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ABS-CBN v.

CA
G.R. No. 128690 January 21, 1999
Doctrine: The award of moral damages cannot be granted in favor of a corporation because,
being an artificial person and having existence only in legal contemplation, it has no feelings, no
emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish,
which call be experienced only by one having a nervous system. The statement in People
v. Manero and Mambulao Lumber Co. v. PNB that a corporation may recover moral damages if
it "has a good reputation that is debased, resulting in social humiliation" is an obiter dictum. On
this score alone the award for damages must be set aside, since RBS is a corporation.

Facts: Viva, through Del Rosario, offered ABS-CBN through its vice-president Charo Santos-
Concio, a list of 3 film packages or 36 titles from which ABS-CBN may exercise its right of first
refusal. Mrs. Concio informed Vic through a letter that they can only purchase 10 titles to be
schedules on non-primetime slots because they were very adult themes which the ruling of
the MTRCB advises to be aired at 9:00 p.m. Del Rosario approached ABS-CBN's Ms. Concio with
a list consisting of 52 original movie titles as well as 104 re-runs proposing to sell to ABS-CBN airing
rights for P60M (P30M cash and P30M worth of television spots)

April 2, 1992: Del Rosario and ABS-CBN general manager, Eugenio Lopez III met wherein Del
Rosario allegedly agreed to grant rights for 14 films for P30M.
April 06, 1992: Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for
Finance discussed the terms and conditions of Viva's offer to sell the 104 films, after the rejection
of the same package by ABS-CBN.
April 07, 1992: Ms. Concio sent the proposal draft of 53 films for P35M which Viva's Board rejected
since they will not accept anything less than P60M.
April 29, 1992, after the rejection of ABS-CBN and following several negotiations and meetings
defendant Del Rosario and VIVA's President Teresita Cruz, in consideration of P60 million, signed
a letter of agreement dated April 24, 1992. Granting RBS the exclusive right to air 104 Viva-
produced and/or acquired films including the fourteen (14) films subject of the present case.

RTC: Issued TRO against RBS in showing 14 films as filed by ABS-CBN. It ordered ABS-CBN to pay
RBS P107,727 premium paid by RBS to the surety which issued their bond to lift the
injunction, P191,843.00 for the amount of print advertisement for "Maging Sino Ka Man" in various
newspapers, P1M attorney's fees, P5M moral damages, P5M exemplary damages and costs.
ABS-CBN appealed. VIVA and Del Rosario also appealed seeking moral and exemplary
damages and additional attorney's fees.
CA: reduced the awards of moral damages to P2M, exemplary damages to P2M and attorney's
fees to P500,000. It also sustained the award of actual damages consisting in the cost of print
advertisements and the premium payments for the counterbond, there being adequate proof
of the pecuniary loss which RBS had suffered as a result of the filing of the complaint by ABS-
CBN. As to the award of moral damages, the Court of Appeals found reasonable basis therefor,
holding that RBS's reputation was debased by the filing of the complaint in Civil Case No. Q-92-
12309 and by the non-showing of the film "Maging Sino Ka Man."

Issue: 1. Whether RBS is entitled to moral damages.

Held: 1. NO. Article 2217 thereof defines what are included in moral damages, while Article 2219
enumerates the cases where they may be recovered, Article 2220 provides that moral damages
may be recovered in breaches of contract where the defendant acted fraudulently or in bad
faith. RBS's claim for moral damages could possibly fall only under item (10) of Article 2219
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The award of moral damages cannot be granted in favor of a corporation because, being an
artificial person and having existence only in legal contemplation, it has no feelings, no
emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish,
which call be experienced only by one having a nervous system. A corporation may recover
moral damages if it "has a good reputation that is debased, resulting in social humiliation" is an
obiter dictum. On this score alone the award for damages must be set aside, since RBS is a
corporation. Exemplary damages are imposed by way of example or correction for the public
good, in addition to moral, temperate, liquidated or compensatory damages. They are
recoverable in criminal cases as part of the civil liability when the crime was committed with one
or more aggravating circumstances in quasi-contracts, if the defendant acted with gross
negligence and in contracts and quasi-contracts, if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner
It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-
contract, delict, or quasi-delict, Hence, the claims for moral and exemplary damages can only
be based on Articles 19, 20, and 21 of the Civil Code. There is no adequate proof that ABS-CBN
was inspired by malice or bad faith. If damages result from a person's exercise of a right, it is
damnum absque injuria.
Filipinas Broadcasting Network Inc. vs. Ago Medical Center
GRN 141994 January 17, 2005
Doctrine: 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.

