PHILIPPINES v. Philippine Advertising Corporation

CONCEPCION, J.:

Appeal by defendant Philippine Advertising Corporation from a decision of the Court of First Instance of Manila, the dispositive part of which reads: WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant Philippine Advertising Corporation under the first cause of action, P92,406.73 with interest at the rate of 8% per annum from January 22, 1951, until paid; P23,622.90 under the second, third, and fourth causes of action, with interest at the rate of 12% per annum from May 1, 1951, until paid; P20,000.00 by way of moral and exemplary damages under the fifth cause of action; and P15,000.00 by way of attorney's fees, and the costs of the suit. Defendants' counterclaims are hereby dismissed for lack of merit. (Record on Appeal, pp. 656-657.) This is an action for the recovery, from said Corporation and its president, defendant John W. Mears, of several sums of money under five (5) causes of action, namely: 1) P92,406.73, as the alleged balance of the cost of eighteen (18) bowling alleys and additional equipment thereof, and the installation thereof; 2) P11,703.00, as the price of two (2) carom and three (3) pocket tables, with their equipment, together with two (2) sets of ivory balls and one (1) revolving cue rack; 3) P3,369.90, as the costs of miscellaneous billiard and bowling accessories and equipment; 4) P8,550.00, as the cost of 168 sets of duck pins; and 5) 25% of the aggregate amount due under the first four (4) causes of action, as exemplary or corrective damages.

Plaintiff prays, also, that the defendants be sentenced to pay interest, attorney's fees, and the costs. In their answer, the defendants admitted some allegations of the complaint, denied other allegations thereof, and set up special defenses, as well as four (4) counterclaims. They prayed that plaintiff's complaint be dismissed and that plaintiff be sentenced to pay damages in the aggregate sum of P763,000.00.

The factual background of the first cause of action is set forth in the appealed decision, from which we quote: The defendants had payments coming to them from the War Damage Commission. Wilfred Hurst had worked together with John W. Mears of the defendant corporation prior to the war. In 1950, Hurst and Mears met, and the question of defendant war damage payments in the Philippines came up in the conversation.

Hurst, who was then Vice-President of the plaintiff corporation 1 suggested to Mears that the defendant re-invest part of the war damage payment due defendant corporation in bowling alleys. The plaintiff was then distributor of Brunswick-Balke-Collender Company of the United States, manufacturer of bowling alleys. Mears was interested, and accordingly, secured the approval of the War Damage Commission to re-invest part of the war damage payment due the defendant Philippine Advertising Corporation in bowling alleys.

After continuous negotiations, plaintiff, thru Hurst, and defendant, thru Mears, finally came into an agreement. This was in the form of a letter addressed by the plaintiff to the defendant and which was approved and accepted by the defendant corporation, thru Mears. The pertinent portion of the letter-agreement marked Exhibit A2 and which is one of the subjects of the controversy between the plaintiff and the defendant reads as follows: With reference to our verbal conversations regarding bowling alleys, we hereby submit our firm quotation of P85,948.42 to cover the cost of installing twelve (12) Brunswick Bowling Alleys in any location acquired by you in the City of Manila or its immediate suburbs.

This quotation includes the cost of the alleys, additional equipment and installation cost but does not include freight charges for accessories that will have to be ordered from the United States. Such freight charges will be charged to you at actual cost upon the arrival of the shipment. Then follows a detailed list of the materials which were included and additional equipment for 6 months maintenance of alleys and the terms of payment.

The price was payable 50% upon the signing of the agreement and the balance in six (6) monthly installments, the first installment falling due on the first day of work on the installation of alleys.3 The one-year guarantee against materials and defective workmanship was allowed by the plaintiff company. This was, as stated above, accepted by the Philippine Advertising Corporation, thru John W. Mears, President. Attached to the letter, Exhibit A, was, according to Hurst, a breakdown of the bowling alley quotation.

Subsequently, the defendants ordered and the plaintiff supplied to the defendants another six (6) Brunswick bowling alleys. The agreement with respect to them is embodied in the letter-agreement, Annex B,4 dated October 2, 1950. The pertinent portion of this letter reads as follows: As explained to you verbally we can no longer offer a firm quotation as we have received advice from the Brunswick-Balke-Collender Company that all prices are subject to existing price at time merchandise leaves the factory.

For this reason we are submitting to you our tentative quotation of P48,107.24 to cover the cost of installing 6additional alleys in your acquired location. It is understood that any adjustments necessary will be made upon receipt of final invoices from the Brunswick-Balke-Collender Company. The above tentative quotation includes the cost of the alleys, cost of additional equipment and installation cost but does not include any freight charges for accessories that will have to be ordered from the United States.

Such freight charges will be charged to you at actual cost upon the arrival of the shipment. Then follows a detailed list of the items that the supplier included in the quotation and additional equipment for 6 months maintenance of alleys. According to the letter, it was also agreed that defendants were to pay 8% interest on the monthly payment and it was also understood that any luxury or additional sales tax that might be imposed by the government would be for defendants' account.

This letter was also accepted by defendant corporation thru John W. Mears. The sum of P92,406.73 sought to be recovered by the plaintiff, under its first cause of action, allegedly represents the unpaid balance of the cost of 18 bowling alleys and additional equipment under the agreements Exhibits A and D, computed as follows: 1. Cost of 12 bowling alleys & add.

equipment, including installation . . .

. . .

. P85,948.42 2. Cost of 6 bowling alleys & add.

equipment, including installation . . .

. . .

. 48,107.24