The Court of Appeals (CA) has spared movie actor and television host Ariel “Aga” Muhlach, his manager and a talent firm from the payment of more than P7.3 million in damages in connection with the alleged breach of his contract with an advertising agency.
However, the CA also denied Muhlach’s plea for damages from the advertising agency as a result of his rescinded contract.
On top of reversing the 2017 ruling of the Makati City regional trial court (RTC), the CA ordered the talent contract and the obligations of the parties extinguished in line with the provision of Article 1192 of the Civil Code.
Article 1192 provides: “in case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.”
The legal controversy arose from the talent contract signed by Muhlach and his manager, Ethelwolda “Ethel” Ramos, of AMC Entertainment, Inc. (AMC) with Pacific Asian Advertising Specialist, Inc. (PAASI).
Court records showed that in 2009, PAASI engaged AMC to provide the services of Muhlach to promote the treatment, products, and services for weight loss and skin care of Marie France and Facial Care Center For Men or Marie France For Men.
The concept of the advertising campaign was for Muhlach to undergo the weight loss and facial care regimen offered by Marie France For Men and advertise its results.
To illustrate the changes in Muhlach after availing himself of Marie France For Men treatments, photographs the actor’s physical appearance would be taken before and after undergoing the prescribed regimen and publicized.
The talent contract was signed on March 8, 2010 between PAASI as the “agency” and AMC as the “talent provider.” Muhlach signed as president of AMC.
Almost a year after the signing of the contract, PAASI filed a civil case on Feb. 4, 2011 against AMC, Muhlach and Ramos. PAASI told the RTC that the talent contract was breached when Muhlach underwent only 29 out of the 78 treatment sessions, was seen exercising in “Gold's Gym,” and controlled his food intake and publicized it in public interviews.
In their defense, Muhlach, Ramos and AMC told the court there was substantial performance of the talent contract and the “alleged breaches were neither substantial nor material.”
They also pointed out “PAASI's unqualified acceptance of irregular performance of its obligations, excusing it under Article 1235 of the Civil Code.”
Ruling against Muhlach and his group, the RTC said the talent contract was materially breached because the essence of the contract was Muhlach's credibility as an endorser which was dependent on his strict compliance with Marie France's treatment program on an exclusive basis.
The trial court rejected Muhlach and his group’s excuse that his difficult schedule made performance of his obligations impossible as it noted that the actor had failed to prove any earnest effort to make up for missed sessions.
When their motion for reconsideration was denied by the RTC, Muhlach, Ramos and AMC elevated the case to the CA.
Citing a Supreme Court decision, the CA said “the breach of contract is the failure, without legal excuse, to perform any promise which forms the whole or part of the contract.”
The CA, in a decision written by Associate Justice Pablito A. Perez and concurred in by Associate Justices Mariflor P. Punzalan Castillo and Raymond Reynold R. Lauigan, said:
“Indeed, the Talent Contract does not limit Muhlach to any one particular branch of Marie France For Men. With that in mind, the Court notes that the treatment record card submitted into evidence... ” only pertains to Muhlach's visits to Marie France-Alabang. Muhlach's visits in other Marie France branches are not accounted for.
“Therefore, the mere fact that Muhlach missed visits to Marie France clinics does not immediately breach the contract. There is no compelling proof, other than bare assertions, that PAASI had formally reminded Muhlach of the sessions he had missed and demanded that he make them up under a catch-up plan.
“That being said, even if Muhlach was not in perfect performance of his obligations, PAASI was not within its rights to unilaterally terminate the Talent Contract. It is well-settled that the remedy of rescission will only be permitted for breaches of contract that are so substantial and fundamental that they tend to defeat the object of the parties in making the agreement.
“The Court finds that Muhlach's breach had not made the Talent
Contract rescissible at PAASI's will.
“FIRST: PAASI overstated the mininum number of visits Muhlach was required to make. SECOND: Even if Muhlach missed thirteen (13) required visits for the first phase, the breach is clearly not material because PAASI tolerated the same when it proceeded with the “after pictorial” despite Muhlach's imperfect compliance.
“This Court does not agree with the RTC that the mere act of Muhlach exercising and reducing one's food intake violated his negative obligations. Words should be taken in their plain meaning, as well as within the context of the instrument in which they are found.
“The unilateral termination of the Talent Contract disregarded Section 8.1 of the Talent Contract, which states that rescission shall be made ‘by giving three (3) days written notice to that effect to the other party after the offending party failed to remedy or cure the breach within ten (10) days from written notice thereof by the aggrieved party.’
“In effect, AMC was not given written notice of Muhlach's alleged breach of his obligations nor given the period to cure his default.
“PAASI evaded the agreed process in the contract to cure the alleged breach by the other party by declaring that the breach had become incurable, a conclusion reached by PAASI with neither basis nor explanation.
“The core of the contract is the successful transformation of Muhlach's body into a successful specimen of the Marie France For Men program. Yet, the parties failed to agree on a desired outcome, whether it was of Muhlach's weight or physique.
“His weight/height profile, Annex ‘B’ of the Talent Contract was left blank by AMC as the party obliged to fill in the physical profile sheet. Yet PAASI was willing to overlook AMC's omission to fill-in the baseline profile of Muhlach and did not demand that Muhlach fix a target weight to be achieved within a specified time, which was what the advertising campaign was all about to begin with.
“Courts have no jurisdiction to look into the wisdom of the contract entered into by and between the parties or to render a decision different therefrom.
“However, where it cannot be conclusively determined which of the parties is more liable under a contract, equity calls and justice demands that We apply the solution provided in Article 1192 of the Civil Code.
“The Court also denies defendants-appellants' (Muhlach and his group)
counterclaims for moral and exemplary damages for lack of basis.
“While Muhlach testified that he suffered anxiety and embarrassment as a result of being accused of breaching the contract, that by itself is not a sufficient reason to award moral damages.
“WHEREFORE, the appeal is GRANTED. The Decision dated March 15, 2017 of the Regional Trial Court, Branch 59, Makati City in Civil Case No. 11-097 is REVERSED and SET ASIDE. The Talent Contract, and the obligations of the parties thereunder, is deemed EXTINGUISHED. Civil Case No. 11-097 is DISMISSED. SO ORDERED.”