Facts: Rima & Alegre were host of FBNI radio program “Expose”. Respondent Ago was the owner
of the Medical & Educational center, subject of the radio program “Expose”. AMEC claimed
that the broadcasts were defamatory and owner Ago and school AMEC claimed for damages.
The complaint further alleged that AMEC is a reputable learning institution. With the supposed
expose, FBNI, Rima and Alegre “transmitted malicious imputations and as such, destroyed
plaintiff’s reputation. Such as:
"(1)AMEC-BCCM is a dumping ground for morally and physically misfit teachers;
(2) AMEC obtained the services of Dean Justita Lola to minimize expenses on its employees’
salaries; and
(3) AMEC burdened the students with unreasonable imposition and false regulations."
FBNI was included as defendant for allegedly failing to exercise due diligence in the selection
and supervision of its employees. The trial court found Rima’s statements to be within the bounds
of freedom of speech and ruled that the broadcast was libelous. It ordered the defendants
Alegre and FBNI to pay AMEC 300k for moral damages.”

CA ruled that the broadcasts were made "with reckless disregard as to whether they were true
or false." The appellate court pointed out that FBNI, Rima and Alegre failed to present in court
any of the students who allegedly complained against AMEC. Rima and Alegre merely gave a
single name when asked to identify the students. According to the Court of Appeals, these
circumstances cast doubt on the veracity of the broadcasters’ claim that they were "impelled
by their moral and social duty to inform the public about the students’ gripes."

It also held that FBNI failed to exercise due diligence in the selection and supervision of its
employees for allowing Rima and Alegre to make the radio broadcasts without the proper KBP
accreditation. The Court of Appeals denied Ago’s claim for damages and attorney’s fees
because the libelous remarks were directed against AMEC, and not against her. The Court of
Appeals adjudged FBNI, Rima and Alegre solidarily liable to pay AMEC moral damages,
attorney’s fees and costs of suit.

Issue: Whether AMEC is entitled to moral damages.


Held: A juridical person is generally 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. Nevertheless, AMEC’s claim, or moral damages fall
under item 7 of Art – 2219 of the NCC.This provision expressly authorizes the recovery of moral
damages in cases of libel, slander or any other form of defamation. Art 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. Moreover, where the broadcast is libelous per se, the law implied damages. In such a
case, evidence of an honest mistake or the want of character or reputation of the party libeled
goes only in mitigation of damages. In this case, the broadcasts are libelous per se. thus, AMEC
is entitled to moral damages. However, we find the award P500,000 moral damages
unreasonable. The record shows that even though the broadcasts were libelous, per se, AMEC
has not suffered any substantial or material damage to its reputation. Therefore, we reduce the
award of moral damages to P150k.
Arturo Calubad v. Ricarcen Development Corporation
G.R. No. 202364, August 30, 2017

Doctrine: When a corporation intentionally or negligently clothes its agent with apparent
authority to act in its behalf, it is estopped from denying its agent's apparent authority as to
innocent third parties who dealt with this agent in good faith.

Facts: Ricarcen Development Corporation was a domestic corporation engaged in renting out
real estate. It was the registered owner of a parcel of land located at 53 Linaw St., Sta. Mesa
Heights, Quezon City. Marilyn R. Soliman (Marilyn) was its president from 2001 to August 2003. The
other members of the board of directors during that time were Marilyn's mother, Erlinda
Villanueva (Erlinda), her brother, Josefelix R. Villanueva (Josefelix), her aunt, Maura Rico, and her
sisters, Ma. Elizabeth V. Chamorro (Elizabeth), Ma. Theresa R. Villanueva, and Annabelle R.
Villanueva. On October 15, 2001, Marilyn, acting on Ricarcen's behalf as its president, took out a
P4 Million loan from Calubad. Over time Ricarcen through Marilyn took additional P3 Million loan
from Calubad. This loan was secured by a real estate mortgage over Ricarcen's Quezon City
property covered by TCT No. RT-84937 (166018).

To prove her authority to execute the mortgage contracts in Ricarcen's behalf, Marilyn
presented Calubad with a Board Resolution empowering her to borrow money and use the
Quezon City property as collateral for the loans. Marilyn also presented two (2) Secretary's
Certificates. Sometime in 2003, after Ricarcen failed to pay its loan, Calubad initiated
extrajudicial foreclosure proceedings on the real estate mortgage. In its Complaint, Ricarcen
claimed that it never authorized its former president Marilyn to obtain loans from Calubad or use
the Quezon City property as collateral for the loans. The Regional Trial Court granted Ricarcen's
complaint and annulled the mortgage contracts. The Court held that Marilyn failed to present a
special power of attorney as evidence of her authority from Ricarcen.

