable. s observed by the trial court, *S-C*NVs ri+ht of firstrefusal had already been e7ercised when #s. Concio wrote to Giva tickin+ off ten films. Thus/?T@he subse4uent ne+otiation with *S-C*N two 2$3 months after this letter was sent, was for an entirelydifferent packa+e. #s. Concio herself admitted on cross-e7amination to havin+ used or e7ercised the ri+htof first refusal. She stated that the list was not acceptable and was indeed not accepted by *S-C*N,

2Tsn, =une , &''$, pp. -&)3. Even #r. ;ope< himself admitted that the ri+ht of first refusal may have beenalready e7ercised by #s. Concio 2as she had3. 2TSN, =une , &''$, pp. %&-%D3. 6el >osario himself knewand understand ?sic@ that *S-C*N has lost its ri+ht of first refusal when his list of 5( titles were reAected2Tsn, =une ', &''$, pp. &)-&&3.?D)@!!owever, we find for *S-C*N on the issue of dama+es. e shall first take up actual dama+es. Chapter$, Title G!!!, *ook !G of the Civil Code is the specific law on actual or compensatory dama+es. E7cept asprovided by law or by stipulation, one is entitled to compensation for actual dama+es only for suchpecuniary loss suffered by him as he has duly proved.?D&@ The indemnification shall comprehend not onlythe value of the loss suffered, but also that of the profits that the obli+ee failed to obtain.?D$@ !n contractsand 4uasi-contracts the dama+es which may be awarded are dependent on whether the obli+or acted with+ood faith or otherwise. !n case of +ood faith, the dama+es recoverable are those which are the natural

and probable conse4uences of the breach of the obli+ation and which the parties have foreseen or couldhave reasonably foreseen at the time of the constitution of the obli+ation. !f the obli+or acted with fraud,bad faith, malice, or wanton attitude, he shall be responsible for all dama+es which may be reasonablyattributed to the non-performance of the obli+ation.?D5@ !n crimes and 4uasi-delicts, the defendants shall beliable for all dama+es which are the natural and probable conse4uences of the act or omission complainedof, whether or not such dama+es have been foreseen or could have reasonably been foreseen by thedefendant.?D@ctual dama+es may likewise be recovered for loss or impairment of earnin+ capacity in cases oftemporary or permanent personal inAury, or for inAury to the plaintiffVs business standin+ or commercialcredit.?DD@The claim of >*S for actual dama+es did not arise from contract, 4uasi-contract, delict, or 4uasi-delict. !tarose from the fact of filin+ of the complaint despite *S-C*NVs alle+ed knowled+e of lack of cause of

action. Thus para+raph &$ of >*SVs nswer with Counterclaim and Cross-claim under the headin+C9UNTE>C;!# specifically alle+es/&$. *S-C*N filed the complaint knowin+ fully well that it has no cause of action a+ainst >*S. s a resultthereof, >*S suffered actual dama+es in the amount of "(,($&,&'D.5$.?D(@Needless to state the award of actual dama+es cannot be comprehended under the above law on actualdama+es. >*S could only probably take refu+e under rticles &', $), and $& of the Civil Code, which readas follows/>T. &'. Every person must, in the e7ercise of hid ri+hts and in the performance of his duties, act withAustice, +ive everyone his due, and observe honesty and +ood faith.>T. $). Every person who, contrary to law, wilfully or ne+li+ently causes dama+e to another shallindemnify the latter for the same.>T. $&. ny person who wilfully causes loss or inAury to another in a manner that is contrary to morals,+ood customs or public policy shall compensate the latter for the dama+e.!t may further be observed that in cases where a writ of preliminary inAunction is issued, the dama+es whichthe defendant may suffer by reason of the writ are recoverable from the inAunctive bond.?D%@ !n this case,*S-C*N had not yet filed the re4uired bond: as a matter of fact, it asked for reduction of the bond andeven went to the Court of ppeals to challen+e the order on the matter. Clearly then, it was not necessaryfor >*S to file a counterbond. ence, *S-C*N cannot be held responsible for the premium >*S paid forthe counterbond.Neither could *S-C*N be liable for the print advertisements for R#a+in+ Sino a #an for lack of sufficientle+al basis. The >TC issued a temporary restrainin+ order and later, a writ of preliminary inAunction on thebasis of its determination that there e7isted sufficient +round for the issuance thereof. Notably, the >TC didnot dissolve the inAunction on the +round of lack of le+al and factual basis, but because of the plea of >*S

that it be allowed to put up a counterbond.s re+ards attorneyVs fees, the law is clear that in the absence of stipulation, attorneyVs fees may berecovered as actual or compensatory dama+es under any of the circumstances provided for in rticle $$)of the Civil Code.?D@The +eneral rule is that attorneyVs fees cannot be recovered as part of dama+es because of the policy that


