Yalung, Sr. v. Magsaysay Films International Corp.

SECOND DIVISION

[G.R. No. 212955. January 5, 2022.]

BENJAMIN YALUNG, SR., petitioner, vs.MAGSAYSAY FILMS INTERNATIONAL CORP., AND GENELYN MAGSAYSAY, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Second Division, issued a Resolution dated05 January 2022which reads as follows:

"G.R. No. 212955 (Benjamin Yalung, Sr. v. Magsaysay Films International Corp., and Genelyn Magsaysay). — Challenged in this Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure filed by petitioner Benjamin Yalung, Sr. (Yalung) is the Decision 2 dated November 6, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 97095, which denied Yalung's appeal and affirmed the Regional Trial Court's (RTC) Decision 3 in Civil Case No. 0253-04 dated October 28, 2010, which in turn granted respondent Magsaysay Films International Corporation's (Magsaysay) Complaint for Sum of Money and Damages.

The Antecedents

On August 27, 2004, Magsaysay, a corporation engaged in the business of producing movies, and Genelyn Magsaysay (Genelyn), its Chief Executive Officer, (collectively referred to as respondents) filed a Complaint for Sum of Money and Damages against Cinecolor Corporation (Cinecolor), a corporation engaged as a film laboratory and post-production studio, Yalung (General Manager of Cinecolor), Noel Mauricio (Mauricio), and Benjamin Yalung, Jr. (Yalung Jr.), (collectively referred to as defendants). They averred that in 2004, respondents entered into a Package Service Contract (Contract) with Cinecolor for the post-production of its maiden movie entitled "Anak ka ng Tatay Mo." Thereafter, the shooting and production of the movie proceeded. 4

When respondents learned that the movie will be shown in the 2004 Manila Film Festival on June 23, 2004, they informed defendants and they agreed on a new schedule for the film's post-production so that it can be released in time for the festival. 5 CAIHTE

The shooting for the film was finished in the first week of May to give time for defendants to complete the dubbing, editing, film processing and other works in time for the premier showing of the film on June 22, 2004, and the Metro Manila wide showing the next day, June 23, 2004. However, after receiving the footages, defendants started making excuses that the film's sound recordings were erased, necessitating the actors to go repeatedly to Cinecolor's studio for re-recording and re-dubbing. 6

On June 21, 2004, when the film was scheduled to be viewed by the Movie and Television Review and Censors Board (MTRCB), the film was still not ready for final mixing. The viewing was, thus, re-scheduled for the next day. In the morning of June 22, 2004, only seven (7) parts of the twelve (12) parts could be shown to MTRCB. The scheduled premiere night was likewise re-scheduled from 5:30 in the afternoon to 8:30 in the evening of June 22, 2004, because the mixing was not finished. 7

When the film was shown, it was a disaster. The color of the picture varied and abruptly changed throughout the movie; characters were uttering words that were not theirs; sounds and voices were not synchronized; a character was playing a guitar with no sound at all; a male character emitted the voice of a small girl; the director's voice on set could be heard; a portion suddenly jumped back to a previous part. Magsaysay was, thus, constrained to transfer the final mixing and printing of the eighth to the twelfth parts of the movie to the studios of Sampaguita Pictures and LVN Pictures. When the movie was finally shown in cinemas, it was still a failure. The cinemas even requested respondents to pull out the movie because the mixing was terrible. 8

On July 12, 2004, Genelyn, together with her lawyer, met with petitioner Yalung at Club Filipino in San Juan. An apologetic Yalung offered to refund the expenses of Magsaysay for the post-production of the film, amounting to P8,000,000.00 on a staggered basis. 9 In that meeting, Genelyn suggested that half of the Eight Million Pesos be paid in cash, while the other half can be generated if the film could be shown on cable and television stations. 10

On July 16, 2004, Genelyn and Yalung met again and agreed that an audit be made for the purpose of knowing the exact amount of the refund. After the audit, it yielded the amount of P8,113,422.15. Yalung, then offered to pay the amount in shares of stock of Cinecolor. Genelyn, however, declined the offer. 11 Yalung then allured Genelyn for a joint business venture which the latter declined. 12

Respondents, thereafter, demanded payment from defendants. A formal demand letter was sent to Cinecolor on July 28, 2004, but it was ignored. Hence, the complaint for Sum of Money and Damages based on the audit and the prejudice that respondents suffered. 13

