Appellant's Brief Agro Food Case 2

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REPUBLIC OF THE PHILIPPINES

COURT OF APPEALS
MANILA

VITARICH CORPORATION,
Plaintiff-Appellant,

-versus-
C.A. G.R. CV No.90550

AGRO FOOD AND PROCESSING


CORPORATION,
Defendant-Appellee
x----------------------------------------x

APPELLANT’S BRIEF

COMES NOW PLAINTIFF-APPELLANT VITARICH CORPORATION

(‘Vitarich” for brevity), by counsel, to this Honorable Court,

respectfully states:

ASSIGNMENT OF ERRORS

1. The court a quo committed a reversible error when


it concluded that defendant Agro Food had not agreed on the
reduced dressing fees, when the defendant benefited from
the changes in the contract not to mention the fact that it
was defendant which reflected the changes in its 68 billing
statements.

2. The court a quo committed a reversible error when


it found the statement of account of defendant-appellee,
although belatedly prepared, as sufficient evidence of its
counterclaim.

3. The court a quo committed a reversible error when


it failed to grant to the plaintiff the undisputed unpaid
balance of P4,734,906.57 of the P20M deposit plus 12%
interest per annum.

4. The court a quo committed a reversible error when


it imposed only a 12% interest per annum on the unpaid
account on the sale of broilers when the sales invoices
provide for 24% interest per annum.

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STATEMENT OF THE CASE

This is a complaint for sum of money filed by plaintiff-

appellant Vitarich Corporation (sometimes referred to herein as

“Vitarich”) on March 17, 1998 against defendant-appellee Agro

Food and Processing Corporation (sometimes referred to herein as

“Agro Food”) on the basis of two causes of actions:

a. On the first cause of action, Vitarich sought the return and

payment of the amount of P4,770,916.82, exclusive of 12%

interest, representing the balance of the amount of Twenty Million

Pesos (P20,000,000.00) it advanced to Agro Food. This amount

was delivered by plaintiff-appellant to the defendant appellee

pursuant to the parties temporary agreement giving Vitarich the

right to buy Agro Food’s dressing plant under certain conditions and

in case the proposed sale does not materialize, for Agro Food to

return to Vitarich the said amount of P20M.

b. Under its second cause of action, plaintiff-appellant sought

the payment of the sum of P4,322,032.36, exclusive of 24%

interests, representing the remaining obligation of defendant-

appellee Agro Food on the broilers it purchased from Vitarich.

On February 1, 1999, Vitarich filed a motion for leave to file

and admit its Amended Complaint. In the amended complaint,

Vitarich maintained the amount of its claim under the original

complaint but introduced amendments pertaining to the verbal

amendments of the parties in the Memorandum of Agreement.

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Thus, in paragraphs 5 and 5.3 of the amended complaint, plaintiff-

appellant added the following allegations:

“5. x x x although its provisions on guaranteed volume


and percentage of deduction on tolling fees were verbally
amended in August 1996, x x x

5.3. x x x although its provision on dressing fee was


amended by the parties in June 1996 and August 1996 which
amendments were fully executed by the parties. (please refer
to pages 90 and 91 of the records)

On May 31, 1999, the trial court denied the motion for leave

to file and admit amended complaint. However, on January 27,

2000, the trial court reconsidered and set aside its Order dated May

31, 1999, and admitted the Amended Complaint of Vitarich.

In its Amended Answer dated March 1, 2000, Agro Food

admitted the genuineness and due execution Memorandum of

Agreement and Toll Processing Agreement but that, according to it,

no verbal amendment was made on the toll processing agreement;

that the dressing fees paid by Vitarich were less than those

provided in the memorandum of agreement and in the toll dressing

agreement. Defendant appellee then went on to say that it is

plaintiff-appellant who is indebted to it in the amount of Twenty

Five Million Pesos (P25,000,000.00), allegedly representing the

deficiency payment of the dressing fees. (please refer to the

amended answer, pages 180 to 186 of the records)

The pre-trial conference was set on several dates. On

September 27, 2000 ,the trial court issued a (pre-trial) order

(pages 226 to 229 of the records) which order contained several

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significant facts admitted by the defendant-appellee. The facts

admitted by the defendant-appellee are:

1. Out of the P20,000,000.00 cash advances, defendant paid

the total amount of P15,265,093.43

2. Vitarich sold and delivered to Agro Food broilers with a

total reconciled amount.

3. Payment for the broilers came from offsetting of the

dressing fee due to Agro Food.

4. Agro Food billed Vitarich for the use of its (Agro Food)

dressing plant for the period June 1, 1996 to August 2, 1996 in the

amount of P4.95 per gallantina and P6.75 per fresh chilled chicken

dressed (please refer to proposed stipulations in page 1 of the pre-trial order (page 226 of

the records) and the admission in the second paragraph of page 2 of the pre-trial order (page

227 of the records)

Plaintiff-appellant presented Lemuel De Leon, a billing

processor, Alexander P. Parinas, its Credit and Collection

Supervisor, Ms. Ermelinda Enriquez, the booking (sales)

representative and Shiela Domingo, account analyst. Plaintiff-

appellant offered in evidence voluminous documentary evidence to

prove that the dressing fees were reduced/increased by defendant-

appellee pursuant to the verbal agreement of the parties.