Calubad appeals and avers that: 1. several withdrawal slips signed by either Elizabeth or Erlinda,
jointly with Marilyn, authorizing a certain Lilydale Ombina to repeatedly withdraw from Ricarcen's
bank account.

2. several checks drawn from Ricarcen's bank account, issued by Elizabeth or Erlinda, jointly with
Marilyn, payable to third persons or to cash. Petitioner maintains that the foregoing evidence is
indubitable proof that the loan proceeds have been used by Ricarcen.

3. Petitioner then claims that Ricarcen, in a check drawn and issued by Erlinda and Marilyn, paid
the 3% monthly interest for the first loan of P4,000,000.00. This bolstered his belief that Ricarcen
and its officers knew of and approved that loan, and induced him to grant Ricarcen, through
Marilyn, additional loans.54

Petitioner asserts that the acts of Elizabeth and Erlinda are equivalent to clothing Marilyn with
apparent authority to deal with him and use the Quezon City property as collateral: Their acts
are also a manifestation of their acquiescence to Marilyn Soliman's availment of loans and
execution of real estate mortgage with petitioner.

Issue: Whether Ricarcen Development Corporation is estopped from denying or disowning the
authority of Marilyn R. Soliman.

Held: Yes. As a corporation, Ricarcen exercises its powers and conducts its business through its
board of directors. However, the board of directors may validly delegate its functions and
powers to its officers or agents. The authority to bind the corporation is derived from law, its
corporate by-laws, or directly from the board of directors, either expressly or impliedly by habit,
custom or acquiescence in the general course of business.
The general principles of agency govern the relationship between a corporation and its
representatives. Article 1317 of the Civil Code similarly provides that the principal must delegate
the necessary authority before anyone can act on his or her behalf. Nonetheless, law and
jurisprudence recognize actual authority and apparent authority as the two (2) types of
authorities conferred upon a corporate officer or agent in dealing with third persons. Actual
authority can either be express or implied. Express actual authority refers to the power
delegated to the agent by the corporation, while an agent's implied authority can be measured
by his or her prior acts which have been ratified by the corporation or whose benefits have been
accepted by the corporation.

On the other hand, apparent authority is based on the principle of estoppel. The doctrine of
apparent authority provides that even if no actual authority has been conferred on an agent,
his or her acts, as long as they are within his or her apparent scope of authority, bind the
principal. However, the principal's liability is limited to third persons who are reasonably led to
believe that the agent was authorized to act for the principal due to the principal's conduct.
Apparent authority is determined by the acts of the principal and not by the acts of the agent.
Thus, it is incumbent upon Calubad to prove how Ricarcen 's acts led him to believe that Marilyn
was duly authorized to represent it.

As the former president of Ricarcen, it was within Marilyn's scope of authority to act for and enter
into contracts in Ricarcen's behalf. Her broad authority from Ricarcen can be seen with how the
corporate secretary entrusted her with blank yet signed sheets of paper to be used at her
discretion. She also had possession of the owner's duplicate copy of the land title covering the
property mortgaged to Calubad, further proving her authority from Ricarcen.

It appears as if Ricarcen and its officers gravely erred in putting too much trust in Marilyn.
However, Calubad, as an innocent third party dealing in good faith with Marilyn, should not be
made to suffer because of Ricarcen's negligence in conducting its own business affairs. This finds
support in Yao Ka Sin Trading "if a private corporation intentionally or negligently clothes its
officers or agents with apparent power to perform acts for it, the corporation will be estopped to
deny that such apparent authority is real, as to innocent third persons dealing in good faith with
such officers or agents."
Citystate Savings Bank v. Teresita Tobias and Shellidie Valdez
G.R. No. 227990, March 07, 2018
Doctrine: 1. The doctrine of apparent authority or what is sometimes referred to as the "holding
out" theory, or the doctrine of ostensible agency, imposes liability, not "as the result of the reality
of a contractual relationship, but rather because of the actions of a principal or an employer in
somehow misleading the public into believing that the relationship or the authority exists.

2. A banking corporation is liable to innocent third persons where the representation is made in
the course of its business by an agent acting within the general scope of his authority even
though, in the particular case, the agent is secretly abusing his authority and attempting to
perpetrate a fraud upon his principal or some other person, for his own ultimate benefit.