In their Answer with Counterclaim filed on October 22, 2004, defendants averred that the venue had been improperly laid because, in their Contract, it was agreed upon that only a competent court in Mandaluyong shall have jurisdiction in cases of breach. 14 Further, defendants argued that respondents had no cause of action against them because the losses allegedly suffered were the result of their fault, negligence, and lack of experience. 15 Therein, they averred that the delays were attributable to respondents, thus:

1) Film Editing. The assistant film editor started working alone on the film on May 31, 2004; the film director began assisting in the editing only on June 7, 2004. By June 13, 2004, editing was completed; however, the executive producer rejected the editing, and the film director had to re-edit the film from the start. Film editing was completed only on June 18, 2004.

2) Sound Recording. Sound recording sessions began on May 21, 2004 until June 18, 2004. The reason why it took so long was because the film editor wanted to edit the film only after it had been dubbed. Despite discussion on the matter that the process required by the film editor was wrong, the film editor still insisted on what he wanted. On June 14, 2004, appellants had to talk with the film director to transfer the sound recording session from digital to analog; the film director agreed. Recorded dubs were transferred from digital to 35mm magnetic tapes. Despite double time being expended by appellants on the film, the film director kept changing the final edit so that sound was not synchronized. [Defendants'] efforts were wasted. The musical score was also affected by the constant changes in the final edit and had to be re-arranged. 16 DETACa

Defendants further claim that respondents failed to provide for the raw materials needed to complete the project — sufficient tapes for recording. Defendants' printing machinery even bogged down because of the uninterrupted day and night work. Defendants then suggested that the remaining work be commissioned to Sampaguita and LVN Studios. Respondents, however, insisted that all works be done by defendants. Finally, defendants insist that respondents' unpreparedness, lack of foresight and inexperience are the causes of a substandard film. 17

The RTC Ruling

The RTC rendered a Decision 18 dated October 28, 2010, granting respondents' Complaint for Sum of Money and Damages. The RTC ratiocinated that despite the failure of defendants to perform the post-production job, they dismissed respondents' concern by conveniently assuring them that the film would be released in its best form. The RTC added that after the failed movie, defendants even offered respondents the refund of the latter's expense in the post-production after the conduct of an audit. Such acts, for the RTC, were clear manifestations that the Principle of Abuse of Right enshrined in Article 19 has been violated. 19

The RTC further concluded that defendants acted with bad faith in failing to refund respondents the amount reflected in the audit conducted. 20 The RTC, thus, disposed of the case in this wise:

WHEREFORE, the instant case is hereby GRANTED. ACCORDINGLY, defendants are hereby ordered to pay plaintiffs the following amounts of damages, to wit:

1. Eight Million One Hundred Thirteen Thousand Four Hundred Twenty-Two Pesos & 15/100 (P8,113,422.15) as actual and compensatory damages with six per cent (6%) interest from the date of the filing of this case, which is August 27, 2004 until the finality of this decision;

2. Two Million Pesos (P2,000,000.00), as moral damages in favor of plaintiff Genelyn Magsaysay; and,

3. Two Hundred Fifty Thousand Pesos (P250,000.00), as Attorney's Fees.

4. Cost of suit.

SO ORDERED. 21

Aggrieved, the defendants appealed the RTC Decision with the CA.

The CA Ruling

In a Decision 22 promulgated on November 6, 2013, the CA denied the defendants' appeal and affirmed with modification the RTC Decision in that the attorney's fees was deleted. 23

The CA ruled that a gentleman's agreement is legally and morally binding. Thus, the promise to pay made by Yalung is binding between the parties. 24 It added that Article 1358 25 of the Civil Code, which requires, among others, that contracts, where the amount involved exceeds Five Hundred Pesos (P500.00), must appear in writing, is inapplicable considering that the obligation to refund Magsaysay was not based on a contract but on a promise to pay. 26

The CA affirmed the application of Article 19 of the Civil Code. It explained that the refusal of the defendants to correct the technical glitches in post-production and release a quality print after a disastrous premiere showing is a violation of the Principle of Abuse of Right enshrined in Article 19. 27 Furthermore, the CA concluded that defendants' indifference and cavalier attitude towards their clients make Article 21 of the Civil Code applicable. 28 aDSIHc

Finally, the CA deleted the award of attorney's fees for failure of the RTC to state the basis of the award. 29 The fallo of the assailed Decision reads:

WHEREFORE, the appeal is DENIED. The Decision dated October 28, 2010 of the Regional Trial Court, Branch 22 of Imus, Cavite, in Civil Case No. 0253-04, is AFFIRMED with MODIFICATION. The award of attorney's fees is deleted. Costs against defendants-appellants.

