ABS-CBN vs CA FACTS: In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement whereby ABS-CBN was given the

right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN from the actual offer in writing. Consequently, Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of three(3) film packages (36 titles) from which ABS-CBN may exercise its right of first refusal under the afore-said agreement. ABS CBN rejected said list. On February 27, 1992, Del Rosario approached Ms. Concio, with a list consisting of 52 original movie titles, as well as 104 re-runs from which ABS-CBN may choose another 52 titles, or a total of 156 titles, proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00. The package was rejected by ABS-CBN. On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS discussed the terms and conditions of Vivas offer to sell the 104 films. On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from Ms. Concio which reads: Heres the draft of the contract. I hope you find everything in order, to which was attached a draft exhibition agreement, a counter-proposal covering 53 films for a consideration of P35 million. The said counter-proposal was however rejected by Vivas Board of Directors. On April 29, 1992, Viva granted RBS the exclusive right to air 104 Vivaproduced and/or acquired films including the fourteen (14) films subject of the present case. ABS-CBN then filed a a complaint for specific performance. RTC rendered a decision in favor of RBS and VIVA and against ABS-CBN, ruling that there was no meeting of minds on the price and terms of the offer. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. Concios letter to Del Rosario ticking off ten titles acceptable to them, which would have made the 1992 agreement an entirely new contract. The Court of Appeals affirmed the decision of the RTC. Hence, this petition. ISSUES 1. Whether or not there was no perfected contract between petitioner and private respondent 2. Whether or not ABS-CBN has already exercised its right of first refusal HELD 1. The issue should be resolved against ABS-CBN. Contracts that are consensual in nature are perfected upon mere meeting of the minds. Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the 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. That Del Rosario did not have the authority to accept ABS-CBNs counteroffer was best evidenced by his submission of the draft contract to VIVAs Board of Directors for the latters approval. In any event, there was between Del Rosario and Lopez III no meeting of minds. 2. Yes. ABS-CBNs right of first refusal had already been exercised when Ms. Concio wrote to VIVA ticking off ten films. As observed by the trial court, the subsequent negotiation with ABS-CBN was for an entirely different package. Ms. Concio herself admitted on cross-examination to having used or exercised the right of first refusal. She stated that the list was not acceptable and was indeed not accepted by ABS-CBN. Del Rosario himself knew and understood that ABS-CBN has lost its rights of the first refusal when his list of 36 titles were rejected. ---------------Peoples Aircargo and Warehousing Co., Inc. vs. Court of Appeals [October 7, 1998] Facts: Petitioner is a domestic corporation organized in 1986 to operate a customs bonded warehouse at the old Manila International Airport (MIA). To obtain a license from the Bureau of Customs, Antonio Punsalan, Jr., the corporation president, solicited a proposal from private respondent Stefani Sano for the preparation of afeasibility study. Sano submitted a letter proposal dated October 17, 1986 (First Contract) to Punsalan regarding his request

forprofessional engineering consultancy services which services are offered in the amount of P350,000.00. Initially, Cheng Yang, the majority stockholder of petitioner, objected to said offer as another company can provide for the same service at a lower price. However, Punsalan preferred Sanos services because of latters membership in the task force, which task force was supervising the transition of the Bureau from the Marcos to the Aquino government. Petitioner, through Punsalan, thereafter confirmed the contract. On December 4, 1986, upon Punsalans request, private respondent sent petitioner another letter-proposal (Second Contract) which offers the same service already at P400,000.00 instead of the previous P350,000.00 offer. On January 10, 1987, Andy Villaceren, vice-president of petitioner, received the operations manual prepared by Sano and which manual operations was submitted by petitioner to the Bureau in compliance for its application to operate a bonded warehouse. Thereafter, in May 1987, the Bureau issued to it a license to operate. Private respondent also conducted in the third week of January 1987 in the warehouse of petitioner, a three-day training seminar for the petitioners employees. On February 9, 1988, private respondent filed a collection suit against petitioner. He alleged that he had prepared an operations manual for petitioner, conducted a seminar-workshop for its employees and delivered to it a computer program but that despite demand, petitioner refused to pay him for his services. Petitioner, on its part, denied that Sano had prepared such manual operations and at the same time alleged that the letter-agreement was signed by Punsalan without authority and as such unenforceable. It alleges that the disputed contract was not authorized by its board of directors. Issue: Whether or not the Second Contract signed by Punsalan is enforceable and binding against petitioner. Held: Yes, the Second Contract is binding and enforceable. The general rule is that, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. A corporation is a juridical person, separate and distinct from its stockholders and members having xxx powers, attributes and properties expressly authorized by law or incident to its existence. Being a juridical entity, a corporation may act through its board of directors, which exercises almost all corporate powers, lays down all corporate business policies