Facts: Rolando Robles a certified public accountant, has been employed with Citystate Savings
Bank (hereinafter referred to as the petitioner) since July 1998 then as Accountant-trainee for its
Chino Roces Branch. On September 6, 2000, Robies was promoted as acting manager for
petitioner's Baliuag, Bulacan branch, and eventually as manager. Sometime in 2002, respondent
Teresita Tobias, a meat vendor at the Baliuag Public Market, was introduced by her youngest
son to Robies, branch manager of petitioner's Baliuag, Bulacan branch.

Robies persuaded Tobias to open an account with the petitioner, and thereafter to place her
money in some high interest rate mechanism, to which the latter yielded. Thereafter, Robies
would frequent Tobias' stall at the public market to deliver the interest earned by her deposit
accounts in the amount of Php 2,000.00. In turn, Tobias would hand over her passbook to Robies
for updating. The passbook would be returned the following day with typewritten entries but
without the corresponding counter signatures.

Tobias was later offered by Robies to sign-up in petitioner's back-to-back scheme which is
supposedly offered only to petitioner's most valued clients. Under the scheme, the depositors
authorize the bank to use their bank deposits and invest the same in different business ventures
that yield high interest. Robies allegedly promised that the interest previously earned by Tobias
would be doubled and assured her that he will do all the paper work. Lured by the attractive
offer, Tobias signed the pertinent documents without reading its contents and invested a total of
Php 1,800,000.00 to petitioner through Robies. Later, Tobias became sickly, thus she included her
daughter and herein respondent Shellidie Valdez, as co-depositor in her accounts with the
petitioner. In 2005, Robies failed to remit to respondents the interest as scheduled. Respondents
tried to reach Robies but he can no longer be found; their calls were also left unanswered. In a
meeting with Robies' siblings, it was disclosed to the respondents that Robies withdrew the
money and appropriated it for personal use. Robies later talked to the respondents, promised
that he would return the money by installments and pleaded that they do not report the
incident to the petitioner. Robies however reneged on his promise. Petitioner also refused to
make arrangements for the return of respondents' money despite several demands.
Respondents filed a Complaint for sum of money and damages, against Robles and the Ciystate
Savings Bank. In their Complaint, respondents alleged that Robles committed fraud in the
performance of his duties as branch manager when he lured Tobias in signing several pieces of
blank documents, under the assurance as bank manager of petitioner, everything was in order.

Issue: Whether the bank is liable to the respondents

Held: Yes. The business of banking is one imbued with public interest. As such, banking institutions
are obliged to exercise the highest degree of diligence as well as high standards of integrity and
performance in all its transactions.
Petitioner's evidence bolsters the case against it, as they support the finding that Robles as
branch manager, has been vested with the apparent or implied authority to act for the petitioner
in offering and facilitating banking transactions. The testimonies of the witnesses presented by
petitioner establish that there was nothing irregular in the manner in which Robles transacted
with the respondents.42 In fact, petitioner's witnesses admitted that while the bank's general
policy requires that transactions be completed inside the bank premises, exceptions are made
in favor of valued clients, such as the respondents. In which case, banking transactions are
allowed to be done in the residence or place of business of the depositor, since the same are
verified subsequently by the bank cashier.

Moreover, CityState Savings Bank admitted that for valued clients, the branch manager has the
authority to transact outside of the bank premises. In fact, Robles previously transacted business
on behalf of the petitioner as when it sought and facilitated the opening of respondents'
accounts. Petitioner acknowledged Robles' authority and it honored the accounts so opened
outside the bank premises. To recall, prior to the alleged back-to-back scheme entered into by
the respondents, Robles has consistently held himself out as representative of the petitioner in
seeking and signing respondents as depositors to various accounts.45 It bears to stress that in the
course of the said investment, the practice has been for Tobias to surrender the passbook to
Robles' for updating.46 All of which accounts have been in order until after the respondents was
lured into entering the back-to-back scheme.