SO ORDERED.30

Cinecolor moved for reconsideration of the CA Decision. It was, however, denied per CA Resolution 31 promulgated on June 11, 2014.

Aggrieved, Yalung filed the instant Petition for Review on Certiorari32 raising the following issues:

Issues

I. THE HONORABLE [CA] ERRED IN HOLDING THAT THE CONCEPT OF GENTLEMAN'S AGREEMENT IS APPLICABLE IN THE INSTANT CASE THEREBY AWARDING ACTUAL DAMAGES OF P8,113,4225.15 n TO THE RESPONDENTS;

II. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE VENUE WAS NOT IMPROPERLY LAID.

III. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING PETITIONER [YALUNG] LIABLE FOR MORAL DAMAGES OF P2,000,000.00 DESPITE THE FACT THAT HE HAS NOTHING TO DO WITH CINECOLOR CORPORATION BEING NEITHER A STOCKHOLDER, DIRECTOR OR OFFICER THEREOF. 33

The Court's Ruling

The petition is partly meritorious.

At the outset, the issues raised, being interrelated, are discussed jointly.

Settled is the rule that this Court is not a trier of facts. In a plethora of cases, it has been repeatedly stated:

It is a settled rule that the Supreme Court is not a trier of facts. The function of the Court in petitions for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing errors of law that may have been committed by the lower courts. As a matter of sound practice and procedure, the Court defers and accords finality to the factual findings of trial courts. To do otherwise would defeat the very essence of Rule 45 and would convert the Court into a trier of facts, which is not its intended purpose under the law. x x x 34 (Citation omitted)

Established are the following pertinent facts: (1) after post-production, the outcome of the movie was a total disaster; (2) Genelyn then met with Yalung, who offered to refund, in a staggered basis, the expenses for the post-production costs which was roughly P8,000,000.00; (3) in that meeting Genelyn suggested that half of the P8,000,000.00 be paid in cash, while the other half can be generated if the film could be shown on cable and television stations; (4) in a subsequent meeting, Genelyn and Yalung agreed that an audit be conducted for the purpose of knowing the exact amount of the refund; (5) the audit yielded the amount of P8,113,422.15; (6) in another meeting, Yalung offered that the payment be made by way of assigning to Genelyn some shares of stocks of Cinecolor; (7) Genelyn, however, refused and insisted that she be paid in cash; (8) Yalung then allured Genelyn for a joint business venture which the latter declined; (9) upon verification, Genelyn discovered that Cinecolor was not a registered and existing company with the Securities and Exchange Commission; (10) Genelyn, thus, insisted payment on the agreed refund; (11) despite demand, defendants refused to pay Magsaysay and Genelyn of their refund; and (12) such agreement was not made in writing. 35 ETHIDa

Now that it has been settled that Yalung promised to refund respondents of the latter's expenses in the post-production of the film, which amounts to P8,113,422.15, the question now is whether Yalung, or defendants for that matter, are obliged to make good the promise to refund.

We rule in the negative.

Obligation is a juridical necessity to give, to do or not to do. 36 It arises from (1) Law; (2) Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts. 37

In the assailed Decision, the CA ruled that the defendants' obligation arose from Yalung's promise to refund respondents. It explained, "A PROMISE does not necessarily give rise to a contract, but, in all instances, it gives rise to an OBLIGATION." 38 The CA then exempts Yalung's promise from the requirements under Article 1358 of the Civil Code for not being a contract.

We find the CA's conclusion bereft of merit.

As above enumerated, an obligation to give, to do, or not to do arises only from law, contracts, quasi-contracts, act or omissions punished by law and quasi-delict. It cannot arise from a mere promise. While, respondents, in their Appellees' Brief, 39 claimed that Yalung's promise had ripened into a contract, such is baseless. To recall, respondents insisted that the Complaint for Sum of Money and Damages is based on a separate and perfected contract to pay the duly audited expenses they have incurred. 40 After a careful review of the records of this case, however, We hold and so rule that there was, between the parties, no perfected contract to pay the audited amount.

