GR 217454; (January, 2021) (Digest)
G.R. No. 217454 , January 11, 2021
AGRO FOOD AND PROCESSING CORP., Petitioner, v. VITARICH CORPORATION, Respondent.
FACTS
On October 5, 1995, Agro Food and Processing Corp. (Agro) and Vitarich Corporation (Vitarich) executed a Toll Agreement where Agro agreed to dress chickens supplied by Vitarich for a toll fee. Vitarich had also paid Agro a P20 million deposit related to a separate, unaccepted purchase offer for a plant. The parties agreed that this deposit would be returned via deductions of 15% from the weekly toll fee billings. Subsequently, Vitarich filed a complaint against Agro for sum of money, claiming a balance on the deposit. Vitarich’s computation was based on verbal amendments to the toll fees, negotiated and implemented thrice from 1996 to 1997 between Vitarich and Agro’s Finance Manager, Chito del Castillo. Agro contested the claim, arguing the amendments were not binding as del Castillo lacked actual authority from its Board of Directors to alter the written contract. The Regional Trial Court (RTC) ruled in favor of Agro, holding the amendments not binding due to lack of documentary evidence and authority. The Court of Appeals (CA) reversed the RTC, finding the verbal amendments valid and binding on Agro under the doctrine of apparent authority, as evidenced by 89 weekly billings prepared by Agro reflecting the amended rates and the parties’ course of conduct over two years.
ISSUE
Whether the Court of Appeals erred in applying the doctrine of apparent authority to hold that the reduced toll dressing rates agreed upon by Agro’s Finance Manager are binding on Agro, despite the lack of actual authority from its Board of Directors.
RULING
The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ Decision. The doctrine of apparent authority was correctly applied. Apparent authority is determined by the acts of the principal, not the agent. Here, Agro’s own conduct clothed its Finance Manager, Chito del Castillo, with apparent authority to bind the corporation. For over two years, Agro knowingly prepared and issued 89 weekly billings to Vitarich reflecting the verbally amended toll rates, accepted payments based on these reduced rates, and never repudiated del Castillo’s actions or questioned his authority during the course of their business dealings. By holding del Castillo out as having authority to agree to and implement the amendments through this consistent course of conduct, Agro is estopped from denying such authority. The amendments are therefore binding on Agro. The parol evidence rule does not bar proof of the amendments as the issue was duly raised in the Amended Complaint.