33/68

no premium should be placed on the ri+ht to liti+ate.?D'@ They are not to be awarded every time a partywins a suit. The power of the court t award attorneyVs fees under rticle $$) demands factual, le+al, ande4uitable Austification.?()@ Even when a claimant is compelled to liti+ate with third persons or to incure7penses to protect his ri+hts, still attorneyVs fees may not be awarded where no sufficient showin+ of badfaith could be reflected in a partyVs persistence in a case other than an erroneous conviction of theri+hteousness of his cause.?(&@s to moral dama+es the law is Section &, Chapter 5, Title G!!!, *ook !G of the Civil Code. rticle $$&%thereof defines what are included in moral dama+es, while rticle $$&' enumerates the cases where they

may be recovered. rticle $$$) provides that moral dama+es may be recovered in breaches of contractwhere the defendant acted fraudulently or in bad faith. >*SVs claim for moral dama+es could possibly fallonly under item 2&)3 of rticle $$&', thereof which reads/2&)3 cts and actions referred to in rticles $&, $(, $%, $, $', 5), 5$, 5 and 5D.#oral dama+es are in the cate+ory of an award desi+ned to compensate the claimant for actual inAurysuffered and not to impose a penalty on the wron+doer.?($@ The award is not meant to enrich thecomplainant at the e7pense of the defendant, but to enable the inAured party to obtain means, diversion, oramusements that will serve to obviate the moral sufferin+ he has under+one. !t is aimed at the restoration,within the limits of the possible, of the spiritual status 4uo ante, and should be proportionate to the sufferin+inflicted.?(5@ Trial courts must then +uard a+ainst the award of e7orbitant dama+es: they should e7ercisebalanced restrained and measured obAectivity to avoid suspicion that it was due to passion, preAudice, orcorruption or the part of the trial court.?(@

The award of moral dama+es cannot be +ranted in favor of a corporation because, bein+ an artificialperson and havin+ e7istence only in le+al contemplation, it has no feelin+s, no emotions, no senses. !tcannot, therefore, e7perience physical sufferin+ and mental an+uish, which can be e7perienced only by onehavin+ a nervous system.?(D@ The statement in "eople v. #anero?((@ and #ambulao ;umber Co. v."N*?(%@ that a corporation may recover moral dama+es if it Rhas a +ood reputation that is debased,resultin+ in social humiliation is an obiter dictum. 9n this score alone the award for dama+es must be setaside, since >*S is a corporation.The basic law on e7emplary dama+es is Section D Chapter 5, Title G!!!, *ook !G of the Civil Code. Theseare imposed by way of e7ample or correction for the public +ood, in addition to moral, temperate,li4uidated, or compensatory dama+es.?(@ They are recoverable in criminal cases as part of the civil liabilitywhen the crime was committed with one or more a++ravatin+ circumstances:?('@ in 4uasi-delicts, if thedefendant acted with +ross ne+li+ence:?%)@ and in contracts and 4uasi-contracts, if the defendant acted in a

