PAN PACIFIC COMPANY (PHILIPPINES), PLAINTIFF-APPELLEE, VS. PHILIPPINE ADVERTISING CORPORATION AND JOHN W. MEARS, DEFENDANTS. PHILIPPINE ADVERTISING CORPORATION, DEFENDANT-APPELL…

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 P263,000.00.

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
reinvest 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 A^[2]
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 6 additional 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 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:

Appellant denies plaintiff’s right to collect this balance upon
the ground that:  1) the sum of
P30,661.90, representing the aggregate amount of inland freight, ocean freight,
arrastre and sales tax, should be deemed included in
the price agreed upon; 2) eight (8) of the bowling alleys installed by the
plain­tiff were “second-hand”, not the new ones ordered by the defendants;
3) the bowling alleys installed by the plaintiff were of a lower quality than
those ordered by the defendants; and 4) the installations made by the plaintiff
were defective.

As regards inland and ocean freights, the arrastre
and the sales tax, plaintiff alleges that these charges are due from the
defendants, because Exhibits A and D explicitly provide that the prices therein
quoted include “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 U.S.”  Moreover, Exhibit D explicitly declares
“that any luxury or additional sales tax that may be imposed by the Phil­ippine
Government upon the arrival of the merchandise” would be for defendants’
account.  Upon the other hand, appellant
asserts that none of the goods supplied by plaintiff are “accessories”
covered by the aforementioned provision in Exhibits A and D, and that in
resolving the issue as to what are “accessories“, the Court
can not go beyond the terms of said exhibits.

As correctly noted in the decision appealed from,

“x x x
defendants’ contention would be correct if the plaintiff had not alleged in its
complaint that the true and real agreement of the parties was that such charges
and taxes were not included in the firm quotation expressed in Exhibits A and
D, but that it was understood between the parties that such freight charges
would be borne by the defendants.  x x x.

xx                  xx                     xx                     xx

 “x x
x plaintiff’s interpretation or, to be exact, Hurst’s
understanding of the term ‘accessories’, includes all the parts of the bowl­ing
alley – the alleys itself, the pinballs, the pins,
the ball, the pinspotters, etc., as enume­rated in
detail in the letter-agreement, Exhibit A. 
On the other hand, neither the defendant nor its President, Mears, had given
the definition of the term ‘accessories’. 
As a matter of fact, defend­ant Mears, in spite of his long deposition
and defendants, in spite of the voluminous
evidence, had not stated for what arrastre charges or
what freight charges defendant is liable to the plaintiff.

“Plaintiff’s contention is that the prices listed in Exhibit A
were a firm quotation, f.o.b., that is, delivered in the United States, and
this price is the same as that stated in the breakdown attached to Exhibit
A.  In fact, defendant does not deny that
the price quoted in Exhibit A is a firm quotation and the fact is confirmed by
the letter, Exhibit D, dated October 2, 1950, in which Hurst stated that they
could no longer offer a firm quotation as they had received advice from the Brunswick-Balke-Collender Company that all prices were subject to
existing prices at the time the merchandise leaves the factory.  When Hurst stated in Exhibit D that they
could no longer offer a firm quotation, he was evidently re­ferring to the
quotation in the letter Exhibit A.  As
stated by Hurst, he could not at the time have been given a quotation which
would include freight charges, taxes and other charges which might be imposed
by the government because he did not know exactly at that time what the freight
charges and other charges would amount to and that it was not their intention
to make money on these charges.  It was
for that reason that Hurst, in his
letter, said that the quota­tion did not include freight charges for the
accesso­ries which were to be imported from the United
States. 
In contending that the quotation in the letters Exhi­bits A and D defendant has clung to the ambiguity in the
letters-agreement.  This ambiguity arises
from the fact that the letters were hurriedly done by a man who is not a lawyer
and with no experience in the drafting of contracts.  But the evidence and circum­stances proved,
in the mind of the Court, that, as contended by the plaintiff, the quotations
stated in the letter-agreement were from quotations f.o.b. and did not include
freight charges, taxes, and other charges which might be imposed by the
government and which must be borne by the defendants.” (Record
on Appeal, pp. 635-637.)