Defendant-appellee, on the other hand, presented its

President, Mr. Jose Michael B. Gonzales and its Finance Manager,

Chito del Castillo. It offered few documentary evidence.

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On December 29, 2005, the trial court rendered a decision,

the dispositive portion of which reads as follows:

“WHEREFORE, premises considered, judgment is


hereby rendered, to wit:

1. ordering defendant Agro Foods to pay plaintiff


the amount of P4,770,916.82 plus interest of
P93,828.03 from January 9, 1998 to March 9, 1998 and
an additional interest of 12% per annum from March
10, 1998 until the said amount is fully paid relative to
the purchase of live broiler; and

2. ordering plaintiff to pay defendant Agro Foods


the amount of P25,430.72 as deficiency payment on the
billing based on the toll rates as provided by the Toll
Processing Agreement dated October 4, 1995 plus the
legal rate interest from the date of the filing of this
complaint until the said amount is fully paid.

Further, plaintiff Vitarich Corp., and defendant


Agro Food shall bear the payment of attorney’s fees to
their respective counsels.

No pronouncement as to costs.

SO ORDERED.”

a certified xerox copy of which is hereto attached as Annex “A” for

ready reference.

STATEMENT OF FACTS

I. Under the first cause of action

The following facts are not in dispute:

Both plaintiff appellant Vitarich Corporation (“Vitarich” for

brevity) and defendant-appellee Agro Food Processing and

Development Corporation (“Agro Food” for brevity) are domestic

corporations duly organized and existing under the laws of the

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Philippines and with business addresses in the Province of Bulacan.

Plaintiff appellant Vitarich is engaged, among others, in the

production and wholesale of poultry and animal feed products, while

defendant appellee Agro Food is the owner and operator of a

dressing plant located at Bgy. Pulong Gubat, Balagtas, Bulacan.

Agro Food is also engaged in the sale of poultry products. ( pars. 1, 2, 3

and 4 of the amended complaint dated February 1, 1999, page 89 of the records and admitted

in pars. 1 and 2 of the amended answer dated March 1, 2000, page 180 of the records)

On October 4, 1995, Vitarich and Agro Food entered into a

Memorandum of Agreement (Exh. “A” for the plaintiff and Exhibit “1” for the

defendant, please refer to No. 1 of the documents attached in plaintiff’s formal offer evicence

dated 3 September 2003, pages 467-537 of the records ), where the parties, among

others, indicated their mutual intent to sell and buy the dressing

plant owned and operated by Agro Food located at the place

mentioned above (pars. 5 and 5.1 of the amended complaint dated February 1, 1999

page 90 of the records; admitted in par. 3 of the amended answer dated March 1, 2000, pages

180 and 181 of the records) . The memorandum of agreement obliged

plaintiff-appellant Vitarich, as prospective buyer, to deposit to the

defendant appellee, as prospective seller, the amount of Twenty

Million Pesos (P20,000,000.00) (pars. 1 and 2 of the MOA; par. 5.2 of the

amended complaint, page 90 of the record and admitted in par. 3 of the amended answer

dated March 1, 2000, pages 180 and 181 of the records). In compliance with the

said provision, plaintiff-appellant Vitarich delivered to the

defendant-appellee Agro Food, the amount of P20,000,000.00 on

October 4, 1995 (Exh. “C”, no. 7 of the documents attached in plaintiff’s offer of

evidence, pages 467- 537 of the records; also admitted during the pre-trial conference per

[pre-trial] Order dated September 27, 2000, page 226 of the records; furthermore, this was not

denied in the answer ). Under the terms of the Memorandum of

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Agreement (Exhibits A and 1), it was agreed that in the event that

Agro Food rejects the offer of Vitarich to buy, defendant-appellee

Agro Food shall pay back the deposit of P20,000,000.00. (please refer

to page 2 of the MOA, supra; see also par. 5.3. of the amended complaint, supra and admitted

in par. 3 of the amended answer, supra). Defendant-appellee Agro Food

rejected plaintiff appellant’s offer to purchase on January 6, 1996

(par. 7 of the amended complaint, supra, page 91 of the records; admitted in par. 3 of the

amended answer, supra). In order that the amount of P20M could be

returned to plaintiff-appellant, plaintiff-appellant continued the use

of Agro Food’s dressing plant facility (par. 8 of the amended complaint, page 91

of the records and admitted in par. 3 of the amended answer, supra) under a Toll

Processing Agreement (Exh. “B” for the plaintiff and Exhibit 2 for the defendant,

nos. 3-6 of plaintiff’s offer of evidence, supra) entered into by the parties on the

date that the Memorandum of Agreement was signed. It was

provided in the Memorandum of Agreement that a certain

percentage of the dressing fees that plaintiff-appellant Vitarich was

obliged to pay under the toll processing agreement shall be

deducted and applied as partial payment for the P20M deposit until

the deposit is fully refunded ( please refer to page 2, par. 2 of the Memorandum of

Agreement, Exhibit A for the plaintiff and Exhibit 1 for the defendant, Nos. 1-2 of

plaintiff’s offer of evidence, supra).

