Pacmac v. The Honorable Intermediate Appellate Court

Summary

This case involved a commercial dispute between PACMAC and VULCAN corporations over an exclusive distributorship arrangement that began in 1953. After a formal two-year written contract expired in 1964, the parties continued their business relationship with an understanding that one-year advance notice would be given before termination. VULCAN unilaterally terminated the arrangement on August 3, 1965, prompting PACMAC to sue for damages. The Intermediate Appellate Court erroneously applied the parol evidence rule and ruled for VULCAN. The Supreme Court reversed, holding that the parol evidence rule does not preclude evidence of subsequent agreements modifying or extending the original contract. The Court found that VULCAN's breach entitled PACMAC to damages under Article 1170 of the Civil Code, but offset these against PACMAC's outstanding debt to VULCAN. The decision clarifies the proper application of the parol evidence rule in commercial relationships and establishes precedent for post-contract modifications in distributorship agreements.