ABS-CBN BROADCASTING CORPORATION, petitioner,
vs.
HONORABLE COURT OF APPEALS, REPUBLIC
BROADCASTING CORP, VIVA PRODUCTION, INC., and
VICENTE DEL ROSARIO, respondents.
In 1992, ABS-CBN Broadcasting Corporation, through its
vice president Charo Santos-Concio, requested Viva
Production, Inc. to allow ABS-CBN to air at least 14 films
produced by Viva. Pursuant to this request, a meeting was
held between Vivas representative (Vicente Del Rosario)
and ABS-CBNs Eugenio Lopez (General Manager) and
Santos-Concio was held on April 2, 1992. During the
meeting Del Rosario proposed a film package which will
allow ABS-CBN to air 104 Viva films for P60 million. Later,
Santos-Concio, in a letter to Del Rosario, proposed a
counterproposal of 53 films (including the 14 films initially
requested) for P35 million. Del Rosario presented the
counter offer to Vivas Board of Directors but the Board
rejected the counter offer. Several negotiations were
subsequently made but on April 29, 1992, Viva made an
agreement with Republic Broadcasting Corporation
(referred to as RBS or GMA 7) which gave exclusive rights
to RBS to air 104 Viva films including the 14 films initially
requested by ABS-CBN.
ABS-CBN now filed a complaint for specific performance
against Viva as it alleged that there is already a perfected
contract between Viva and ABS-CBN in the April 2, 1992
meeting. Lopez testified that Del Rosario agreed to the
counterproposal and he (Lopez) even put the agreement in
a napkin which was signed and given to Del Rosario. ABS-
CBN also filed an injunction against RBS to enjoin the latter
from airing the films. The injunction was granted. RBS now
filed a countersuit with a prayer for moral damages as it
claimed that its reputation was debased when they failed to
air the shows that they promised to their viewers. RBS
relied on the ruling in People vsManero and Mambulao
Lumber vsPNB which states that a corporation may recover
moral damages if it has a good reputation that is debased,
resulting in social humiliation. The trial court ruled in favor
of Viva and RBS. The Court of Appeals affirmed the trial
court.
The first issue should be resolved against ABS-CBN. A
contract is a meeting of minds between two persons
whereby one binds himself to give something or to render
some service to another 37 for a consideration. there is no
contract unless the following requisites concur: (1) consent
of the contracting parties; (2) object certain which is the
subject of the contract; and (3) cause of the obligation,
which is established. 38 A contract undergoes three stages:
(a) preparation, conception, or generation,
which is the period of negotiation and
bargaining, ending at the moment of
agreement of the parties;
(b) perfection or birth of the contract,
which is the moment when the parties
come to agree on the terms of the
contract; and
(c) consummation or death, which is the
fulfillment or performance of the terms
agreed upon in the contract. 39
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.
When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-
CBN at the Tamarind Grill on 2 April 1992 to discuss the
package of films, said package of 104 VIVA films was VIVA's
offer to ABS-CBN to enter into a new Film Exhibition
Agreement. But ABS-CBN, sent, through Ms. Concio, a
counter-proposal in the form of a draft contract proposing
exhibition of 53 films for a consideration of P35 million. This
counter-proposal could be nothing less than the counter-
offer of Mr. Lopez during his conference with Del Rosario at
Tamarind Grill Restaurant. Clearly, there was no acceptance
of VIVA's offer, for it was met by a counter-offer which
substantially varied the terms of the offer.
In the case at bar, ABS-CBN made no unqualified
acceptance of VIVA's offer. Hence, they underwent a period
of bargaining. ABS-CBN then formalized its counter-
proposals or counter-offer in a draft contract, VIVA through
its Board of Directors, rejected such counter-offer, Even if it
be conceded arguendo that Del Rosario had accepted the
counter-offer, the acceptance did not bind VIVA, as there
was no proof whatsoever that Del Rosario had the specific
authority to do so.
Under Corporation Code, 46 unless otherwise provided by
said Code, corporate powers, such as the power; to enter
into contracts; are exercised by the Board of Directors.
However, the Board may delegate such powers to either an
executive committee or officials or contracted managers.
That Del Rosario did not have the authority to accept ABS-
CBN's counter-offer was best evidenced by his submission
of the draft contract to VIVA's Board of Directors for the
latter's approval. In any event, there was between Del
Rosario and Lopez III no meeting of minds. The following
findings of the trial court are instructive:
The contention that ABS-CBN had yet to fully exercise its
right of first refusal over twenty-four films under the 1990
Film Exhibition Agreement and that the meeting between
Lopez and Del Rosario was a continuation of said previous
contract is untenable. As observed by the trial court, ABS-
CBN right of first refusal had already been exercised when
Ms. Concio wrote to VIVA ticking off ten films, Thus:
YOLANDA PALATTAO, petitioner, vs. THE COURT OF generate consent because any modification or variation
APPEALS, HON. ANTONIO J. FINEZA, from the terms of the offer annuls the offer.[27]