and is responsible for the efficiency of management, as provided in Section 23 of the Corporation Code. However, it is familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent, to act within the scope of an apparent authority, it holds him out to the public as possessing the power to do those acts and thus, the corporation witll, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agents authority. Thus privaterespondent shall not be faulted for believing that Punsalans conformity to the contract in dispute was also binding on petitioner. In the case at bar, petitioner, through its president Antonio Punsalan Jr., entered into the First Contract without first securing board approval. Despite such lack of board approval, petitioner did not object to or repudiate said contract, thus "clothing" its president with the power to bind the corporation. The grant of apparent authority to Punsalan is evident in the testimony of Yong senior vice president, treasurer and major stockholder of petitioner. Furthermore, private respondent prepared an operations manual and conducted a seminar for the employees of petitioner in accordance with their contract. Petitioner accepted the operations manual, submitted it to the Bureau of Customs and allowed the seminar for its employees. As a result of its aforementioned actions, petitioner was given by the Bureau of Customs a license to operate a bonded warehouse. Granting arguendo then that the Second Contract was outside the usual powers of the president, petitioner's ratification of said contract and acceptance of benefits have made it binding, nonetheless. The enforceability of contracts under Article 1403(2) is ratified "by the acceptance of benefits under them" under Article 1405. ----------------------China Banking Corporation v CA Facts: China Banking Corporation made a 53% equity investment (P16,227,851.80) in the First CBC Capital a Hongkong subsidiary engaged in financing and investment with deposit-taking function. It was shown that CBC has become insolvent so China Banking wroteoff its investment as worthless and treated it as a bad debt or as an ordinary loss deductible from its gross income.

CIR disallowed the deduction on the ground that the investment should not be classified as being worthless. It also held that assuming that the securities were worthless, then they should be classified as a capital loss and not as a bad debt since there was no indebtedness between China Banking and CBC. Issue: Whether or not the investment should be classified as a capital loss. Held: Yes. Section 29.d.4.B of the NIRC contains provisions on securities becoming worthless. It conveys that capital loss normally requires the concurrence of 2 conditions: there is a sale or exchange the thing sold or exchanges is a capital asset. When securities become worthless, there is strictly no sale or exchange but the law deems it to be a loss. These are allowed to be deducted only to the extent of capital gains and not from any other income of the taxpayer. A similar kind of treatment is given by the NIRC on the retirement of certificates of indebtedness with interest coupons or in registered form, short sales and options to buy or sell property where no sale or exchange strictly exists. In these cases, The NIRC dispenses with the standard requirements. There is ordinary loss when the property sold is not a capital asset. In the case, CBC as an investee corporation, is a subsidiary corporation of China Banking whose shares in CBC are not intended for purchase or sale but as an investment. An equity investment is a capital asset of the investor. Unquestionably, any loss is a capital loss to the investor. --------------China Banking Corporation v CA Facts: China Banking Corporation made a 53% equity investment (P16,227,851.80) in the First CBC Capital a Hongkong subsidiary engaged in financing and investment with deposit-taking function. It was shown that CBC has become insolvent so China Banking wroteoff its investment as worthless and treated it as a bad debt or as an ordinary loss deductible from its gross income. CIR disallowed the deduction on the ground that the investment should not be classified as being worthless. It also held that assuming that the securities were worthless, then they should be classified as a capital loss and not as a bad debt since there was no indebtedness between China Banking and CBC. Issue: Whether or not the investment should be classified as a capital loss. Held: Yes. Section 29.d.4.B of the NIRC contains provisions on securities becoming worthless. It conveys that capital loss normally requires the concurrence of 2 conditions: there is a sale or exchange the thing sold or exchanges is a capital asset. When securities become worthless, there is strictly no sale or exchange but the law deems it to be a loss. These are allowed to be deducted only to the extent of capital gains and not from any other income of the taxpayer. A similar kind of treatment is given by the NIRC on the retirement of certificates of indebtedness with interest coupons or in registered form, short sales and options to buy or sell property where no sale or exchange strictly exists. In these cases, The NIRC dispenses with the standard requirements. There is ordinary loss when the property sold is not a capital asset. In the case, CBC as an investee corporation, is a subsidiary corporation of China Banking whose shares in CBC are not intended for purchase or sale but as an investment. An equity investment is a capital asset of the investor. Unquestionably, any loss is a capital loss to the investor. --------------------------PRIME WHITE In July 1969, Zosimo Falcon and Justo Trazo entered into an agreement with Alejandro Te whereby it was agreed that from 1970 to 1976, Te shall be the sole dealer of 20,000 bags Prime White cement in Mindanao. Falcon was the president of Prime White Cement Corporation (PWCC) and Trazo was a board member thereof. Te was likewise a board member of PWCC. It was agreed that the selling price for a bag of cement shall be P9.70.

