G.R. No. 128690 January 21, 1999
ABS-CBN BROADCASTING CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP., VIVA PRODUCTION, INC., and VICENTE DEL ROSARIO, respondents.

FACTS

In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement granting ABS-CBN an exclusive right to exhibit some Viva films. The agreement included a right of first refusal for the next twenty-four Viva films for TV telecast, exercisable by ABS-CBN upon an actual written offer. In December 1991, Viva, through Vicente Del Rosario, offered ABS-CBN, through Charo Santos-Concio, a list of three film packages (36 titles) from which to exercise this right. ABS-CBN, through Concio, rejected the list, ticking off only ten titles it could purchase. On February 27, 1992, Del Rosario offered ABS-CBN a new package of 52 original movie titles (including the 14 titles subject of the case) and 104 re-runs for a total price of P60,000,000. On April 2, 1992, Del Rosario and ABS-CBN general manager Eugenio Lopez III met. Lopez claimed they agreed on exclusive rights to fourteen films for P36 million, with the terms written and signed on a napkin. Del Rosario denied this, asserting they discussed the P60 million package, with Lopez promising a counter-proposal. On April 7, 1992, ABS-CBN sent a draft contract (counter-proposal) covering 53 films for P35 million, which Viva’s Board rejected the same day, insisting on the 104-film package for P60 million. On April 29, 1992, Viva signed an agreement with Republic Broadcasting Corporation (RBS) granting exclusive rights to air 104 films, including the fourteen in dispute, for P60 million. ABS-CBN filed a complaint for specific performance. The Regional Trial Court issued a preliminary injunction but later dissolved it upon RBS’s posting of a counterbond. The Court of Appeals affirmed the RTC’s decision with modification.

ISSUE

The core issue is whether a perfected contract of sale was entered into between ABS-CBN and Viva for the fourteen films during the April 2, 1992 meeting, thereby entitling ABS-CBN to specific performance.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. It held that no contract was perfected between ABS-CBN and Viva. The elements of consent, object, and cause for a contract of sale were not established. The alleged “napkin agreement” was not proven to be a genuine document, and the testimony regarding it was unreliable. The subsequent conduct of the parties showed there was no meeting of the minds: ABS-CBN’s April 7 counter-proposal for 53 films at P35 million was a new offer, not an acceptance of Viva’s package offer, and Viva’s immediate rejection of that counter-proposal confirmed the absence of an agreement. The right of first refusal under the 1990 agreement was not validly exercised by ABS-CBN as it rejected Viva’s initial written offer in December 1991. The Court also modified the award of damages, deleting the award of attorney’s fees to private respondents as there was no showing that the case fell under the grounds enumerated in Article 2208 of the Civil Code.