In this light, respondents cannot be blamed for believing that Robles has the authority to
transact for and on behalf of the petitioner47 and for relying upon the representations made by
him. After all, Robles as branch manager is recognized "within his field and as to third persons as
the general agent and is in general charge of the corporation, with apparent authority
commensurate with the ordinary business entrusted him and the usual course and conduct
thereof." Consequently, petitioner is estopped from denying Robles' authority. As the employer of
Robles, petitioner is solidarity liable to the respondents for damages caused by the acts of the
former, pursuant to Article 1911 of the Civil Code.
Violeta Banate et. Al. v. Philippine Countryside Rural Bank
GR 163825, 13 July 2010

Doctrine: “We would be unduly stretching the doctrine of apparent authority were we to
consider the power to undo or nullify solemn agreements validly entered into as within the
doctrine's ambit. Although a branch manager, within his field and as to third persons, is the
general agent and is in general charge of the corporation, with apparent authority
commensurate with the ordinary business entrusted him and the usual course and conduct
thereof, yet the power to modify or nullify corporate contracts remains generally in the board of
directors.”

Facts: Sometime in November 1997 the spouses Maglasang and the spouses Cortel asked
PCRB’s permission to sell the properties which they mortgaged with the bank. They likewise
requested that the said properties be released from the mortgage since the two other loans
were adequately secured by the other mortgages. The spouses Maglasang and the spouses
Cortel claimed that the PCRB, acting through its Branch Manager, Pancrasio Mondigo, verbally
agreed to their request but required first the full payment of the subject loan. They thereafter
sold to petitioner Violeta Banate the subject properties for P1,750,000.00 and used the amount to
pay the subject loan with PCRB. After settling the subject loan, PCRB gave the owner’s duplicate
certificate of title of Lot 12868-H-3-C to Banate, who was able to secure a new title in her name.
It, however, carried the mortgage lien in favor of PCRB, prompting the petitioners to request
from PCRB a Deed of Release of Mortgage. As PCRB refused to comply with the petitioners’
request, the petitioners instituted an action for specific performance before the RTC to compel
PCRB to execute the release deed. The petitioners disregard the cross-collateral stipulation in
the mortgage contract, claiming that it had been novated by the subsequent agreement with
Mondigo.
Accordingly, PCRB claimed that full payment of the three loans, obtained by the spouses
Maglasang, was necessary before any of the mortgages could be released; the settlement of
the subject loan merely constituted partial payment of the total obligation. Thus, the payment
does not authorize the release of the subject properties from the mortgage lien

Issue: Whether Mondigo, as branch manager of PCRB, has the authority to modify the original
mortgage contract on behalf of the company.

Held: NO. He is not authorized to modify the mortgage contract that would in effect cause
novation. Under the doctrine of apparent authority, acts and contracts of the agent, as are
within the apparent scope of the authority conferred on him, although no actual authority to do
such acts or to make such contracts has been conferred, bind the principal. The principal’s
liability, however, is limited only to third persons who have been led reasonably to believe by the
conduct of the principal that such actual authority exists, although none was given. In other
words, apparent authority is determined only by the acts of the principal and not by the acts of
the agent. There can be no apparent authority of an agent without acts or conduct on the part
of the principal; such acts or conduct must have been known and relied upon in good faith as a
result of the exercise of reasonable prudence by a third party as claimant, and such acts or
conduct must have produced a change of position to the third party’s detriment.
In the present case, the decision of the trial court was utterly silent on the manner by
which PCRB, as supposed principal, has “clothed” or “held out” its branch manager as having
the power to enter into an agreement, as claimed by petitioners. No proof of the course of
business, usages and practices of the bank about, or knowledge that the board had or is
presumed to have of, its responsible officers’ acts regarding bank branch affairs, was ever
adduced to establish the branch manager’s apparent authority to verbally alter the terms of
mortgage contracts. Neither was there any allegation, much less proof, that PCRB ratified
Mondigo’s act or is estopped to make a contrary claim.

Further, we would be unduly stretching the doctrine of apparent authority were we to consider
the power to undo or nullify solemn agreements validly entered into as within the doctrine's
ambit. Although a branch manager, within his field and as to third persons, is the general agent
and is in general charge of the corporation, with apparent authority commensurate with the
ordinary business entrusted him and the usual course and conduct thereof, yet the power to
modify or nullify corporate contracts remains generally in the board of directors. Being a mere
branch manager alone is insufficient to support the conclusion that Mondigo has been clothed
with "apparent authority" to verbally alter terms of written contracts, especially when viewed
against the telling circumstances of this case: the unequivocal provision in the mortgage
contract; PCRB's vigorous denial that any agreement to release the mortgage was ever entered
into by it; and, the fact that the purported agreement was not even reduced into writing
considering its legal effects on the parties' interests. To put it simply, the burden of proving the
authority of Mondigo to alter or novate the mortgage contract has not been established.

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