ACI Phil., Inc. vs.

Coquia

FACTS:
Petitioner ACI Philippines, Inc. (ACI) contracted with respondent Coquia for the purchase of
one lot of flint cullets, consisting of 2,500 to 3,000 metric tons, at a price of P4.20 per kilo
under Purchase Order No. 106211. Several deliveries made by respondent were accepted
and paid for by petitioner at the unit price of P4.20 per kilo as indicated in Purchase Order
No. 106211. However, petitioner demanded the reduction of the purchase price to P3.65 per
kilo, to which respondent acceded. Petitioner accordingly issued Purchase Order No. 106373,
and deliveries were again made by respondent on 5, 8 and 12 November 1994 under
Delivery Receipt Nos. 901, 719 and 735, respectively. Petitioner accepted the deliveries but
refused to pay for them even at the reduced price of P3.65 per kilo, demanding instead that
the unit price be further reduced to P3.10 per kilo.

Respondent filed a Complaint for specific performance and damages against petitioner
seeking payment for the deliveries made under Delivery Receipt Nos. 901, 719 and 735,
amounting to 46,390 kilos at the renegotiated price of P3.65 per kilo. The trial court ruled in
favor of the respondent. CA affirmed the decision of the trial court but further held that
Purchase Order No. 106211 is a contract of adhesion whose terms must be strictly construed
against petitioner. It also deemed as contrary to the original agreement, which pegged the
unit price of flint cullets at P4.20 per kilo, petitioners willful refusal to pay for the deliveries
unless the price is reduced, for which petitioner should be held liable. The appellate court
denied petitioners Partial Motion for Reconsideration, as well as respondents Urgent Ex
Parte Application for Attachment.

Petitioner claims that the CA erred in ruling that Purchase Order No. 106211 is a contract of
adhesion despite the fact that respondent is an established businesswoman who has the
freedom to negotiate the terms and conditions of any contract she enters into. It stresses
that Purchase Order No. 106211 was superseded by Purchase Order No. 106373 and that, in
both contracts, it was made clear to respondent that her assurance of prompt delivery of the
flint cullets motivated the transaction. Petitioner maintains that it entered into a contract
with respondent upon the latters assurance that she could promptly deliver the 2,500-3,000
metric tons of flint cullets required by petitioner. However, it believes that the trial court and
the appellate court erroneously refused to receive evidence aliunde to prove that time was
an important element of the agreement.

ISSUE:
Whether the trial court and the appellate court erroneously refused to receive
evidence aliunde to prove that time was an important element of the agreement

HELD & RATIO:

YES. A contract of adhesion is one wherein a party, usually a corporation, prepares the
stipulations in the contract, and the other party merely affixes his signature or his
"adhesion" thereto. There is every indication in this case that respondent, a presumably
astute businesswoman who has dealings with big corporations, gave her assent to Purchase
Order No. 106211 with full knowledge. She was, in fact, the one who sought a contract with
petitioner upon learning of the latters need for a supply of flint cullets. The Court cannot,
therefore, apply the rule on contracts of adhesion in construing the provisions of the
purchase orders in this case. Even the conditions of purchase, enumerated at the reverse
side of the purchase orders, do not reveal any hint of one-sidedness in favor of petitioner.
Petitioner raised the failure of the purchase order to express the true intent of the
parties, i.e., that petitioner entered into a contract with respondent conditioned upon the
latters prompt delivery of flint cullets, as an issue in its Answer with Counterclaims.
Unfortunately, the trial court sustained respondents objection based on the parol evidence
rule.
It is a cardinal rule of evidence, not just one of technicality but of substance, that the written
document is the best evidence of its own contents. It is also a matter of both principle and
policy that when the written contract is established as the repository of the parties
stipulations, any other evidence is excluded and the same cannot be used as a substitute for
such contract, nor even to alter or contradict them. This rule, however, is not without
exception. Section. 9, Rule 130 of the Rules of Court states that a party may present
evidence to modify, explain or add to the terms of the agreement if he puts in issue in his
pleading the failure of the written agreement to express the true intent and agreement of
the parties. Since an exception to the parol evidence rule was squarely raised as an issue in
the answer, the trial court should not have been so inflexible as to completely disregard
petitioners evidence.

Sifting through the testimony of respondent, the Court finds that although she was not given
definite days during which she should deliver the flint cullets, she was indeed apprised of
petitioners urgent need for large quantities thereof. Furthermore, petitioner presented the
unrebutted testimony of Ermilinda Batalon, its materials control manager, to prove that it
agreed to the P4.20 per kilo purchase price only because respondent assured it of prompt
deliveries sufficient for petitioners production requirements. These testimonies give a more
complete picture of the transaction between the parties and allow for a more reasoned
resolution of the issues, without over-reliance on the tenuous application of the rule on
contracts of adhesion.