wanton, fraudulent, reckless, oppressive, or malevolent manner.?%&@!t may be reiterated that the claim of >*S a+ainst *S-C*N is not based on contract, 4uasi-contract, delict,or 4uasi-delict. ence, the claims for moral and e7emplary dama+es can only be based on rticles &', $),and $& of the Civil Code.The elements of abuse of ri+ht under rticle &' are the followin+/ 2&3 the e7istence of a le+al ri+ht or duty,2$3 which is e7ercised in bad faith, and 253 for the sole intent of preAudicin+ or inAurin+ another. rticle $)speaks of the +eneral sanction for all provisions of law which do not especially provide for their ownsanction: while rticle $& deals with acts contra bonus mores, and has the followin+ elements/ 2&3 there isan act which is le+al, 2$3 but which is contrary to morals, +ood custom, public order, or public policy, and 253and it is done with intent to inAure.?%$@Gerily then, malice or bad faith is at the core of rticles &', $), and $&. #alice or bad faith implies aconscious and intentional desi+n to do a wron+ful act for a dishonest purpose or moral obli4uity.?%5@ Suchmust be substantiated by evidence.?%@There is no ade4uate proof that *S-C*N was inspired by malice or bad faith. !t was honestly convincedof the merits of its cause after it had under+one serious ne+otiations culminatin+ in its formal submission ofa draft contract. Settled is the rule that the adverse result of an action does not per se make the actionwron+ful and subAect the actor to dama+es, for the law could not have meant impose a penalty on the ri+htto liti+ate. !f dama+es result from a personVs e7ercise of a ri+ht, it is damnum abs4ue inAuria.?%D@E>E19>E, the instant petition is F>NTE6. The challen+ed decision of the Court of ppeals in C-F.>. CG No. &$D is hereby >EGE>SE6 e7cept as to unappealed award of attorneyVs fees in favor ofG!G "roductions, !nc.


34/68

G.R. No. 141994. $7$r 1, 25:

FILIINAS 'ROAD)ASTING NET;OR!, IN).,petitioner, vs.AGO EDI)AL AND ED()ATIONAL)ENTER-'I)OL )HRISTIAN )OLLEGE OF EDI)INE, +AE)-')) $7" ANGELITA F. AGO, .

This petition for review?&@ assails the =anuary &''' 6ecision?$@ and $( =anuary $))) >esolution of theCourt of ppeals in C-F.>. CG No. )&D&. The Court of ppeals affirmed with modification the &6ecember &''$ 6ecision?5@ of the >e+ional Trial Court of ;e+aima liable for libel and ordered them to solidarily pay +o #edical and Educational Center-*icol Christian Colle+e of #edicine moral dama+es, attorneyVs fees and costs of suit.

The ntecedents

RE7posX is a radio documentary?@ pro+ram hosted by Carmelo #elV >ima 2R>ima3 and ermo+enes =unVle+re 2Rle+re3.?D@ E7posX is aired every mornin+ over 6K>C-# which is owned by 1ilipinas*roadcastin+ Network, !nc. 2R1*N!3. RE7posX is heard over ;e+aima and le+re e7posed various alle+ed complaints fromstudents, teachers and parents a+ainst +o #edical and Educational Center-*icol Christian Colle+e of#edicine 2R#EC3 and its administrators. Claimin+ that the broadcasts were defamatory, #EC andn+elita +o 2R+o3, as 6ean of #ECVs Colle+e of #edicine, filed a complaint for dama+es?%@ a+ainst1*N!, >ima and le+re on $% 1ebruary &''). Iuoted are portions of the alle+edly libelous broadcasts/

(N ALEGRE/

;et us be+in with the less burdensome/ if you have children takin+ medical course at #EC-*CC#, advisethem to pass all subAects because if they fail in any subAect they will repeat their year level, takin+ up allsubAects includin+ those they have passed already. Several students had approached me statin+ that theyhad consulted with the 6ECS which told them that there is no such re+ulation. !f ?there@ is no suchre+ulation why is #EC doin+ the sameB

777

Second/ Earlier #EC students in "hysical Therapy had complained that the course is not reco+niiC today, it would be very easy for detractors and enemies of the +o familyto stop the flow of support of forei+n foundations who assist the medical school on the basis of the latterVspurpose. *ut if the purpose of the institution 2#EC3 is to deceive students at cross purpose with itsreason for bein+ it is possible for these forei+n foundations to lift or suspend their donations temporarily.?@

9n the other hand, the administrators of #EC-*CC#, #EC Science i+h School and the #EC-!nstituteof #ass Communication in their effort to minimi


35/68

committee on scholarship in #EC. She had retired from *icol University a lon+ time a+o but #EC haspatiently made use of her.

EL RIAima is SOLIDARIL& AD(DGEDliable with 1*N?!@ and ermo?+@enes le+re.

1*N!, >ima and le+re filed a motion for reconsideration which the Court of ppeals denied in its $(=anuary $))) >esolution.