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Before the bags of cement can be delivered, Te already made known to the public that he is the sole dealer of cements in Mindanao. Various hardwares then approached him to be his sub-dealers, hence, Te entered into various contracts with them. But then apparently, Falcon and Trazo were not authorized by the Board of PWCC to enter into such contract. Nevertheless, the Board wished to retain the contract but they wanted some amendment which includes the increase of the selling price per bag to P13.30 and the decrease of the total amount of cement bags from 20k to 8k only plus the contract shall only be effective for a period of three months and not 6 years. Te refused the counter-offer. PWCC then awarded the contract to someone else. Te then sued PWCC for damages. PWCC filed a counterclaim and in said counterclaim, it is claiming for moral damages the basis of which is the claim that Tes filing of a civil case against PWCC destroyed the companys goodwill. The lower court ruled in favor Te. ISSUE: Whether or not the ruling of the lower court is correct. HELD: No. Te is what can be called as a self-dealing director he deals business with the same corporation in which he is a director. There is nothing wrong per se with that. However, Sec. 32 provides that: SEC. 32. Dealings of directors, trustees or officers with the corporation. - A contract of the corporation with one or more of its directors or trustees or officers is voidable, at the option of such corporation, unless all the following conditions are present: 1. That the presence of such director or trustee in the board meeting in which the contract was approved was not necessary to constitute a quorum for such meeting; 2. That the vote of such director or trustee was not necessary for the approval of the contract; 3. That the contract is fair and reasonable under the circumstances; and 4. That in the case of an officer, the contract with the officer has been previously authorized by the Board of Directors. In this particular case, the Supreme Court focused on the fact that the contract between PWCC and Te through Falcon and Trazo was not reasonable. Hence, PWCC has all the rights to void the contract and look for someone else, which it did. The contract is unreasonable because of the very low selling price. The Price at that time was at least P13.00 per bag and the original contract only stipulates P9.70. Also, the original contract was for 6 years and theres no clause in the contract which protects PWCC from inflation. As a director, Te in this transaction should protect the corporations interest more than his personal interest. His failure to do so is disloyalty to the corporation. Anent the issue of moral damages, there is no question that PWCCs goodwill and reputation had been prejudiced due to the filing of this case. However, there can be no award for moral damages under Article 2217 of the Civil Code in favor of a corporation. >>>>>>Before Us is a Petition for Review on Certiorari filed by petitioner Prime White Cement Corporation seeking the reversal of the decision * of the then Intermediate Appellate Court, the dispositive portion of which reads as follows: ----------------------------------------------Contracts entered into by a corporate president without express prior board approval bind the corporation, when such officers apparent authority is established and when these contracts are ratified by the corporation. The Case This principle is stressed by the Court in rejecting the Petition for Review of the February 28, 1994 Decision and the October 28, 1994 Resolution of the Court of Appeals in CA-GR CV No. 30670. [1] In a collection case filed by Stefani Sao against Peoples Aircargo and Warehousing Co., Inc., the Regional Trial Court (RTC) of [2] Pasay City, Branch 110, rendered a Decision dated October 26, 1990, [3] the dispositive portion of which reads: WHEREFORE, in light of all the foregoing, judgment is hereby rendered, ordering [petitioner] to pay [private respondent] the amount of sixty thousand (P60,000.00) pesos representing payment of [private respondents] services in preparing the manual of operations and in the conduct of a seminar for [petitioner]. The Counterclaim is hereby dismissed.