After the termination of the toll processing arrangement of

the parties on December 8, 1997 (par. 9 of the amended complaint) ,

defendant-appellee was able to refund only the amount of Fifteen

Million Two Hundred Sixty Five Thousand Ninety Three Pesos and

43 centavos (P15,265,093.43), out of the P20M deposit. (please refer to

stipulation No. 1 and the admission of the defendant as contained in the second page of the

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pre-trial order of September 27, 2000, pages 226-227 of the records), thus leaving a

balance of P4,734,906.57 of the P20M cash advance.

The amount of P15,265,093.43, as stated earlier, was

deducted on staggered basis from the dressing fees billing of the

defendant appellee to which plaintiff appellant Vitarich had dutifully

paid.

Dressing fees from the period


from January 6-12, 1996 to May 25- 31, 1996

For the period beginning January 6-12, 1996 (Exh. “F”) until

May 25-31, 1996 (Exh. “Z”), defendant-appellee Agro Food billed

Vitarich the following dressing fees:

P7.50/kg for fully dressed chicken, and

P5.50/kg for gallantina.

In its various billings for the said period, defendant-appellee

deducted from the gross billing an amount equivalent to 15%

thereof in partial payment of the deposit of P20,000,000.00 (see

Exhibit “F” to Exhibit “Z”, and their sub-markings).

Dressing fees from the period


from June 1-7, 1996 to July 27- August 2, 1996

For the period beginning June 1-7, 1996 (Exh. AA”) until the

dressing period ending July 27-August 2, 1996 (Exh. “II”). The

dressing fees billed by Agro Food to Vitarich are as follows:

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P6.75/kg for fully dressed chicken, and

P4.95//kg for gallantina.

or a reduction of P.75/kg and P.55/kg, respectively.

Instead of deducting 15% of the amount of the billing in

partial payment of the deposit of P20,000,000.00, defendant-

appelee Agro Food deducted only 10% of the dressing fees for this

period.

Dressing fees for the period from


August 3-9, 1996 to July 26-August 1, 1997

For the period beginning August 3-9, 1996 (Exh. “JJ”) until

the dressing period ending on August 2-8, 1997 (Exh. “XXX”),

defendant-appellee Agro Food billed Vitarich, the following dressing

fees:

P6.05/kg. for fresh chilled, and

P4.55/kg for gallantina.

or a further reduction of P.70/kg and P.40/kg, respectively.

Also, for this dressing period, defendant-appellee Agro Food

deducted from its own billings an amount equivalent to 7.5% of

the amount of billing for the first 240,000 heads of chickens

dressed, and another 20% of the amount of billing for the volume

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of chicken exceeding 240,000 heads ( please see Exhibits “JJ” to

“XXX”, and their sub-markings).

Dressing fees from the period from


August 2-8, 1997 to December 6-7, 1997

For the dressing period beginning August 2-8, 1997 (Exh.

“YYY”) until the dressing period ending on December 6-7, 1997

(Exh. “PPPP”), Agro Food billed Vitarich a uniform dressing fee of

P5.75/kg for gallantina and fresh chilled chicken or a

reduction of P.30/kg in the dressing fee for fully dressed chicken

but an increased of P1.20/kg in the dressing fee of

gallantina.

Here is a matrix summarizing the times when the changes on

the rates occurred:

Item Original 1st Amended 2nd Amended 3rd Amended


Rate Rate Rate effective Rate effective
effective effective June Aug. 3, 1996 Aug. 2, 1997
Jan. 6 to 1 to Aug. 2, to Aug. 8, to Dec. 7,
May 31, 1996 1997 1997
1996
Fresh Chilled P7.50/kilo P6.75/kilo P6.05/kilo P5.75

Neckless P7.50/kilo P6.75/kilo P6.05/kilo


Gallantina P5.50/kilo P4.95/kilo P4.55/kilo P5.75

EXHIBIT Nos “F” to “Z” “AA” to “II” “JJ” to “XXX” “YYY” to


“PPPP”

Facts In Support of the Second Cause of Action

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Independent and separate from the agreements to “buy and

sell” of Agro Food’s dressing plant and the toll dressing

arrangement as contained in the Memorandum of Agreement ( Exhibit

“A” for the plaintiff and Exhibit “1” for the defendant ) and the Toll Processing

Agreement (Exhibit “B” for the plaintiff and Exhibit 2 for the defendant), the parties

also entered into sale of live broilers. Plaintiff-appellant Vitarich

sold, on credit, live broilers to defendant-appellee Agro Food, which

the latter undertook to pay within seven (7) days from delivery.

(please refer to paragraph 7 of the Answer to the amended complaint, pages 180-182 of the

records; the transactions per se were not denied by defendant but only the accuracy of the

figures)

Indeed, during the pre-trial conference, defendant-appellee

admitted that Vitarich sold and delivered to Agro Food, broilers with

a total reconciled amount. (Please refer to the pre-trial order dated September 27,

2000, pages 226-229 of the records. Proposed stipulation no. 2 was admitted by the

defendant as may be read in page 2 of the pre-trial order.)