We find no plausible reason to disturb the foregoing
finding.  To begin with, it connotes a
determination of the relative credibi­lity of the testimony of plaintiff’s
witness, Wilfred Hurst, when contrasted with that of defendant John W. Mears,
which the lower court, in effect, found unworthy of credence and on which we
agree.

Moreover, strictly speaking, the term “bowling alley”
does not apply except to one already installed. 
Prior thereto, the materials necessary to install and operate a
“bowling alley” do not constitute such “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.  The goods ordered by and
delivered to the defendants, included, aside from alley beds, pinspotters, standard bell return sections, bottom storage
rails for standard ball return, pit cushions, pit mats, duck pins, duck pin
balls, score sheets, marking pencils, pin balls, crown ten pins, bowlers
settees, spectators opera chairs, bowling shoes, floor machines, square bottom
hand chalk, special league record books, etc. 
If none of these goods were “accessories”, as contended by the
defendants, then the proviso under consideration would be meaningless.

Again, it has been satisfactorily established that the prices
quoted for each of the goods specified in the lists attached to Exhibits A and
D are those charged “f.o.b.” in the catalogue of Brunswick-Balke-Collender Co., of which plaintiff is a
distributor.  Hence, plaintiff made in
Exhibit A a “firm” offer, whereas in
Exhibit B it stated that the prices therein were merely “tentative”
and that a “firm” offer could not be made therein, owing to the fact
that “all prices are subject to the existing price at the time the
merchandise leaves the factory.” It is thus clear that the “firm
offer” made in Exhibit A and the prices quoted in the
“breakdown” lists attached thereto and to Exhibit D, refer to the
prices “at the time the merchandise leaves the factory” – and,
accordingly, to the f.o.b. prices quoted in the catalogue of the manufacturer –
not to the prices of the goods placed at the premises of its buyer, over
8,000 miles away from the factory.

This conclusion is bolstered up by the fact that plaintiff had
some goods available on hand, such as those involved in the second, third and
fourth causes of action.  Indeed, the
defendants have introduced evidence to the effect that plaintiff, likewise, had
some second-hand bowling alleys in stock. 
The subject-matter of Exhi­bits A and D were, however, new
bowling alleys and additional equipment, practically all of which had still
to be ordered by the plaintiff from the United States.  Hence, the proviso in Exhibits A and D: “This
quotation includes the cost of the alleys, additional equipment and
installation cost but does not include freight charges” – not for all
accessories, but only – “for accessories that will have to be ordered
in the United States.”  Consequently – Exhibits A and D continue – “such
freight charges will be charged to you at actual cost upon the
arrival of the shipment.” In other words, the freight charges for all
goods shipped from the United States would be on defendants’ account.

Needless to say, there is every reason to believe that de­fendants
would not have agreed to the prices specified in Exhibits A and B Without first
ascertaining the prices prevailing in the United States, from which the goods ordered would come, and, hence, without finding that said
Exhibits A and B were based upon said “f.o.b.” prices.

It is next argued that eight (8) of the eighteen (18) alleys
installed by plaintiff were used or second-hand bowling alleys, not the new
ones ordered by appellant; that, sometime in August, 1950, plaintiff purchased
from Clark Field several second-hand bowling alleys which were brought to
plaintiff’s workshop at Sta. Mesa, Manila; that these second-hand bowling
alleys were repaired and painted in said workshop in January and February,
1951; and that eight (8) of the bowling alleys installed by the plaintiff in
appellant’s premises came from this stock of second-hand bowling alleys purchased
from Clark Field.

In support of this contention, defendants introduced the
testimony of Vicente Aquino, a former carpenter of
the plaintiff, who said that he was one of those who had repaired second-hand
bowling, alleys in plaintiff’s workshop at Sta. Mesa; that he was, also, on
board the trailer that allegedly brought second-hand bowling alleys to
appellant’s premises at Isaac Peral Street; and that,
while these second-hand bowling alleys were being installed in said
premises, defendant Mears complained to Hurst that said bowling alleys were not new.

