Court of Appeals favors GMA Films in civil suit filed against movie licensor

(Quezon City, Philippines) - The Court of Appeals (CA) ruled in favor of GMA Network Films, Inc. in a civil case filed by the latter against movie licensor and supplier Ricardo Honrado.

In a 13-page decision penned by Associate Justice Stephen C. Cruz dated April 30, 2012, the Special Thirteenth Division of the CA reversed and set aside the Regional Trial Court's (RTC) dismissal of the case owing to Honrado's violation of a TV Rights Agreement with GMA Films. 

In December 1998, GMA Films entered into an agreement with Honrado covering thirty-six (36) films, which the latter offered for telecast. The agreement states that the program titles are subject to the approval of the Movie and Television Review and Classification Board (MTRCB); and in the event of disapproval, a censored title must be replaced by the licensor with a new title acceptable to both parties, or a proportionate amount shall be deducted or refunded from the total price.

In May 2003, GMA Films filed a complaint for payment and damages against Honrado with the RTC for his refusal to refund the payment for the movies "Evangeline Katorse" and "Bubot."

The former was initially rejected by GMA Films so Honrado attempted to replace it with the movie "Winasak na Pangarap." However, the replacement, being a bold film, was also deemed unacceptable for airing.

GMA Films also contended that only P500,000 went to the owner of the movie "Bubot" out of the P1.25 million paid by GMA Films to Honrado.

GMA Films therefore demanded that Honrado return the total amount of P2 million representing the P1.25 million it paid for the movie "Evangeline Katorse" and P750,000 as balance from the amount Honrado received for the film "Bubot."

The CA ruled that GMA Films is within its rights as a licensee to demand a suitable replacement for the movie "Evangeline Katorse" based on the express terms of the contract. After the film "Winasak na Pangarap" was not accepted by GMA Films as a suitable replacement for "Evangeline Katorse," Honrado had the duty to either find another title acceptable to both parties, or to return the money paid by GMA Films in the amount of P1.25 million.

According to the Court, Honrado, not being the owner but only the licensor of the film "Bubot," is not entitled to any commission and has no right to retain any amount in excess of what was paid to the movie owner. The CA likewise said that the RTC erred in awarding Honrado attorney's fees amounting to P100,000 as GMA Films "was merely forced to protect its rights and interest under a valid contract and to rectify a wrong done upon it."

The Court awarded GMA Films P2 million plus interest and damages.