From October 18, 1996 to December 5, 1997, Vitarich sold,

on credit, to Agro Food several thousands of live broilers amounting

to P56,332,351.22. Agro Food paid the amount of P52,010,318.85,

but failed to pay the balance in the sum of P4,322,032.36,

representing purchases for the period November 11, 1997 to

December 3, 1997, as evidenced by Charge Sales Invoices Nos.

2903 (Exh. “YYYY”), 2909 (“YYYY-1”), 2910 (“YYYY-2”), 2926

(“YYYY-3”), 2927 (“YYYY-4”), 2946 (“YYYY-5”), 2947 (“YYYY-6”),

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and 5166 (“YYYY-7”). The said amount is exclusive of stipulated

interests at the rate of 24%.

In the course of the trial, the trial court directed the parties or

their representatives to meet for the purpose of reconciling the

accounts covered by 28 different charge sales invoices. This

directive was contained in the Order dated May 11, 2000. Thus, on

May 23, 2000, May 25, 2000 and in June 2000, the representatives

of Vitarich and Agro Food met, and agreed on (1) the amounts in

the reconciled charge sales invoices that were adjusted by them;

and (2) on the amounts in disputed charge sales invoices that were

reconciled. On this point, plaintiff-appellant agrees with the

findings of the trial court as follows:

“Shiela Santos testified that pursuant to the


Court’s order order dated May 11, 2000, both parties
agreed to the process and manner for the reconciliation
of the acounts with respect to the sale of live broilers
(TSN, September 24, 2002, p.12); and, as in fact
proceeded to reconcile the accounts on May 23 and 25,
2000 and sometime in June, 2000 by the respective
representatives of both parties. Thereafter, the parties
were able to reconcile the accounts. Witness Shiela
Santos presented a summary of the reconciled accounts
conducted and signed by the representative of both
parties and denominated as Exhibit “AAAAA” comprises
Exhibits “CCCCC-1” to “CCCCC-3” which is the summary
of the undisputed sales invoice amounting to
P56,000,170.67 and Exhibit “CCCCC-4” to “CCCCC-5”
which represents the summary of the undisputed
payments of the defendant from its purchases of live
broilers amounting to P52,010,318.85. Consequently,
with the reconciled amount of the parties of the
summary of undisputed sales invoices and the
undisputed payments made thereto, defendant Agro
Food still had an unpaid obligation to plaintiff Vitarich in
the amount of P3,989,851.82. Further, considering
that the interest on the unpaid obligation remains
unrebutted by defendant Agro Foods, such interest

12
prevails.” (underlining and bold facing ours for
emphasis)

(please refer to pages 3 and 4 of the decision dated December 29, 2005, pages

701 and 702 of the records)

DEMAND PRIOR TO FILING OF COMPLAINT

With these outstanding balances and since the parties had no

more business transactions, Vitarich demanded in writing, not only

once but for four times, from defendant Agro Food its outstanding

obligation. First, plaintiff-appellant sent to defendant-appellee, a

letter cum statement of account on the sale of broilers dated

December 8, 1997, which was received by Mr. Chito del Castillo,

Finance Manager of defendant (please refer to Exhibits UUUU and UUUU-7, no.

344-349 of plaintiff-appellant’s formal offer of evidence found in pages 467-537 of the

records; also TSN dated September 6, 2001, pages 3-4). This was followed by

another demand letter dated December 18, 1997, this time

demanding not only the payment of the outstanding balance on the

broilers’ transaction but also the remaining balance on the P20M

deposit. This letter was received by Mr. Chito del Castillo on

December 19, 1997 (please refer to TSN dated September 6, 2001, pages 5-6 and to

Exhibits TTTT and TTTT-1, no. 343 of plaintiff’s formal offer of evidence, pages 467-537 of

the records)

The third demand letter dated January 7, 1998 was received

again by Mr. Chito del Castillo, defendant-appellee’s Finance

Manager, on Janaury 9, 1998. In this letter, plaintiff-appellant

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demanded from defendant Agro Food, the payment of the amount

of P9,779,018.88 or P4,253,103,103.16-representing sales of

broilers and P5,525,915.72-representing the remaining balance of

the deposit of P20M converted into loan. ( Please refer to Exhibits WWWW

and WWWW-1, no. 354 of plaintiff appellant’s formal offer of evidence found on pages 467-

537 of the records; Also TSN dated September 6, 2001, page 7). The fourth demand

letter dated March 3, 1998 was received by defendant-appellee’s

employee by the name of Noemi Kabigting on March 4, 1998. (please

refer to Exhibits XXXX and XXXX-1, no. 355 of plantiff appellant’s formal offer of evidence

found on pages 467-537 of the records; also TSN, dated September 6, 2001, pages 8 and 9 ).

Despite receipt of these four (4) demand letters and the

verbal demands made, defendant-appellee did not bring out, even

by insinuation, that plaintiff-appellee had unpaid obligation to it

arising from underpayment of the dressing fees.

Due to the refusal of defendant to pay its obligation without

justifiable reason, plaintiff was constrained to file the complaint in

the trial court.

STATEMENT OF THE ISSUES

Related to the assigned errors, plaintiff-appellant

submits the following issues for consideration of this

Honorable Court.