The >ulin+ of the Court of ppeals

The Court of ppeals upheld the trial courtVs rulin+ that the 4uestioned broadcasts are libelousper seandthat 1*N!, >ima and le+re failed to overcome the le+al presumption of malice. The Court of ppeals found>ima and le+reVs claim that they were actuated by their moral and social duty to inform the public of thestudentsV +ripes as insufficient to Austify the utterance of the defamatory remarks.

1indin+ no factual basis for the imputations a+ainst #ECVs administrators, the Court of ppeals ruled thatthe broadcasts were made Rwith reckless disre+ard as to whether they were true or false. The appellatecourt pointed out that 1*N!, >ima and le+re failed to present in court any of the students who alle+edlycomplained a+ainst #EC. >ima and le+re merely +ave a sin+le name when asked to identify thestudents. ccordin+ to the Court of ppeals, these circumstances cast doubt on the veracity of thebroadcastersV claim that they were Rimpelled by their moral and social duty to inform the public about thestudentsV +ripes.

The Court of ppeals found >ima also liable for libel since he remarked that R2&3 #EC-*CC# is adumpin+ +round for morally and physically misfit teachers: 2$3 #EC obtained the services of 6ean =ustita;ola to minimiima and le+re to make the radio broadcasts without the proper *"accreditation. The Court of ppeals denied +oVs claim for dama+es and attorneyVs fees because thelibelous remarks were directed a+ainst #EC, and not a+ainst her. The Court of ppeals adAud+ed 1*N!,>ima and le+re solidarily liable to pay #EC moral dama+es, attorneyVs fees and costs of suit.

!ssues

1*N! raises the followin+ issues for resolution/

!. ETE> TE *>96CSTS >E ;!*E;9US:

!!. ETE> #EC !S ENT!T;E6 T9 #9>; 6#FES:

!!!. ETE> TE >6 91 TT9>NEYVS 1EES !S ">9"E>: and

!G. ETE> 1*N! !S S9;!6>!;Y ;!*;E !T >!# N6 ;EF>E 19> "Y#ENT 91 #9>;6#FES, TT9>NEYVS 1EES N6 C9STS 91 SU!T.

T=e )or>% R?7@ e deny the petition.

This is a civil action for dama+es as a result of the alle+edly defamatory remarks of >ima and le+re

a+ainst #EC.?&%@ hile #EC did not point out clearly the le+al basis for its complaint, a readin+ of thecomplaint reveals that #ECVs cause of action is based on rticles 5) and 55 of the Civil Code. rticle5)?&@ authoriima and le+re.

I.&hether the %roadcasts are li%elous

libel?$5@ is a public and malicious imputation of a crime, or of a vice or defect, real or ima+inary, or any act

or omission, condition, status, or circumstance tendin+ to cause the dishonor, discredit, or contempt of anatural or Auridical person, or to blacken the memory of one who is dead.?$@

There is no 4uestion that the broadcasts were made public and imputed to #EC defects or circumstancestendin+ to cause it dishonor, discredit and contempt. >ima and le+reVs remarks such as R+reed for moneyon the part of #ECVs administrators: R#EC is a dumpin+ +round, +arba+e of 777 moral and physical


37/68

misfits: and #EC students who +raduate Rwill be liabilities rather than assets of the society are libelousperse. Taken as a whole, the broadcasts su++est that #EC is a money-makin+ institution wherephysically and morally unfit teachers abound.

owever, 1*N! contends that the broadcasts are not malicious. 1*N! claims that >ima and le+re wereplainly impelled by their civic duty to air the studentsV +ripes. 1*N! alle+es that there is no evidence that illwill or spite motivated >ima and le+re in makin+ the broadcasts. 1*N! further points out that >ima andle+re e7erted efforts to obtain #ECVs side and +ave +o the opportunity to defend #EC and itsadministrators. 1*N! concludes that since there is no malice, there is no libel.

1*N!Vs contentions are untenable.

