Pan Pacific Company (Phil) vs. Phil.

Advertising Corporation
No. L-22050
Concepcion, J.

June 13, 1968

Facts: (medyo di ko gets yung facts pero try ko)

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Defendant Philippine Advertising Corporation (hereinafter defendant) had payments coming to

them from the War Damage Commission; plaintiff Pan Pacific Company Phil (hereinafter
plaintiff), through its then VP Wilfred Hurst, managed to convince the defendant company,
through its president John Mears, to re-invest its war payments to bowling alleys. Plaintiff then
was the distributor of Brunswick-Balke-Collender Company of the US, which is a manufacturer
of bowling alleys.
The agreement between plaintiff and defendant is encapsulated in a letter dated Aug. 28, 1950,
which was addressed to the latter from the former. Pertinent parts are:
o Firm quotation1 of P85,948.42 to cover the cost of installing 12 Brunswick Bowling
Alleys; quotation includes the cost of alleys, additional equipment and installation cost
but does not include freight charges for accessories that will have to be ordered from the
US (will be charged to defendant upon arrival of the shipment).
o Price payable at 50% upon signing of the agreement, and the rest at installments for a
period of six months.
o One year guaranty against the materials and faulty workmanship.
Defendant ordered for 6 more Brunswick bowling alleys, and said agreement for this was
embodied in another letter dated October 2, 1950.
Outside the downpayment required, however, defendant had absolutely refused to pay the
subsequent installments, prompting the plaintiff to file a case to the CFI.
o Initially, defendant asked for deferment of payments until the completion of the
installments (which the plaintiff acceded to in good faith). Come completion, however,
defendant refused to pay, thus the court action.
o CFI Manila found for the plaintiff. Hence, this petition.

Issues/Held:
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Defendants contention:
1. The sum representing the aggregate amount of inland freight, ocean freight, arrastre
and sales tax should be deemed included in the price agreed upon, considering that none
of the goods supplied by plaintiff are accessories;
2. 8 of the bowling alleys were second-hand, contrary to the contract;
3. The bowling alleys were of lower quality than agreed upon;
4. The installations were defective.
Accessories according to plaintiff: includes all the parts thereof (the alleys itself, the pinballs, the
pins, etc.) Hence (I think) the logic of the defendant that since theyre necessary parts of the
bowling alley, they cant be considered as accessories.
o SC: affirmed the interpretation of the plaintiff. The term bowling alley does not apply
except to one already installed. Prior thereto, the materials necessary to install and

1 Firm quotation = quoted price and conditions which remain unchanged for a
specified expiration date. (businessdictionary.com)

operate a bowling alley do not constitute an alley. They are merely parts of, and in
this sense, accessories to the principal, namely, the bowling alley once said parts or
accessories have been duly assembled. If none of these goods were accessories then
the proviso under consideration would be meaningless.
SC also did not give credence to the contention of the defendant that 8 alleys were second-hand
as defendant never made an official or written complaint to plaintiff.
o Also, there was positive declaration from the export manager J.E. Whitaker that said
bowling alleys were new but were unfortunately not properly maintained by defendant.
Defendant maintains that what it ordered was the centennial type of bowling alleys but what was
installed was the liberty type, which was inferior.
o There was no mention in their agreement as to what kind of bowling alley would be
installed.
o
Also, the aforementioned J.E. Whitaker mentioned that there was technically no
difference between the centennial type and the liberty type.
Plaintiff managed to rebut what the defendants termed as the defective installation made by the
former. Sufficient evidence show that the installments were made in accordance with the standard
requirements, and that what defendant experienced as defective was just normal for all new
bowling installations and also was also minor in character. Also, there was poor maintenance on
the part of the defendants.
SC: defendant liable for exemplary damages
o Under A. 2232 of the CC: In contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive,
or malevolent manner.
o The records of the case (defendants absolute refusal to pay the installments + abuse of
plaintiffs good faith) clearly show that the defendants, in utter disregard of the rights of
plaintiff, had refused deliberately and wantonly to pay plaintiff what is justly due.
o The business of defendant since its opening in 1951 had brought it lucrative income, and
yet it still refused to pay plaintiff.
o Not only that, but the defendants actuations with plaintiff was characterized as unsavory
and that the letters sent to plaintiff were replete with discourteous remarks.
Actual damages and attorneys fees also awarded.

Judgment Affirmed.