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. 41 There can be no contract unless all of the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) the cause of the obligation which is established. 42 When one of the elements is wanting, no contract can be perfected. 43

Furthermore, from the moment of a meeting of the offer and the acceptance upon the object and the cause that would constitute the contract, consent arises. However, the offer must be certain and the acceptance seasonable and absolute; if qualified, the acceptance would merely constitute a counter-offer. 44

The three stages of a contract are likewise of importance. In the case of Insular Life Assurance Co. Ltd. v. Asset Builders Corp., 45 We explained that:

Equally important are the three distinct stages of a contract — its "preparation or negotiation, its perfection, and finally, its consummation." Negotiation begins when the prospective contracting parties manifest their interest in the contract and ends at the moment of their agreement. The perfection or birth of the contract occurs when they agree upon the essential elements thereof. The last stage is its consummation, wherein they "fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. 46 (Citations omitted) cSEDTC

In the case at bar, the parties were not able to pass the first stage — negotiation. Indeed, in the initial meeting, there was an offer made by Yalung to refund respondents of the cost of post-production. While Genelyn initially accepted the offer, she suggested that half of the amount of refund be paid in cash, while the other half would be generated from the film if it would be shown on cable and television stations. In this very instance, there was still no final agreement arrived at. In fact, they opted that an audit is first made. Hence, an audit was conducted which yielded the amount of P8,113,422.15. On their next meeting, Yalung's offer to refund the amount stayed but insisted that payment be made by way of assigning to Genelyn some shares of stocks of Cinecolor. Genelyn, however, refused. Yalung even tried to allure Genelyn to enter a business venture with him, but the latter again declined. Genelyn then insisted that she be paid in cash. Subsequently, nothing was heard from Yalung. 47

Clearly, the events that transpired between them were indeed initiated by an offer. This, however, was merely an imperfect promise that could not be considered a binding commitment. There was only an offer and, later, a counter offer from Genelyn. Yalung then made a qualified offer that payment be made by assigning shares of stock of Cinecolor to Genelyn, which the latter declined.

The offer to refund, obviously, did not sum up to any final arrangement containing the elements of a contract. In fact, it was clear that at any time, a party may impose a condition. They may even at any time stop the negotiation and withdraw the offer, as what Yalung did when nothing was ever heard from him after Genelyn insisted that they be paid in cash.

Needless to state, there was no concurrence of the offer and its acceptance because other matters or details — in addition to the subject matter and the consideration — would still be stipulated and agreed upon by the parties. There was no definite agreement arrived at. At the risk of being repetitive, We stress that while there was an initial offer made, such offer was not certain. They did not agree as to how the amount is to be paid, and when it would be paid. Was it payable in cash or on a staggered basis, or by way of assigning to Genelyn some shares of stocks of Cinecolor? Since there was no definite offer, there can never be an absolute acceptance on the part of Genelyn. Without a doubt, there was no meeting of minds between the parties.

In the case of Sps. Gironella v. Philippine National Bank, 48 We have emphasized:

To reach that moment of perfection, the parties must agree on the same thing in the same sense, so that their minds meet as to all the terms. They must have a distinct intention common to both and without doubt or difference; until all understand alike, there can be no assent, and therefore no contract. The minds of parties must meet at every point; nothing can be left open for further arrangement. So long as there is any uncertainty or indefiniteness, or future negotiations or considerations to be had between the parties, there is not a completed contract, and in fact, there is no contract at all. 49 (Emphasis supplied, citations omitted)

The circumstances of this case fall short of the above definition of a perfected contract. Yalung and Genelyn did not agree on all the terms. Their minds did not meet at every point. Simply put, there is no perfected contract between the parties. In fact, there is no contract at all. This might be the very reason why no written contract to such effect was ever executed by the parties, and why respondents did not insist on executing one. Corollarily, Article 1358 of the Civil Code which requires certain contracts to be in a public document becomes irrelevant.

We likewise do not agree with the CA that Yalung's promise is a form of a gentleman's agreement, which is legally binding between the parties. In support of such conclusion, the CA cited the case of Dela Cruz v. Roxas. 50 This case, however, does not apply to the present case.

