Case Digest (G.R. No. 119729)
Facts:
In Ace-Agro Development Corporation v. Court of Appeals and Cosmos Bottling Corporation, petitioner Ace-Agro Development Corporation (Ace-Agro), a bottle-cleaning and wooden-shell repair contractor, entered into annual service contracts with private respondent Cosmos Bottling Corporation (Cosmos) for operations inside Cosmos’s San Fernando, Pampanga plant since 1979. On January 18, 1990, the parties renewed their agreement for the period January 1 to December 31, 1990. A concurrent contract with Aren Enterprises existed because Ace-Agro could handle only 2,000–2,500 cases daily, whereas Cosmos’s production reached 8,000 cases. On April 25, 1990, a fire destroyed the work area and materials, halting Ace-Agro’s services. Despite Ace-Agro’s May 15 request to resume, Cosmos, citing destruction of bottles and shells, issued a May 23, 1990 letter unilaterally terminating the contract. Ace-Agro sought reconsideration by letters dated June 13 and July 17, 1990, to cushion the impact onCase Digest (G.R. No. 119729)
Facts:
- Parties and Contractual Relationship
- Ace-Agro Development Corporation (petitioner) and Cosmos Bottling Corporation (private respondent) are Philippine corporations.
- Since 1979, Ace-Agro cleaned soft-drink bottles and repaired wooden shells for Cosmos under annual service contracts, renewed each January 1 to December 31.
- Fire Incident and Contract Suspension
- On April 25, 1990, a fire at Cosmos’s San Fernando plant destroyed the work area used by Ace-Agro, halting its services.
- Petitioner wrote on May 15, 1990 seeking to resume work; Cosmos replied that the contract was terminated due to loss of bottles and shells.
- Petitioner requested reconsideration on June 13 and July 17, 1990, citing the welfare of its displaced workers; Cosmos did not reply.
- Post‐Fire Offers to Resume Work
- August 28, 1990 – Cosmos offered to let Ace-Agro resume shell-repair work outside plant premises under similar terms. Petitioner refused, citing added transport costs.
- November 7, 1990 – Cosmos offered full resumption inside the plant under the existing contract. Petitioner again refused on November 17, 1990, invoking a pending labor case and seeking a contract extension.
- Parallel Proceedings and Appeals
- Labor Case – Ace-Agro’s employees filed illegal dismissal charges; Labor Arbiter ruled Ace-Agro liable for reinstatement and backwages, absolving Cosmos for lack of privity.
- Civil Case – On January 3, 1991, Ace-Agro sued Cosmos in RTC for breach of contract and damages; RTC (Nov. 21, 1991) ruled in favor of Ace-Agro, awarding actual and exemplary damages, attorney’s fees, and costs.
- Appeal – Court of Appeals (Dec. 29, 1994) reversed, dismissing the complaint: Cosmos had validly suspended performance and repeatedly offered resumption; Ace-Agro unjustifiably refused.
- Certiorari – Ace-Agro’s petition to the Supreme Court sought review of the CA’s reversal.
Issues:
- Did the fire constitute a force majeure that justified Cosmos’s unilateral termination or only a suspension of the contract?
- After the fire, did Cosmos validly offer to resume performance such that Ace-Agro’s refusal amounted to breach of contract?
- Was Cosmos liable for damages for breach of contract given the post-fire correspondence and events?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)