1. Whether or not defendant-appellee which changed


the terms of the MEMORANDUM OF AGREEMENT three times
as reflected in its 68 weekly billing statements to plaintiff-
appellant can now say that its own acts are not binding upon
it.

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2. If in the affirmative, whether or not the statement
of account presented by defendant-appellee is enough to
prove its counter claim.

3. At any event, whether or not plaintiff-appellant is


entitled to be paid the sum of P4,734,906.57 plus 12%
interest per annum on its first cause of action.

4. At any event, whether or not plaintiff-appellant is


entitled to be paid 24% interest per annum on the unpaid
account on the sale of broilers (respecting to the award on
the second cause of action)

DISCUSSION

On the first cause of action, there is no dispute that plaintiff

deposited the sum of P20M to defendant Agro Food. There is no

dispute also that the said sum is returnable to Vitarich in case its

offer to buy Agro Food’s dressing facility was rejected. There is no

dispute that Agro Food rejected the offer to purchase. Accordingly,

defendant-appellee Agro Food was able to return only the sum of

P15,265,093.43 out of the P20 million deposit of Vitarich. This is

admitted by the defendant-appellee during the pre-trial conference

and the admission is clearly stated in the pre-trial order dated

September 27, 2000. Accordingly, there remains a balance of

P4,734,906.57 on this transaction.

On the second cause of action, the established reconciled

amount due to plaintiff-appellant is P3,989,851.82. We quote

again the findings of the trial court on this point:

“Shiela Santos testified that pursuant to the


Court’s order order dated May 11, 2000, both parties

15
agreed to the process and manner for the reconciliation
of the acounts with respect to the sale of live broilers
(TSN, September 24, 2002, p.12); and, as in fact
proceeded to reconcile the accounts on May 23 and 25,
2000 and sometime in June, 2000 by the respective
representatives of both parties. Thereafter, the parties
were able to reconcile the accounts. Witness Shiela
Santos presented a summary of the reconciled accounts
conducted and signed by the representative of both
parties and denominated as Exhibit “AAAAA” comprises
Exhibits “CCCCC-1” to “CCCCC-3” which is the summary
of the undisputed sales invoice amounting to
P56,000,170.67 and Exhibit “CCCCC-4” to “CCCCC-5”
which represents the summary of the undisputed
payments of the defendant from its purchases of live
broilers amounting to P52,010,318.85. Consequently,
with the reconciled amount of the parties of the
summary of undisputed sales invoices and the
undisputed payments made thereto, defendant Agro
Food still had an unpaid obligation to plaintiff Vitarich in
the amount of P3,989,851.82. Further, considering
that the interest on the unpaid obligation remains
unrebutted by defendant Agro Foods, such interest
prevails.” (underlining and bold facing ours for
emphasis)

Dispute of the parties

The dispute of the parties, therefore, is not on the

balances due to plaintiff arising from the transactions

mentioned in its first and second causes of actions. Rather,

the dispute pertains to the binding effect of the billing

statements done by defendant sixty eight (68) times.

According to defendant-appellee, plaintiff-appellant underpaid

its dressing fees by as much as P25 million and then concluded that

after offsetting the amount due to plaintiff, there is still a remaining

balance of about P16M (please refer to the testimony of defendant’s witness

and Finance Manager on October 26, 2004, T.S.N. page 44)

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Plaintiff-appellant, however, maintains that there is no such

underpayment because it paid defendant-appellee strictly on the

basis of its own (defendant-appellee’s) billings which were in

accordance with the agreements of the parties.

On the first assigned error / first issue

The court a quo said that plaintiff failed to prove that

defendant Agro Food agreed to the reduction of the dressing fees.

Plaintiff-appellee respectfully submits that it was able to

prove by preponderance of evidence that the parties agreed to the

changes in the dressing fees.

First, by admission of defendant’s own witness, plaintiff

requested for changes in the rate of the dressing fees. Thus,

defendant’s witness, Mr. Chito del Castillo, defendant’s very own

Finance Manager, testified on direct examination :

Atty. Macapagal:

Q. Now, during the presentation of plaintiff’s evidence,


they presented Exhibit AA and submarkings
denominated as AA-1 to AA-7 which were the billing for
the period June 1-7, 1996 sent by you charging Vitarich
Corporation of the dressing fees in the amount of P6.75
per kilo for fresh chilled chicken and the amount of
P4.95 for gallantina, now how do you explain the
discrepancy of the amount of toll fees which you sent
compared to the amount of the toll fees which were
fixed in the contract which you have identified a while
ago?

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A. There was a request on the part of Vitarich
Corporation to reduce the amount of the billing rate, sir.