The Roxas Case involves a different factual milieu. Therein, there was already a decision by Judge Roxas ordering petitioners to vacate the premises. One of the petitioners, Agustin Alonzo (Alonzo), asked that he be given 3 months from the promulgation of the decision, during which the order of execution should not be issued, in order to give him sufficient time for locating a vacant house or a vacant room where he can transfer himself and his family. To this, respondents owners of the property, and Judge Roxas assented. After the lapse of three months, Judge Roxas issued a Writ of Execution. Aggrieved, Alonzo filed a petition against the owners of the house and Judge Roxas. 51 SDAaTC

In dismissing the case and upholding the validity of the issuance of a Writ of Execution after the lapse of three months, this Court upheld the gentleman's agreement stating that "we revolt against the idea of being a party to a violation of a gentleman's agreement and trampling upon the word of honor of honorable citizens." 52

Clearly, the gentleman's agreement contemplated in the Roxas Case was within the knowledge and approval of Judge Roxas. Such promise, in effect, is equivalent to a compromise agreement, not a mere promise which is such in this case.

Notwithstanding, We find defendants liable for moral damages for violating the Principle of Abuse of Rights under Article 19 of the Civil Code, in relation to Article 21, also of the Civil Code.

The Principle of Abuse of Rights, as enshrined in Article 19 of the Civil Code, provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. 53 The legal consequence should anyone violate this fundamental provision is found in Articles 20 and 21 of the Civil Code, 54 which state:

Article 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.

Article 21. Any person who willfully causes loss or injury to another in manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

Moreover, to be liable for abuse of rights under Article 19, the following elements must concur: (1) there is a legal right or duty; (2) the right is exercised or the duty is performed in bad faith; and (3) the sole intent of the exercise or performance is to prejudice or injure another. 55

On the other hand, Article 21 refers to acts contra bonos mores. It has the following elements: (1) an act which is legal; (2) but which is contrary to morals, good custom, public order or public policy; and (3) is done with intent to injure. 56 The common element under Articles 19 and 21 is that the act complained of must be intentional, and attended with malice or bad faith. 57

We find that all these elements are present in this case.

It was incumbent upon defendants to release a good quality film after post-production. It was their legal duty. It was what they were paid to do. The outcome of the film, however, was a total disaster.

As records show, the post-production of the movie, "Anak ka ng Tatay Mo," was laughable, embarrassing, humiliating and tragic, to such point that movie houses requested that the movie be pulled out from the cinemas. Thanks to the defendants' technical service or disservice, the movie, respondents' maiden movie, was the cause of their downfall.

Moreover, there was an implied admission on the part of the defendants that the disastrous movie was due to their fault. It is undisputed that Yalung made an offer to refund the costs for the post-production of the film. He even initiated, with respondents' consent, the conduct of an audit to determine the exact amount of respondents' losses. Such admission is more than enough to conclude that defendants had a legal duty to release a good quality film, but failed to meet the task entrusted them. acEHCD

Furthermore, as found by the RTC, despite the defendants' failure to perform properly and diligently the post-production job, they simply dismissed the desperate concerns of respondents by conveniently reassuring them that the movie would be released in its best form. 58 This is a clear manifestation of evident bad faith on the part of the defendants. Instead of a mere reassurance, defendants should have done what they were asked and paid to do. They should have corrected what was needed to be corrected to come out with a good quality movie.

Defendants' incapacity to produce a good quality movie proved to be injurious and prejudicial to respondents. Their loss was unquantifiable. More than their financial losses, the humiliation the disastrous movie had caused them was incapable of pecuniary estimation. Needless to state, their reputation was besmirched. They were humiliated in front of the viewing public.

As to the award of damages, We hold and so rule that respondents are entitled to moral damages in the amount of P8,113,422.15.

The pertinent provisions of the Civil Code on moral damages state:

Article 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission.

xxx xxx xxx

Article 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage; EcTCAD

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in article 309;

(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

xxx xxx xxx (Emphasis supplied)

It is clear from Article 2219 (10), as above-quoted, that moral damages may be awarded (or violation of the Principle of Abuse of Rights in relation to Article 21 of the Civil Code. In fact, in a plethora of cases, We awarded moral damages on this ground. 59

Moreover, Delos Santos v. Papa60 enumerates the requisites for the award of moral damages, thus:

x x x (1) [T]here must be an injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award for damages is predicated on any of the cases stated in Article 2219 [of the Civil Code.] 61 (Citation omitted)

In this case, it is beyond cavil that respondents suffered besmirched reputation and social humiliation due to the failure of defendants to come up with a quality film after post-production. To stress, the outcome of the movie was tragic and disastrous. Defendants even admitted that it was their fault after Yalung offered to refund respondents' expenses for post-production. Finally, this case falls under Paragraph 10, Article 2219 of the Civil Code for violation of Principle of Abuse of Rights under Article 19, in relation to Article 21 of the Civil Code. With the presence of the above-enumerated elements, respondents are clearly entitled to moral damages.