The antecedent facts are as follows: Petitioner Yolanda In the case at bar, while it is true that private respondent
Palattao entered into a lease contract whereby she leased informed petitioner that he is accepting the latters offer to
to private respondent a house and a 490-square-meter lot sell the leased property, it appears that they did not reach
located in 101 Caimito Road, Caloocan City, covered by an agreement as to the extent of the lot subject of the
Transfer Certificate of Title No. 247536 and registered in the proposed sale. This is evident from the April 15, 1993 reply-
name of petitioner. The duration of the lease contract was letter of private respondent to petitioner.
for three years, commencing from January 1, 1991, to
December 31, 1993, renewable at the option of the parties. The foregoing letters reveal that private respondent did not
The agreed monthly rental was P7,500.00 for the first year; give his consent to buy only 413.28 square meters of the
P8,000.00 for the second year; and P8,500.00 for the third leased lot, as he desired to purchase the whole 490 square-
year. The contract gave respondent lessee the first option meter-leased premises which, however, was not what was
to purchase the leased property.[6] exactly proposed in petitioners offer. Clearly, therefore,
During the last year of the contract, the parties began private respondents acceptance of petitioners offer was not
negotiations for the sale of the leased premises to private absolute, and will consequently not generate consent that
respondent. In a letter dated April 2, 1993, petitioner would perfect a contract.
offered to sell to private respondent 413.28 square meters
of the leased lot at P7,800.00 per square meter, or for the Even assuming that the parties reached an agreement as to
total amount of P3,223,548.00.[7] Private respondent the size of the lot subject of the sale, the records show that
replied on April 15, 1993 wherein he informed petitioner there was subsequently a mutual withdrawal from the
that he shall definitely exercise [his] option [to buy] the contract.[30] The period within which to pay the down
leased property.[8] Private respondent, however, payment is a new term or a counter-offer in the contract
manifested his desire to buy the whole 490-square-meter which needs acceptance by private respondent. The latter,
leased premises and inquired from petitioner the reason however, failed to pay said downpayment, or to at least
why only 413.28 square meters of the leased lot were being manifest his conformity to the period given by petitioner.
offered for sale. In a letter dated November 6, 1993, Neither did private respondent ask for an extension nor
petitioner made a final offer to sell the lot at P7,500.00 per insist on the sale of the subject lot. Evidently, there was a
square meter with a downpayment of 50% upon the signing subsequent mutual backing out from the contract of sale.
of the contract of conditional sale, the balance payable in Hence, private respondent cannot compel petitioner to sell
one year with a monthly lease/interest payment of the leased property to him.
P14,000.00 which must be paid on or before the fifth day of Considering that the lease contract was not renewed after
every month that the balance is still outstanding.[9] On its expiration on December 31, 1991, private respondent
November 7, 1993, private respondent accepted petitioners has no more right to continue occupying the leased
offer and reiterated his request for clarification as to the premises. Consequently, his ejectment therefrom must be
size of the lot for sale.[10] Petitioner acknowledged private sustained.
respondents acceptance of the offer in his letter dated
November 10, 1993.
Petitioner gave private respondent on or before November
24, 1993, within which to pay the 50% downpayment in
cash or managers check. Petitioner stressed that failure to
pay the downpayment on the stipulated period will enable
petitioner to freely sell her property to others. Petitioner
likewise notified private respondent that she is no longer
renewing the lease agreement upon its expiration on
December 31, 1993.[11]
Private respondent did not accept the terms proposed by
petitioner. Neither was there any documents of sale nor
payment by private respondent of the required
downpayment. Private respondent wrote a letter to
petitioner on November 29, 1993 manifesting his intention
to exercise his option to renew their lease contract for
another three years, starting January 1, 1994 to December
31, 1996.[12] This was rejected by petitioner, reiterating
that she was no longer renewing the lease. Petitioner
demanded that private respondent vacate the premises,
but the latter refused.

Contracts that are consensual in nature, like a contract of

sale, 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
NATIONAL COMMERCIAL BANK OF SAUDI ARABIA, petitioner,
vs. COURT OF APPEALS and PHILIPPINE BANKING
CORPORATION, respondents.

In granting respondents motion, the Court took into

consideration the fact that parties belong to the banking
industry over which the government has a vital interest and
that movants failure to comply with the requirement of
notice and hearing when it filed its motion for
reconsideration of the trial courts Decision3 of August 24,
1993 is not commensurate to the severe prejudice it would
suffer in light of the seeming error of the trial court in
imposing the interest on the judgment obligation, the
correctness of which interest respondent raised for the first
time in its motion at bar.1awphi1.nt

Under Article 1306 of the Civil Code, contracting parties

may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order, or
public policy. Thus, a compromise agreement whereby the
parties make reciprocal concessions to resolve their
differences to thereby put an end to litigation is binding on
the contracting parties and is expressly acknowledged as a
juridical agreement between them.6 To have the force of
res judicata, however, the compromise agreement must be
approved by final order of the court.7

