Facts:

The case involves ACI Philippines, Inc. (petitioner) and Editha C. Coquia, doing business as E. Cardozo Coquia Enterprise (respondent). ACI Philippines, Inc. is engaged in manufacturing fiberglass, which it began producing using recycled broken glass or flint cullets in 1993. On October 6, 1994, ACI entered into a contract with Coquia for the purchase of 2,500 to 3,000 metric tons of flint cullets at a price of P4.20 per kilo, as per Purchase Order No. 106211. Several deliveries were made by Coquia, which ACI accepted and paid for at the agreed price. However, on October 28, 1994, ACI demanded a price reduction to P3.65 per kilo, which Coquia accepted under alleged duress. ACI then issued Purchase Order No. 106373, which superseded the original order. Despite accepting further deliveries at the new price, ACI later refused to pay, insisting on a further reduction to P3.10 per kilo. In response, Coquia filed a complaint for specific performance and damages, seeking payment for...

Facts:

Background of the Parties:
Petitioner ACI Philippines, Inc. is engaged in the manufacturing of fiberglass, used for thermal and acoustic insulation in commercial and industrial equipment. In 1993, to reduce costs, it began using recycled broken glass (flint cullets) instead of silica sand.

Contractual Arrangement:
In 1994, petitioner contracted with respondent Editha C. Coquia for the purchase of 2,500–3,000 metric tons of flint cullets at P4.20 per kg under Purchase Order No. 106211. Deliveries were made and paid for at this price.

Price Reduction and Dispute:
On October 28, 1994, petitioner demanded the price be reduced to P3.65 per kg, which respondent allegedly agreed to under duress. Petitioner issued Purchase Order No. 106373, superseding the original. Respondent made deliveries under this new order, but petitioner refused to pay, demanding a further reduction to P3.10 per kg.

Filing of Complaint:
Respondent filed a complaint for specific performance and damages, seeking payment for deliveries made under the reduced price of P3.65 per kg and completion of the original contract. Petitioner paid for the deliveries after the complaint was filed.

Lower Court Rulings:
The trial court ruled in favor of respondent, ordering petitioner to accept deliveries at P4.20 per kg, pay damages, and award attorney’s fees. The Court of Appeals affirmed but deleted the attorney’s fees, holding that Purchase Order No. 106211 was a contract of adhesion and petitioner’s refusal to pay was contrary to the original agreement.

Petitioner’s Arguments:
Petitioner argued that Purchase Order No. 106211 was not a contract of adhesion, as respondent voluntarily negotiated the terms. It claimed that Purchase Order No. 106373 superseded the original and that respondent’s acquiescence to the reduced price negated any claim of duress.

Issue:

The issues for resolution were:

1. Whether petitioner is bound to accept deliveries from respondent.
2. What unit price should apply to the deliveries.
3. Who is entitled to damages.

Ruling:

The Supreme Court reversed the decisions of the lower courts. It held:

1. Purchase Order No. 106211 was novated by Purchase Order No. 106373, extinguishing petitioner’s obligation to accept further deliveries to complete the original contract.
2. Petitioner cannot be bound to the P4.20 per kg price under the original order, nor to the P3.65 per kg price under the new order, as the latter did not specify the quantity to be delivered.
3. Respondent’s claim for damages lacked factual basis, as she failed to provide sufficient documentary evidence to substantiate her alleged losses.
4. Article 21 of the Civil Code was inapplicable, as there was no fraud or bad faith on petitioner’s part.

Ratio:

1. Novation of Contracts: A contract may be extinguished by novation, which must be clearly expressed or implied by the incompatibility of the old and new obligations. Purchase Order No. 106373 unequivocally superseded Purchase Order No. 106211.
2. Contracts of Adhesion: The Court found that Purchase Order No. 106211 was not a contract of adhesion, as respondent, an astute businesswoman, voluntarily negotiated its terms.
3. Parol Evidence Rule: The parol evidence rule excludes evidence that contradicts or alters a written contract. However, exceptions exist when the written agreement fails to express the true intent of the parties. The trial court erred in disregarding petitioner’s evidence on this issue.
4. Damages: Claims for actual damages must be supported by competent proof, not mere assertions. Respondent failed to provide sufficient evidence to substantiate her alleged losses.
5. Article 21 of the Civil Code: This provision is inapplicable in the presence of a pre-existing contractual relationship and absent proof of fraud or bad faith.