G.R. No. L-22050 June 13, 1968
PAN PACIFIC COMPANY (PHILIPPINES), plaintiff-appellee, vs. PHILIPPINE ADVERTISING CORPORATION and JOHN W. MEARS, defendants, PHILIPPINE ADVERTISING CORPORATION, defendant-appellant.

FACTS

The plaintiff, Pan Pacific Company (Philippines), distributor of Brunswick-Balke-Collender Company, entered into agreements with the defendant Philippine Advertising Corporation, through its president John W. Mears, for the supply and installation of bowling alleys. The first agreement (Exhibit A) was a firm quotation for twelve (12) bowling alleys at P85,948.42, explicitly stating it did not include freight charges for accessories from the U.S. The second agreement (Exhibit D) was a tentative quotation for six (6) additional alleys at P48,107.24, subject to price adjustments and also excluding freight charges, and specifying that any luxury or additional sales tax imposed would be for the defendant’s account. The plaintiff sought to recover an unpaid balance of P92,406.73 under the first cause of action for these alleys, which sum included added charges for inland freight, ocean freight, arrastre, and sales tax. The defendant corporation denied liability, contending that these additional charges should be deemed included in the quoted price, that eight installed alleys were second-hand and of lower quality than ordered, and that the installations were defective. The trial court ruled in favor of the plaintiff, awarding the claimed amounts, moral and exemplary damages, and attorney’s fees.

ISSUE

The primary issue is whether the defendant Philippine Advertising Corporation is liable to pay the plaintiff the additional charges for inland freight, ocean freight, arrastre, and sales tax over the quoted prices for the bowling alleys, and whether the awards for damages and attorney’s fees are proper.

RULING

The Supreme Court affirmed the decision of the Court of First Instance of Manila. It held that the defendant is liable for the additional charges. The agreements (Exhibits A and D) explicitly stated that the quoted prices did not include freight charges for accessories ordered from the United States, and Exhibit D specifically placed any additional sales tax on the defendant. The Court found the plaintiff’s interpretation—that “accessories” included all parts of the bowling alley—to be consistent with the understanding of the parties. The Court rejected the defendant’s claims regarding second-hand alleys and defective installation for lack of sufficient evidence. Furthermore, the Court upheld the award of moral and exemplary damages and attorney’s fees, finding that the defendant acted in gross and evident bad faith, wantonly and oppressively refusing to pay its just obligation despite deriving lucrative income from the alleys, and that the defendant’s president demonstrated arrogance and discourtesy. The awards were deemed proper under Article 2208 of the New Civil Code.