As to the assessment of moral damages, such is left to the discretion of the court. 62 The courts however are not given unbridled discretion as to the amount of moral damages. As held in Mariano v. People, 63 "Moral damages should reasonably approximate the extent of the hurt caused and the gravity of the wrong done." 64

Furthermore, while there is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, the same should not be palpably and scandalously excessive. They are not intended to impose a penalty to the wrongdoer, neither to enrich the claimant at the expense of the defendant. 65

In this case, the award of moral damages in the amount of P8,113,422.15 is reasonable.

To recall, it was established that Yalung made an offer to refund respondents for the latter's expenses for the post-production of the film. He even initiated the conduct of an audit to determine the exact amount spent. After the audit, it yielded the amount of P8,113,422.15. Since the defendants were willing to pay the said amount, and it is the extent of loss which respondents suffered, it is just right and proper to award respondents the same amount of P8,113,422.15 as moral damages.

We impose an interest of 6% per annum on the moral damages reckoned from the finality of this Resolution until the full payment of the obligation. This is because the damages thus fixed hereby become a forbearance. The rate of 6% per annum is pursuant to Circular No. 799, series of 2013, issued by the Office of the Governor of the Bangko Sentral ng Pilipinas on June 21, 2013, and the pronouncement in Nacar v. Gallery Frames. 66

As things are, a corporation, as a general rule, not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. 67 In several instances, however, We granted moral damages to corporations. HSAcaE

In the case of Filipinas Broadcasting Network, Inc. v. Ago Medical & Educational Center-Bicol Christian College of Medicine, 68 We awarded Ago Medical & Educational Center-Bicol Christian College of Medicine (AMEC) moral damages. We ruled:

x x x AMEC's claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages. 69 (Citation omitted)

The same goes for respondents, Magsaysay in particular. Respondents' claim for damages falls under Paragraph 10 of Article 2219 of the Civil Code. This particular provision of the Civil Code does not qualify whether the party asking for damages needs to be a natural or juridical person. Thus, even a corporation may validly complain under this specific provision — Article 2219 (10) and claim moral damages.

Furthermore, it was sufficiently established that respondents suffered besmirched reputation and social humiliation on account of defendants' actions and omissions. This further bolsters respondents' entitlement to moral damages.

As to attorney's fees, We agree with the CA that the RTC failed to establish the basis for such award.

Finally, on the issue of venue, it bears stressing that respondents filed a Complaint for Sum of Money and Damages for failure of defendants to refund the audited amount as promised by Yalung, not based on a breach of the Contract. Accordingly, the provision in the Contract, which states that all causes of action between the parties shall be brought only in any competent court in Mandaluyong City, 70 is irrelevant in this case. Otherwise stated, the venue of this case, which was filed in Imus, Cavite, was not improperly laid. Respondents are free to institute a case against defendants in any court, provided that Rule 4, of the Rules of Court is properly observed.

In sum, Yalung's promise to refund respondents for the latter's expenses in the post-production of the film did not give rise to an obligation to pay. Such offer was merely an imperfect promise that could not be considered a binding commitment. Such promise, coupled with Genelyn's qualified acceptance did not ripen to a contract, for no final agreement was arrived at. Notwithstanding, defendants are held liable for moral damages for violation of the Principle of Abuse of Rights enshrined in Article 19 of the Civil Code, in relation to Article 21, also of the Civil Code.

All told, We are constrained to modify the decision of the CA.