The lower court found the evidence for the defense on this point
unworthy of credence for, despite said alleged discovery that eight (8) of the
bowling alleys installed by plaintiff were second­hand, “Mears made no
official or written complaint or protest to the plaintiff” about it.  The court added:

“x x x The
only complaint of Mears was that they might not be able to open and
inaugurate the bowling alleys on March 1, 1951, the target date set by the
parties, a fear aggravated by the fact that invitations had already been sent
out by the defendants.  Nowhere in his
long letter, consisting of almost three pages of typewritten, single space,
Exhibit O, was there any mention that second-hand bowling alleys were installed
by the plaintiff.  The long letter
was devoted to the fear that they might not be able to open the bowling alleys
on March 1, 1951.  In the letter of Mears
dated April 28, 1951, Exhibit S, or almost two months after the opening of
the bowling alleys, he complained about the defects and faults of bowling
alley No. 8 and demanded that repairs be imme­diately made.  Nowhere again in his letter did Mears
complain that second-hand bowling alleys had been installed by the plaintiff.  And in the letter of John W. Mears to
Brunswick-Balke-Collender Company dated February 17,
1951, Exhibit U-2, his complaint was that the installa­tion was not being given
the proper attention by the plaintiff.  Nowhere
did he complain that second­-hand bowling alleys were installed by the
plaintiff.

“Considering the character of John W. Mears, who, as it
appears to the Court, complains about almost everything to justify the
non-payment of the balance still due from him, the Court cannot understand
why he had not mentioned to the plain­tiff or the Brunswick-Balke-Collender
Company that second-hand bowling alleys had been installed by the
plaintiff.  Moreover, it seems to the
Court that it was quite improbable, if not impossible, for the plaintiff to
bring eight bowling alleys in two truckloads to defendant’s premises in Isaac Peral and re-load eight bowling alleys, without  the same coming to the knowledge of Mears,
who, by his own admission, was at the bowling alley every day, and in the
presence of the men who were con­structing the building for the bowling alley,
consider­ing that the second-hand bowling alleys were not crated and that
new ones which came from the United States and delivered directly to Isaac Peral were crated.” (Record on Appeal, pp.
640-641.  Underscoring supplied.)

Upon the other hand, apart from refuting the testimony of Aquino and other witnesses for the defense thereon,
plaintiff’s witnesses testified that each and every one of the 18 bowling
alleys it had installed in appellant’s premises were new.  This was confirmed by J. E. Whitaker, for
many years export mana­ger of Brunswick-Balke-Collender
Co., and an expert in the installation and
maintenance of bowling alleys, who inspected
defendants’ alleys in November 1951.  In
his deposition, which was duly introduced as part of plaintiff’s evidence and
fully corroborated by his report on the result of his aforementioned in­spection,
Whitaker positively declared that said alleys were new ones, not
second-hand alleys, as now claimed by the defendants.  What is more, he found them to be “first
class Brunswick pre­fabricated sectional alleys, properly
installed, but, unfortunately, not properly maintained.”     

As regards the quality of the bowling alleys installed by the
plaintiff, appellant says they were of the Liberty
type, although their agreement allegedly called for bowling alleys of the
Centennial type.  This pretense is not
borne out by Exhibits A and D, which do not specify the type of bowling alleys
ordered by the defendants.

After arguing that as regards the meaning of the term
“accessories”, said exhibits contain everything agreed upon,
defendants would have us believe that there had been representations by the
plaintiff and an oral understanding with the defendants that they would have
the finest type of bowling alleys, and that these were of the Centennial
type.  If this pretense were true,
appellant would have surely protested in writing against the alleged violation
of said understanding; but its correspondence with the plaintiff is
significantly silent thereon.

Again, the aforementioned J.E. Whitaker affirmed that
“Liberty alleys are the standard alleys as manufactured by Brunswick
before the war and up to the present;” that “the name Liberty x x x was assigned to the alleys
during the war, to go along with the trend of times” and was applied to
bowling alley beds manufactured by Brunswick;” that “this was done as a
matter of sales appeal, and for no other reason;” that Brunswick,
likewise, manu­factures bowling alleys of the so-called Centennial type, the
main characteristic of which is that it has “tongued and groved” bedstocks; that this
is “merely a sales feature,” which “adds nothing to the life and
serviceability of the product;” that “to equal the wear­ing
qualities of the Liberty alleys,” the Centennial alleys “had to be
manufactured out of thicker bedstock;” and that,
in fact, Liberty alleys last longer than Centennial alleys.