(T.S.N. October 26, 2004, pages 11 and 12)

Second, on August 8, 1996, plaintiff-appellant’s Senior Vice

President, Napoleon S. Coma wrote Vitarich’s President that Agro

Food agreed on the reduced fees as well as on the rate of

offsetting. Exhibit “E”, the e-mail memorandum states and we

quote:

To: Renato P. Sarmiento/Vitarich Corporation.PH


Cc: Rogelio M. Sarmiento/Sarmiento management Corp/PH @
Sarmiento Management Corp
From: Napoleon S. Coma/Vitarich Corporation/PH
Date: 08/08/96 01:52:33 PM
Subject: BULPRA

NEW CONTRACT WITH AGRO-FILIPINO (BULPRA) ON OUR TOLL


DRESSING ARRANGEMENT HAS THESE FEATURES:

1. ONE YEAR TERM STARTING AUGUST 1, 1996.

2. FEES AS FOLLOWS:
P 6.05/KILO DC (PREVIOUSLY AT P6.75)
P4.55/KG. GALLANTINA (PREVIOUSLY AT P4.95 )

3. GUARANTEED VOLUME OF 240,000 HDS, FOR DRESSING PER


WEEK.

4. PAYMENT AGAINST DEPOSIT


7 .5% OF PROCEEDS OF 240,000 HDS.
20% OF PROCEEDS IN EXCESS OF 240,000 HDS.

5. RIGHT OF VITARICH TO ASSIGN ITS CONTRACT TO THIRD


PARTY.

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6. EFFECTIVITY IS AUGUST 1, 1996

Third, while this memorandum does not contain the

signature of Agro Food (or BULPRA), still the amendments were

concurred in and implemented by defendant Agro Food. The sixty

eight (68) weekly billings (Exhibits AA to PPPP) of Agro Food are

eloquent evidence of its concurrence with the changes in the

dresssing fees and other terms of the Memorandum of Agreement

(Exhibit A). Here is a tabular form of the billings solely made by

defendant Agro Food and it will be noted here that the changes on

the rates and percentage of offsetting against the deposit were

reflected in the billings starting from June 1, 1996 and then from

August 3-9, 1996, viz:

BILLING DESCRIPTION DRESSING OFFSETTING EXH. NO. PAGE NO.


PERIOD OF PRODUCT FEE RATE IN THE
WRITTEN by
BILLED BY RECORDS
AGRO
AGRO

1. January 6- Gallantina P5.50 /kg. “F-1” 467-537 (10)


12, 1996 Fresh Chilled 7.50/kg. “F-2”
15% “F-5”

2. January 13- Gallantina P5.50 /kg. “G-1” 467-537(14)


19, 1996 Fresh Chilled 7.50/kg. “G-2”
15% “G-5”

3. January 20- Gallantina P5.50 /kg. “H-1” 467-537(18)


26, 1996 Fresh Chilled 7.50/kg. “H-2”
15% “H-5”

4. Jan. 27-Feb. Gallantina P5.50 /kg. “I-1” 467-537(22)


2, 1996 Fresh Chilled 7.50/kg. “I-2”
15% “I-5”

5. February 3- Gallantina P5.50 /kg. “J-1” 467-537(26)


9, 1996 Fresh Chilled 7.50/kg. “J-2”
15% “J-5”

6. February 10- Gallantina P5.50 /kg. “K-1” 467-537(30)


16, 1996 Fresh Chilled 7.50/kg. “K-2”

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15% “K-5”

7. February 17- Gallantina P5.50 /kg. “L-1” 467-537(34)


23, 1996 Fresh Chilled 7.50/kg. “L-2”

8. Feb. 24- Gallantina P5.50 /kg. “M-1” 467-537(37)


March 1, Fresh Chilled 7.50/kg. “M-2”
1996 15% “M-5”

9. March 2 – 8, Gallantina P5.50 /kg. “N-1” 467-537(41)


1996 Fresh Chilled 7.50/kg. “N-2”
15% “N-5”

10. March 9-15, Gallantina P5.50 /kg. “O-1” 467-537(45)


1996 Fresh Chilled 7.50/kg. “O-2”
15% “O-5”

11. March 16- Gallantina P5.50 /kg. “P-1” 467-537(49)


22, 1996 Fresh Chilled 7.50/kg. “P-2”
15% “P-5”

12. March 23- Gallantina P5.50 /kg. “Q-1” 467-537(53)


29, 1996 Fresh Chilled 7.50/kg. “Q-2”
15% “Q-5”

13. May 11-17, Gallantina P5.50 /kg. “R-1” 467-537(57)


1996 Fresh Chilled 7.50/kg. “R-2”
15% “R-5”

14. March 30- Gallantina P5.50 /kg. “S-1” 467-537(61)


April 5, Fresh Chilled 7.50/kg. “S-2”
1996 15% “S-5”

15. April 6-12, Gallantina P5.50 /kg. “T-1” 467-537(65)


1996 Fresh Chilled 7.50/kg. “T-2”
15% “T-5”

16. April 13-19, Gallantina P5.50 /kg. “U-1” 467-537(69)


1996 Fresh Chilled 7.50/kg. “U-2”
15% “U-5”

17. April 20-26, Gallantina P5.50 /kg. “V-1” 467-537(74)


1996 Fresh Chilled 7.50/kg. “V-2”
15% “V-5”

18. April 27- Gallantina P5.50 /kg. “W-1” 467-537(78)


May 3, 1996 Fresh Chilled 7.50/kg. “W-2”
15% “W-5”

