Case Digest (G.R. No. 217454) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
On October 5, 1995, Agro Food and Processing Corp. (Agro) and Vitarich Corporation (Vitarich) entered into two simultaneous agreements in Bulacan: a Memorandum of Agreement for the potential sale of Agro’s chicken dressing plant and a Toll Processing Agreement under which Agro would dress chickens supplied by Vitarich for specified fees. Vitarich deposited ₱20 million with Agro as earnest money and had 45 days to inspect the facility. When Agro did not accept Vitarich’s purchase offer at the end of this period, the deposit was to be returned through weekly deductions equivalent to 15% of Vitarich’s gross toll fees. Vitarich also sold live broiler chickens on credit to Agro. More than two years later, Vitarich sued Agro in the Regional Trial Court (RTC) of Malolos City for ₱4,770,916.82 (balance of the ₱20 million deposit) and ₱4,322,032.36 (balance on live broiler sales), claiming that the toll fees had been verbally amended three times by Agro’s Finance Manager, Chito del Casti Case Digest (G.R. No. 217454) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Agreements
- On October 5, 1995, Agro Food and Processing Corp. (Agro) and Vitarich Corporation (Vitarich) executed:
- A Memorandum of Agreement (MOA) for Vitarich to buy Agro’s Bulacan chicken dressing plant.
- A Toll Agreement for Agro to dress chickens supplied by Vitarich at agreed rates (₱7.50/kg fresh chilled; ₱7.50/kg neckless; ₱5.50/kg gallantina).
- Vitarich paid a ₱20 million deposit under the MOA and had 45 days to evaluate the plant; Agro declined the purchase offer at period’s end, obliging return of the deposit.
- Deposit Offset and Verbal Amendments
- Parties agreed to offset the ₱20 million deposit via deductions equal to 15% of weekly gross toll billing.
- From 1996 to 1997, Agro’s Finance Manager, Chito del Castillo, and Vitarich allegedly agreed to three verbal rate reductions:
- Vitarich also sold live broiler chickens on credit to Agro during this period.
- Judicial Proceedings
- Vitarich filed a complaint (circa 1998) claiming:
- ₱4,770,916.82 plus interest (balance of deposit).
- ₱4,322,032.36 plus interest (balance on live broiler sales).
- Agro counterclaimed for ₱25,430,292.72 representing underpaid toll fees under the original rates.
- RTC, Branch 83, Malolos City (December 29, 2005):
- Held verbal amendments not binding for lack of corporate board authority and documentary signature.
- Dismissed Vitarich’s deposit claim.
- Granted Agro’s counterclaim of ₱25,430,292.72 plus interest.
- Court of Appeals (August 28, 2014):
- Set aside the RTC decision.
- Held verbal amendments binding under principle that contracts bind “in whatever form entered.”
- Applied doctrine of apparent authority, citing 89 Agro-prepared weekly billings and del Castillo’s testimony.
- Ordered Agro to pay Vitarich ₱4,734,906.57 (deposit balance) and ₱3,989,851.82 (live broilers) plus 24% interest.
- CA Resolution (March 9, 2015): Denied Agro’s motion for reconsideration.
- Agro filed this Petition for Review on Certiorari before the Supreme Court.
Issues:
- Whether the Court of Appeals erred in applying the doctrine of apparent authority to bind Agro to verbal amendments not ratified by its board of directors.
- Whether the Court of Appeals erred in admitting parol evidence to prove the verbal amendments to the Toll Agreement.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)