WHEREFORE, in view of the foregoing premises, the instant petition is PARTIALLY GRANTED. The assailed November 6, 2013 Decision of the Court of Appeals in CA-G.R. CV No. 97095, is AFFIRMED WITH MODIFICATION in that the award of P8,113,422.15 as actual and compensatory damages is DELETED. The award of moral damages against defendants Cinecolor Corporation, Benjamin Yalung, Sr., Noel Mauricio, and Benjamin Yalung, Jr. is INCREASED to P8,113,422.15, with an interest of 6% per annum from the finality of this Resolution until the full payment of the obligation. HESIcT

The Court DEEMS AS SERVED by substituted service pursuant to Section 8, Rule 13 of the 2019 Amended Rules of Court, the returned and unserved copies of the Resolution dated June 17, 2020 separately sent to (1) Atty. Alexi Val B. Arciaga at Unit 1, Leon Guinto Homes 3, 2208A Leon Guinto St., Malate, 1004 Manila; and to (2) Ms. Genelyn Magsaysay of Magsaysay Films International Corporation, at Rogi Building, Dona Andeng St., 4103 Imus, Cavite with notation, "RTS, Unclaimed" and "RTS, Unknown," respectively.

SO ORDERED." (Dimaampao, J., no part due to prior action in the Court of Appeals; Rosario, J., designated additional member per raffle dated November 29, 2021.)

By authority of the Court:

(SGD.) TERESITA AQUINO TUAZONDivision Clerk of Court

Footnotes

1. Rollo, pp. 3-17.

2. Id. at 21-39; penned by Associate Justice Victoria Isabel A. Paredes, with Associate Justice Elihu A. Ybañez and Japar B. Dimaampao, (now a Member of this Court) concurring.

3. Id. at 40-51; penned by Judge Cesar A. Mangrobang.

4. Id. at 22.

5. Id.

6. Id. at 23.

7. Id.

8. Id. at 23-24.

9. Id. at 24.

10. Id. at 43.

11. Id. at 24.

12. Id. at 43.

13. Id. at 25.

14. Id.

15. Id.

16. Id. at 26.

17. Id. at 26-27.

18. Id. at 40-51.

19. Id. at 46.

20. Id. at 48.

21. Id. at 51.

22. Id. at 21-39.

23. Id. at 38.

24. Id. at 32.

25. Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein a governed by Articles 1403, No. 2, and 1405;

(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;

(3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person;

(4) The cession of actions or rights proceeding from an act appearing in a public document.

All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by Articles 1403, No. 2 and 1405.

26. Rollo, pp. 32-35.

27. Id. at 37.

28. Id.

29. Id. at 38.

30. Id.

31. Id. at 19-20.

32. Id. at 3-17.

33. Id. at 8.

34. Heirs of Teresita Villanueva v. Heirs of Petronilla Syquia Mendoza, 810 Phil. 172, 177-178 (2017).

35. Rollo, p. 43.

36. Article 1156, CIVIL CODE.

37. Article 1157, CIVIL CODE.

38. Rollo, p. 34.

39. Id. at 52-82.

40. Id. at 69.

41. Article 1305, Civil Code.

42. Article 1318, Civil Code.

43. Catapang v. Lipa Bank, G.R. No. 240645, January 27, 2020.

44. The Insular Life Assurance Co. Ltd. v. Asset Builders Corp., 466 Phil. 751, 765-766 (2004).

45. Id.

46. Id. at 766-767.

47. Rollo, p. 43.

48. 769 Phil. 740 (2015).

49. Id. at 752.

50. 75 Phil. 457 (1945).

51. Id. at 458-459.

52. Id. at 461.

53. Spouses Cabasal v. BPI Family Savings Bank, Inc., G.R. No. 233846, November 18, 2020.

54. Navarro-Banaria v. Banaria, G.R. No. 217806, July 28, 2020.

55. Mercado v. Ongpin, G.R. No. 207324, September 30, 2020.

56. Lomarda v. Fudalan, G.R. No. 246012, June 17, 2020.

57. Mata v. Agravante, 583 Phil. 64, 70 (2008).

58. Rollo, p. 46.

59. See Yuchengco v. The Manila Chronicle Publishing Corp., 677 Phil. 422 (2011); California Clothing, Inc. v. Quiñones, 720 Phil. 373 (2013).

60. 605 Phil. 460 (2009).

61. Id. at 467.

62. Article 2216 of the Civil Code.

63. 738 Phil. 448 (2014).

64. Id. at 462.

65. Yuchengco v. The Manila Chronicle Publishing Corp., supra note 59 at 435.

66. 716 Phil. 267 (2013).

67. Filipinas Broadcasting Network, Inc. v. Ago Medical & Educational Center-Bicol Christian College of Medicine, 489 Phil. 380, 399 (2005).

68. Id.

69. Id. at 400.

70. Rollo, p. 121.

n Note from the Publisher: Copied verbatim from the official document.