19. May 4-10, Gallantina P5.50 /kg. “X-1” 467-537(82)


1996 Fresh Chilled 7.50/kg. “X-2”
15% “X-5”

20. May 18-24, Gallantina P5.50 /kg. “Y-1” 467-537(86)


1996 Fresh Chilled 7.50/kg. “Y-2”
15% “Y-5”

20
21. May 25-31, Gallantina P5.50 /kg. “Z-1” 467-537(90)
1996 Fresh Chilled 7.50/kg. “Z-2”
15% “Z-5”

1. June 1-7, Gallantina P4.95 /kg. “AA-1” 467-537(94)


1996 Fresh Chilled 6.75/kg. “AA-2”
10% “AA-5”

2. June 8-14, Gallantina P4.95 /kg. “BB-1” 467-537(98)


1996 Fresh Chilled 6.75/kg. “BB-2”
10% “BB-5”

3. June 15-21, Gallantina P4.95 /kg.


1996 Fresh Chilled 6.75/kg. “CC-1” 467-537(102)
“CC-2”
“CC-5”
10%

4. June 22-28, Gallantina P4.95 /kg. “DD-1” 467-537(106)


1996 Fresh Chilled 6.75/kg. “DD-2”
10% “DD-5”

5. June 29- Gallantina P4.95 /kg. “EE-1” 467-537(110)


July 5, Fresh Chilled 6.75/kg. “EE-2”
1996 10% “EE-5”

6. July 6-12, Gallantina P4.95 /kg. “FF-1” 467-537(114)


1996 Fresh Chilled 6.75/kg. “FF-2”
10% “FF-5”

7. July 13-19, Gallantina P4.95 /kg. “GG-1” 467-537(118)


1996 Fresh Chilled 6.75/kg. “GG-2”
10% GG-5

8. July 20-26, Gallantina P4.95 /kg. “HH-1” 467-537(122)


1996 Fresh Chilled 6.75/kg. “HH-2”
10% “HH-5”

9. July 27- Gallantina P4.95 /kg. “II-1” 467-537(126)


August 2, Fresh Chilled 6.75/kg. “II-2”
1996 10% “II-5”

1 August 3- Gallantina P4.55 /kg. “JJ-1” 467-537(130)


9, 1996 Fresh 6.05/kg. 7.5% “JJ-2”
Chilled “JJ-5”

2 August Gallantina P4.55 /kg. “KK-1” 467-537(134)


17-23, Fresh 6.05/kg. “KK-2”
1996 Chilled 7.5% “KK-5”

3. August Gallantina P4.55 /kg. “LL-1” 467-537(138)


24-30, Fresh 6.05/kg. “LL-2”
1996 Chilled 7.5% “LL-5”

4. Aug.31- Gallantina P4.55 /kg. “MM-1” 467-537(142)


Sept. 6, Fresh 6.05/kg. “MM-2”
1996 Chilled “MM-5”

21
7.5%

5. Sept. 7- Gallantina P4.55 /kg. “NN-1” 467-537(146)


13, 1996 Fresh 6.05/kg. “NN-2”
Chilled 7.5% “NN-5”

6. Sept. 14- Gallantina P4.55 /kg. “OO-1” 467-537(150)


20, 1996 Fresh 6.05/kg. “OO-2”
Chilled 7.5% “OO-5”

7. Sept. 21- Gallantina P4.55 /kg. “PP-1” 467-537(154)


27, 1996 Fresh 6.05/kg. “PP-2”
Chilled 7.5% “PP-5”

8. Oct. 5-11, Gallantina P4.55 /kg. “QQ-1” 467-537(158)


1996 Fresh 6.05/kg. “QQ-2”
Chilled 7.5% “QQ-5”

9. Oct. 12- Gallantina P4.55 /kg. “RR-1” 467-537(162)


18, 1996 Fresh 6.05/kg. “RR-2”
Chilled “RR-5”
7.5%

10 Oct. 19- Gallantina P4.55 /kg. “SS-1” 467-537(166)


25, 1996 Fresh 6.05/kg. “SS-2”
Chilled 7.5% “SS-5”

11 Oct. 26- Gallantina P4.55 /kg. “TT-1” 467-537(170)


. 31, 1996 Fresh 6.05/kg. “TT-2”
Chilled 7.5% “TT-5”

12 Nov. 2-8, Gallantina P4.55 /kg. “UU-1” 467-537(174)


. 1996 Fresh 6.05/kg. “UU-2”
Chilled 7.5% “UU-5”

13 Nov. 16- Gallantina P4.55 /kg. “VV-1” 467-537(178)


. 22, 1996 Fresh 6.05/kg. “VV-2”
Chilled 7.5% “VV-5”

14 Dec. 14- Gallantina P4.55 /kg. “WW-1” 467-537(182)


. 20, 1996 Fresh 6.05/kg. “WW-2”
Chilled 7.5% “WW-5”

15 Jan. 11- Gallantina P4.55 /kg. “XX-1” 467-537(186)


. 17, 1997 Fresh 6.05/kg. “XX-2”
Chilled 7.5% “XX-5”

16 Jan. 18- Gallantina P4.55 /kg. “YY-1” 467-537(190)


. 24, 1997 Fresh 6.05/kg. “YY-2”
Chilled

17 Jan. 25-31, Gallantina P4.55 /kg. “ZZ-1” 467-537(192)


1997 Fresh Chilled 6.05/kg. “ZZ-2”
.
7.5% “ZZ-5”

18 Feb. 1-7, Gallantina P4.55 /kg. “AAA-1” 467-537(196)


. 1997 Fresh 6.05/kg. “AAA-2”
Chilled 7.5% “AAA-5”