In a vain attempt to offset this evidence, the defense merely
introduced the testimony of defendant Mears, who did no more than indulge in
surmises and speculations, which are devoid of probative value.

Lastly, appellant brands the installation made by the plain­tiff
as defective and tried to prove that within the first months of the operation
of the alleys in question, as many as twenty-eight (28) defects had been
noticed therein.  Upon the other hand,
the evidence for the plaintiff sufficiently shows that said alleys had been
installed in accordance with the standard requirements therefore.  As stated by Whitaker, in his aforementioned
deposition and report, “Mears had complained about board’s popping up on
the alleys,” although this is “normal in all new bowling
installations;” that “all bowling alleys have a tendency to settle
the first year, and require re-align­ing and re-finishing; ” that this is
the reason for the one-year guaranty given by plaintiff herein; that the
defects pointed out by Mears were of “minor” character and were mostly due to
poor or “bad maintenance.  “At
any rate, said minor defects were remedied and/or re­paired in
conformity with plaintiff’s aforementioned guaranty.

We find, therefore that the lower court has not erred in
rendering judgment for the plaintiff, under its first cause of action.

Appellant next maintains that “the trial court erred in not
finding that” plaintiff “had violated its verbal agreement with ap­pellant”
as to the price to be charged (1) “x x x on pocket and carom tables and accessories sued upon in
the second cause of action x x x;”
(2) “x x x for the
miscellaneous billiard tables, accessories and equipment sued upon in the third
cause of action x x x;”
and (3) for the 168 sets of “duck pins sued upon in the fourth cause of
action x x x.”

Appellant objects to the sum of P11,703.00
claimed under the second cause of action, upon the ground that plaintiff
charges P2,150.00 for each table for which the Army & Navy Club of Manila had paid only P1,800.00.  It has been established, however, that said
club had twice purchased from the plaintiff, namely, in August, 1948 and April
5, 1950, and that, although the first tables had cost P1,800.00 each, the club
paid P2,150.00 for each table acquired in 1950, or the same price charged
herein appellant for the tables it acquired in February 1951.

Regarding the sum of P3,369.00 sought to
be collected under plaintiff’s third cause of action, for miscellaneous
billiard and bowl­ing accessories sold to the defendants from February 22 to March 7, 1951, defendants contend that
these goods had been ordered with the understanding that they would pay the
prices thereof as set forth in the Catalogue of Brunswick-Balke-Collender
Co.  We are more inclined to believe,
however, as the lower court did, plaintiff’s evidence to the effect that there
had been and there could have been no such understanding, because the catalogue
prices are factory prices in the United States, whereas the goods involved in
the third assignment of error were part of plaintiff’s stock available on
hand.

In other words, having defrayed the cost of bringing said goods
from the United States, plaintiff could not have possibly agreed to charge therefor said factory prices.

The fourth cause of action refers to 168 sets of duck pins sold
by the plaintiff to the defendants, who allegedly agreed to pay the current
price thereof, or P50.00 for each set.  Appellant insists that it could not have
entered into such agreement, for the reason that, while in the United States,
defendant Mears had bought duck pins at $9.25 a set, or from P18.00 to P19.00 a
set.  Appellant’s records showed,
however, that the duck pins bought by Mears in
the United States had cost from P27.04 to P30.27 a set, or, at the rate of
exchange then prevailing, from $13.52 to $15.13 a set.

Plaintiff seeks, also, to recover interests and attorney’s fees
at the rates of 12% and 25%, respectively, under a provision in its invoices,
attesting to the delivery of its goods to the buyers thereof, in addition to
the costs, reading:          

“Interest of 12% per annum is to be charged on all accounts
overdue.  An additional sum equal to 25%
of the amount will be charged by vendors for attorney’s fees and costs of
collection in case of suit.” (Plaintiff’s brief, pp.
47-48.)