Every defamatory imputation is presumed malicious.?$D@ >ima and le+re failed to show ade4uately their+ood intention and Austifiable motive in airin+ the supposed +ripes of the students. s hosts of adocumentary or public affairs pro+ram, >ima and le+re should have presented the public issues Rfree frominaccurateand misleadin+ information.?$(@ earin+ the studentsV alle+ed complaints a month before thee7posX,?$%@ they had sufficient time to verify their sources and information. owever, >ima and le+rehardly made a thorou+h investi+ation of the studentsV alle+ed +ripes. Neither did they in4uire about norconfirm the purported irre+ularities in #EC from the 6epartment of Education, Culture and Sports. le+retestified that he merely went to #EC to verify his report from an alle+ed #EC official who refused todisclose any information. le+re simply relied on the words of the students Rbecause they were many andnot because there is proof that what they are sayin+ is true.?$@ This plainly shows >ima and le+reVsreckless disre+ard of whether their report was true or not.

Contrary to 1*N!Vs claim, the broadcasts were not Rthe result of strai+ht reportin+. Si+nificantly, somecourts in the United States apply the privile+e of Rneutral reporta+e in libel cases involvin+ matters of publicinterest or public fi+ures. Under this privile+e, a republisher who accuratel"and disinterestedly reportscertain defamatory statements made a+ainst public fi+ures is shielded from liability, re+ardless of therepublisherVs subAective awareness of the truth or falsity of the accusation.?$'@ >ima and le+re cannotinvoke the privile+e of neutral reporta+e because unfounded comments abound in the broadcasts.#oreover, there is no e7istin+ controversy involvin+ #EC when the broadcasts were made. The privile+eof neutral reporta+e applies where the defamed person is a public fi+ure who is involved in an e7istin+controversy, and a party to that controversy makes the defamatory statement.?5)@

owever, 1*N! ar+ues vi+orously that malice in law does not apply to this case. Citin+ Borjal v. Court ofAppeals,?5&@ 1*N! contends that the broadcasts Rfall within the covera+e of 4ualifiedly privile+edcommunications for bein+ commentaries on matters of public interest. Such bein+ the case, #EC shouldprove malice in fact or actual malice. Since #EC alle+edly failed to prove actual malice, there is no libel.

1*N!Vs reliance on Borjalis misplaced. !n Borjal, the Court elucidated on the Rdoctrine of fair comment,thus/

?1@air commentaries on matters of public interest are privile+ed and constitute a valid defense in an actionfor libel or slander. The doctrine of fair comment means that while in +eneral every discreditable imputationpublicly made is deemed false, because every man is presumed innocent until his +uilt is Audicially proved,and every false imputation is deemed malicious, nevertheless, when the discreditable imputation is directeda+ainst a public person in his public capacity, it is not necessarily actionable. !n order that such

discreditable imputation to a public official may be actionable, it must either be a false alle+ation of fact or acomment based on a false supposition. !f the comment is an e7pression of opinion, based on establishedfacts,then it is immaterial that the opinion happens to be mistaken, as lon+ as it mi+ht reasonably beinferred from the facts.?5$@ 2Emphasis supplied3

True, #EC is a private learnin+ institution whose business of educatin+ students is R+enuinely imbued withpublic interest. The welfare of the youth in +eneral and #ECVs students in particular is a matter which thepublic has the ri+ht to know. Thus, similar to the newspaper articles in Borjal, the subAect broadcasts dealtwith matters of public interest. owever, unlike in Borjal, the 4uestioned broadcasts are 7obased one%$b?%=e" $#%. The record supports the followin+ findin+s of the trial court/

777 lthou+h defendants claim that they were motivated by consistent reports of students and parentsa+ainst plaintiff, yet, defendants have not presented in court, nor even +ave name of a sin+le student whomade the complaint to them, much less present written complaint or petition to that effect. To accept thisdefense of defendants is too dan+erous because it could easily +ive license to the media to mali+n peopleand establishments based on flimsy e7cuses that there were reports to them althou+h they could notsatisfactorily establish it. Such la7ity would encoura+e careless and irresponsible broadcastin+ which isinimical to public interests.


38/68

Secondly, there is reason to believe that defendant radio broadcasters, contrary to the mandates of theirduties, did not verify and analy. Iuisumbin+ 2E7h. C-rebuttal3. 6efendants could have easily known this were they careful

enou+h to verify. nd yet, defendants were very cate+orical and sounded too positive when they made theerroneous report that plaintiff had no permit to offer "hysical Therapy courses which they were offerin+.

