G.R. No. 20214 - Arnold vs. Willits and Patterson, Ltd.

G. C. Arnold (“plaintiff”) was a competent, experienced businessman employed by International Banking Corporation of Manila prior to July 1916.
On July 31, 1916, Arnold and the partnership of C. D. Willits & I. L. Patterson (doing business in San Francisco as Willits & Patterson) executed a written contract (Exhibit A), employing Arnold as the firm’s agent in the Philippine Islands for five years at a minimum salary of $200/month plus travel expenses.

Patterson retired; Willits reorganized the business into two one-man corporations—first in California, then in Manila—subscribing to virtually all stock. The corporations succeeded to the partnership’s assets and liabilities.
A dispute over Arnold’s remuneration led to a conference; on November 10, 1919, Arnold addressed Willits a letter (Exhibit B) clarifying commissions and profit-sharing arrangements, which Willits confirmed by signing “Willits & Patterson, by C. D. Willits.” No formal corporate resolution ratified Exhibit B.

The Manila corporation employed an accountant to prepare and forward semiannual financial statements to the San Francisco parent, showing as of July 31, 1921 a balance of ₱106,277.50 due Arnold under Exhibit B.
The San Francisco corporation fell into financial distress; its assets were placed in the hands of a “creditors’ committee,” which objected to Arnold’s Exhibit B claim.

On January 10, 1922, Arnold sued for ₱106,277.50 plus interest. The defendant admitted Exhibit A but denied Exhibit B’s authority, counterclaiming ₱10,858.95 due it under Exhibit A and alleging wrongful withdrawal of ₱30,000 by Arnold.
The trial court ruled for the defendant on its counterclaim, denying Arnold recovery; Arnold appealed.

Under which contract did Arnold render services for July 31, 1916–July 31, 1921: Exhibit A alone or Exhibit A as modified by Exhibit B?
What amount, if any, is owed Arnold under the binding contract?