Appellant asserts that it is under no obligation to pay the
interest and attorney’s fees referred to in said invoices, because it had not
agreed to the above-quoted provision, the invoices for the goods having been
signed by Prudencia Arboleda,
a mere clerk of appellant herein, and because, in fact, Mears had writ­ten on
appellant’s copy of one of said invoices – Exhibit G-1 – the words
“Received copy but not conforme.” Appellant’s
witness, Miss Arboleda declared, however, that she
had authority to re­ceive said invoices or copies thereof; that she, thereupon,
turned them over to defendant Mears; and that the latter received said copies,
without expressing any objection thereto. 
Then, also, it appears that the note, expressing his non-conformity with
the provisions of Exhibit G-1, was written by him on said copy, dated March 15, 1951, about a month and
a half later, or on April 27, 1951.  Again, defendants did not try to cause a
similar entry to be made in plaintiff’s original invoice, or to otherwise
advise the plaintiff of defendants’ objection to the provisions of said
invoice.  Worse still, appellant kept and
used the billiard tables, the bowling alleys and the accessories or equipment
described in the aforementioned invoices, without offering either to pay the
amounts thereof or to return said goods. 
In the language of His honor, the trial Judge,
“His acceptance of the equipment and supplies and acces­sories, and the
use he made of them is an implied conformity to the terms of the invoices and
he is bound thereby.”

Passing upon plaintiff’s claim for damages and attorney’s fees,
the lower court awarded therefore P20,000.00 and
P15,000.00, respectively, upon the following grounds:

“Under the fifth cause of action, plaintiff seeks to recover moral
damages for the alleged wanton re­fusal of the defendants to pay their just
obligation to the plaintiff and for taking advantage of the plaintiff’s good
faith.  Article 2229 of the New Civil
Code provides that ‘exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral, temperate,
liquidated or compen­satory damages’. 
And Article 2232 provides that ‘in contracts and quasi-contracts, the
court may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner’.  The records of this case amply demonstrate
that the defendants, in utter disregard of the rights of the plaintiff, had
refused deliberately and wantonly to pay the plaintiff what is justly due.   The installation of the bowling alleys,
together with their equipment, and the billiard tables had brought the
defendant a lucrative income from the year of its opening in 1951, to the
present; and yet outside of the down payment which defen­dant had paid on the
18 bowling alleys, defendant had absolutely refused, which the Court has found
without just cause, to pay the balance thereof and the cost of the bowling and
billiard accessories – this notwithstanding that the defendant had promised to
pay the balance of the price of the bowling alleys in installments, the first
installment to be paid on the day that the plaintiff would commence work on the
bowling alleys.  Defendant, taking
advantage of the plaintiff’s good faith, requested a deferment of the payment
until the installation shall have been completed; but the installation having
been completed, defendants under one pretext or another, refused without just
cause to pay what is due the plaintiff. 
Not only that, but defendant Mear’s attitude
towards the plaintiff was characterized by arrogance and his letters are
replete with unsavory and discourteous remarks, which demonstrate not only the
character of the man but reveal his lack of intention to pay defendant’s just
obligation.

“Plaintiff is entitled to actual damages consisting in the
payment of interest and attorney’s fees, and considering that the defendants
had acted wantonly, oppressively, if not fraudulently, in the performance of
their obligation, plaintiff is likewise entitled to moral and exemplary
damages, which the Court fixes in the amount of P20,000.00.  Under the first cause of action, plaintiff is
entitled to attorney’s fees, since plaintiff in accordance with Article 2208 of
the New Civil Code, has been awarded exemplary damages, and because defendant
acted in gross and evident bad faith in refusing to satisfy the plaintiff’s
plainly valid, just and demandable claim, and it is just and equitable that
attorney’s fees and expenses of litigation should be recovered.  Considering the lengthy pleadings, the
voluminous records, the lengthy and protracted trial, and the professional
standing of counsel, the Court hereby charges the defendants with the payment
of attorney’s fees in the amount of P15,000.00.”  (Record on Appeal, pp.
649-652.)

We are fully in accord with the foregoing view, which we adopt as
ours.

WHEREFORE, the decision appealed from should be, as it is
hereby, affirmed, with costs against defendant-appellant, Philippine
Advertising Corporation.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,
Castro, and Angeles, JJ.,
concur.

Fernando, J., did not take
part.

^[1]
Pan Pacific Co. (Philippines).

^[2] Dated August 28, 1950.

^[3]
Exhibit A further provided for “a surcharge of 8% per annum” on the
“monthly payments.”

^[4] Later marked as Exhibit D.