The alle+ation that plaintiff was +ettin+ tremendous aids from forei+n foundations like #cdonald 1oundationprove not to be true also. The truth is there is no #cdonald 1oundation e7istin+. lthou+h a bi+ buildin+ ofplaintiff school was +iven the name #cdonald buildin+, that was only in order to honor the first missionary in*icol of plaintiffsV reli+ion, as e7plained by 6r. ;ita +o. Contrary to the claim of defendants over the air, nota sin+le centavo appears to be received by plaintiff school from the aforementioned #c6onald 1oundationwhich does not e7ist.

6efendants did not even also bother to prove their claim, thou+h denied by 6ra. +o, that when medicalstudents fail in one subAect, they are made to repeat all the other subAect?s@, even those they have alreadypassed, nor their claim that the school char+es laboratory fees even if there are no laboratories in theschool. No evidence was presented to prove the bases for these claims, at least in order to +ivesemblance of +ood faith.

s for the alle+ation that plaintiff is the dumpin+ +round for misfits, and immoral teachers, defendant?s@sin+led out 6ean =ustita ;ola who is said to be so old, with ima and le+re were not backed up by facts. Therefore, the broadcasts are not privile+edand remain libelousper se(

The broadcasts also violate the >adio Code?5D@ of the )apisanan ng mga Brodkaster sa Pilipinas, !nk(2R>adio Code3. !tem !2*3 of the >adio Code provides/

'. ('LI) AFFAIRS, ('LI) ISS(ES AND )OENTARIES

. "ublic affairs pro+ram shall present public issues free from personal bias, preAudice and inaccurateand misleadin+ information. 7 7 7 1urthermore, the station shall strive to present balanced discussion ofissues. 7 7 7.

%. The station shall be responsible at all times in the supervision of public affairs, public issues andcommentary pro+rams so that they conform to the provisions and standards of this code.

. !t shall be the responsibility of the newscaster, commentator, host and announcer to protect publicinterest, +eneral welfare and +ood order in the presentation of public affairs and public issues.?5(@

The broadcasts fail to meet the standards prescribed in the >adio Code, which lays down the code ofethical conduct +overnin+ practitioners in the radio broadcast industry. The >adio Code is a voluntary code

of conduct imposed by the radio broadcast industry on its own members. The >adio Code is a publicwarranty by the radio broadcast industry that radio broadcast practitioners are subAect to a code by whichtheir conduct are measured for lapses, liability and sanctions.

The public has a ri+ht to e7pect and demand that radio broadcast practitioners live up to the code ofconduct of their profession, Aust like other professionals. professional code of conduct provides the


39/68

standards for determinin+ whether a person has acted Austly, honestly and with +ood faith in the e7ercise ofhis ri+hts and performance of his duties as re4uired by rticle &'?5%@ of the Civil Code. professional codeof conduct also provides the standards for determinin+ whether a person who willfully causes loss or inAuryto another has acted in a manner contrary to morals or +ood customs under rticle $&?5@ of the Civil Code.

II.&hether $#C is entitled to moral damages

1*N! contends that #EC is not entitled to moral dama+es because it is a corporation.?5'@

Auridical person is +enerally not entitled to moral dama+es because, unlike a natural person, it cannote7perience physical sufferin+ or such sentiments as wounded feelin+s, serious an7iety, mental an+uish ormoral shock.?)@ The Court of ppeals cites Mambulao Lumber Co. v. PNB, et al.?&@to Austify the awardof moral dama+es. owever, the CourtVs statement in Mambulaothat Ra corporation may have a +oodreputation which, if besmirched, may also be a +round for the award of moral dama+es is an o%iter dictum.?$@

Nevertheless, #ECVs claim for moral dama+es falls under item % of rticle $$&'?5@ of the Civil Code.This provision e7pressly authoriima and le+re for the payment of dama+es andattorneyVs fees because it e7ercised due dili+ence in the selection and supervision of its employees,particularly >ima and le+re. 1*N! maintains that its broadcasters, includin+ >ima and le+re, under+o aRvery re+imented process before they are allowed to +o on air. RThose who apply for broadcaster aresubAected to interviews, e7aminations and an apprenticeship pro+ram.


40/68

1*N! further ar+ues that le+reVs a+e and lack of trainin+ are irrelevant to his competence as abroadcaster. 1*N

Corpo Case Assignments

Documents

Transcript of Corpo Case Assignments