To be valid, the compromise agreement must be based on

real claims and actually agreed upon in good faith.8 Both
conditions are present in the case at bar. In clear,
categorical language, each of the parties have manifested
their desire, by forging the Compromise Agreement, to
abbreviate the legal battle and settle the case amicably to
both their satisfaction. As the Agreement is not contrary to
law, public order, public policy, morals or good customs, the
same is hereby approved. The petition having become
moot and academic, it should thus now be dismissed.
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs.
BONITA O. PEREZ and ALFREDO PEREZ, respondents.
The Antecedents
On April 28, 1978, petitioner Development Bank of the
Philippines (DBP) sent a letter to respondent Bonita Perez,
informing the latter of the approval of an industrial loan
amounting to P214,000.00 for the acquisition of machinery
and equipment and for working capital, and an additional
industrial loan amounting to P21,000.00 to cover
unforeseen price escalation.[2]
the respondents were made to sign four promissory notes
covering the total amount of the loan, P235,000.00. The
promissory notes were to be paid in equal quarterly
amortizations and were secured by a mortgage contract
covering real and personal properties.[5].
Due to the respondents' failure to comply with their
amortization payments, the petitioner decided to foreclose
the mortgages that secured the obligation. However, Mrs.
Perez requested for a restructuring of their account due to
difficulties they were encountering in collecting receivables.
the petitioner informed the respondents that it had
approved the restructuring of their accounts.[9] The loan
was restructured, and on May 6, 1982, the respondents
signed another promissory note in the amount of
P231,000.00 at eighteen percent (18%) interest per annum,
payable quarterly at P12,553.27, over a period of ten years.
The promissory note stated in part:
This Promissory Note supersedes the Promissory Note dated
May 18, 1978 and stands secured by a mortgage contract
executed by the above parties on the same date, subject to
the following terms and conditions.[10]
This failure to meet the quarterly amortization of the loan
prompted the petitioner to institute foreclosure proceedings
on the mortgages. The sale of the properties covered by
the mortgage contract was scheduled on October 30, 1985.
[15]
In the instant case, there was no evidence showing that the
respondents signed the new promissory note through
mistake, violence, intimidation, undue influence, or fraud.
The respondents merely alleged that they were forced to
restructure their loan for fear of having their mortgaged
properties foreclosed. However, it is axiomatic that this
would not amount to vitiated consent. The last paragraph of
Article 1335 of the New Civil Code specifically states that a
threat to enforce ones claim through competent authority,
if the claim is just or legal, does not vitiate consent.
Foreclosure of mortgaged properties in case of default in
payment of a debtor is a legal remedy afforded by law to a
creditor. Hence, a threat to foreclose the mortgage would
not, per se, vitiate consent.
The CA noted that the petitioner prepared the new
promissory note on its own and that the only participation
of the respondents was to sign the same. The CA
concluded, therefore, that the new promissory note was a
contract of adhesion.
A contract of adhesion is so-called because its terms are
prepared by only one party while the other party merely
affixes his signature signifying his adhesion thereto.
[31]While we accede to the appellate courts conclusion that
the new promissory note was in the nature of a contract of
adhesion, we cannot fathom how this can further the
respondents case.
It bears stressing that a contract of adhesion is just as
binding as ordinary contracts. It is true that we have, on
occasion, struck down such contracts as void when the
weaker party is imposed upon in dealing with the dominant
bargaining party and is reduced to the alternative of taking
it or leaving it, completely deprived of the opportunity to
bargain on equal footing. Nevertheless, contracts of
adhesion are not invalid per se; they are not entirely
prohibited. The one who adheres to the contract is in reality
free to reject it entirely; if he adheres, he gives his consent.
[33]
Under the Usury Law, no person shall receive a rate of
interest, including commissions, premiums, fines and
penalties, higher than twelve percent (12%) per annum or
the maximum rate prescribed by the Monetary Board for a
loan secured by a mortgage upon real estate the title to
which is duly registered.[37]
In this case, by specific provision in the new promissory
note, the restructured loan continued to be secured by the
same mortgage contract executed on May 18, 1978 which
covered real and personal properties of the respondents.
We, therefore, find the eighteen percent (18%) interest rate
plus the additional interest and penalty charges of eighteen
percent (18%) and eight percent (8%), respectively, to be
highly usurious.
In usurious loans, the entire obligation does not become
void because of an agreement for usurious interest; the
unpaid principal debt still stands and remains valid, but the
stipulation as to the usurious interest is void. Consequently,
the debt is to be considered without stipulation as to the
interest.[38] In the absence of an express stipulation as to
the rate of interest, the legal rate at twelve percent (12%)
per annum shall be imposed.[39]
Finally, we find that the records are insufficient to enable us
to determine the total amount of the respondents
obligation. It is not even clear how much the respondents
have already paid on the restructured loans and when such
payments were made. Moreover, considering our previous
conclusion that the interest rates prescribed under the new
promissory note are usurious, the statement of account
presented by the petitioner is no longer pertinent. It must
be stressed that such statement of account was arrived at
based on the usurious interest rates. Hence, the total
amount of the obligation must necessarily be recomputed.