22
19 Feb. 8-14, Gallantina P4.55 /kg. “BBB-1” 467-537(200)
. 1997 Fresh 6.05/kg. “BBB-2”
Chilled 7.5% “BBB-5”

20 Feb. 15- Gallantina P4.55 /kg. “CCC-1” 467-537(204)


. 21, 1997 Fresh 6.05/kg. “CCC-2”
Chilled 7.5% “CCC-4”

21 Feb. 22- Gallantina P4.55 /kg. “DDD-1” 467-537(207)


. 28, 1997 Fresh 6.05/kg. “DDD-2”
Chilled 7.5% “DDD-4”

22 March 1- Gallantina P4.55 /kg. “EEE-1” 467-537(210)


. 7, 1997 Fresh 6.05/kg. “EEE-2”
Chilled 7.5% “EEE-4”

23 March 8- Gallantina P4.55 /kg. “FFF-1” 467-537(213)


. 14, 1997 Fresh 6.05/kg. “FFF-2”
Chilled 7.5% “FFF-4”

24 March 15- Gallantina P4.55 /kg. “GGG-1” 467-537(216)


. 21, 1997 Fresh 6.05/kg. “GGG-2”
Chilled 7.5% “GGG-4”

25 March 29- Gallantina P4.55 /kg. “HHH-1” 467-537(219)


. Apr. 4, Fresh 6.05/kg. “HHH-2”
1997 Chilled 7.5% “HHH-4”

26 Apr. 5-11, Gallantina P4.55 /kg. “III-1” 467-537(222)


. 1997 Fresh 6.05/kg. “III-2”
Chilled 7.5% “III-4”

27 Apr. 12- Gallantina P4.55 /kg. “JJJ-1” 467-537(225)


. 18, 1997 Fresh 6.05/kg. “JJJ-2”
Chilled 7.5% “JJJ-4”

28 Apr. 19 - Gallantina P4.55 /kg. “KKK-1” 467-537(228)


. 25, 1997 Fresh 6.05/kg. “KKK-2”
Chilled 7.5% “KKK-4”

29 Apr. 26- Gallantina P4.55 /kg. “LLL-1” 467-537(231)


. May 2, Fresh 6.05/kg. “LLL-2”
1997 Chilled

30 May 3-9, Gallantina P4.55 /kg. “MMM-1” 467-537(233)


. 1997 Fresh 6.05/kg. “MMM-2”
Chilled 7.5% “MMM-4”

31 May 10- Gallantina P4.55 /kg. “NNN-“1” 467-537(236)


. 16, 1997 Fresh 6.05/kg. 7.5% “NNN-“2”
Chilled

23
32 May 17- Gallantina P4.55 /kg. “OOO-1” 467-537(241)
. 23, 1997 Fresh 6.05/kg. “OOO-2”
Chilled 7.5% “OOO-4”

33 May 24- Gallantina P4.55 /kg. “PPP-1” 467-537(244)


. 30, 1997 Fresh 6.05/kg. “PPP-2”
Chilled 7.5% “PPP-4”

34 May 31- Gallantina P4.55 /kg. “QQQ-1” 467-537(247)


. June 6, Fresh 6.05/kg. “QQQ-2”
1997 Chilled 7.5% “QQQ-4”

35 June 7-13, Gallantina P4.55 /kg. “RRR-1” 467-537(250)


. 1997 Fresh 6.05/kg. “RRR-2”
Chilled 7.5% “RRR-4”

36 June 14- Gallantina P4.55 /kg. “SSS-1” 467-537(253)


. 20, 1997 Fresh 6.05/kg. “SSS-2”
Chilled 7.5% “SSS-4”

37 June 21- Gallantina P4.55 /kg. “TTT-1” 467-537(256)


. 27, 1997 Fresh 6.05/kg. “TTT-2”
Chilled 7.5% “TTT-4”

38 June 28- Gallantina P4.55 /kg. “UUU-1” 467-537(259)


. July 4, Fresh 6.05/kg. “UUU-2”
1997 Chilled 7.5% “UUU-4”

39 July 12- Gallantina P4.55 /kg. “VVV-1” 467-537(262)


. 18, 1997 Fresh 6.05/kg. “VVV-2”
Chilled 7.5% “VVV-4”

40 July 19- Gallantina P4.55 /kg. “WWW-1” 467-537(267)


. 25, 1997 Fresh 6.05/kg. “WWW-2”
Chilled “WWW-4”
7.5%

41 July 26- Gallantina P4.55 /kg. “XXX-1” 467-537(270)


. Aug. 1, Fresh 6.05/kg. “XXX-2”
1997 Chilled 7.5% “XXX-4”

1 Aug. 2-8, Gallantina P5.75 /kg. “YYY-1” 467-537(273)


1997 Fresh Chilled 5.75/kg. “YYY-2”
7.5% “YYY-4”

2. Aug. 9-15, Gallantina P5.75 /kg. “ZZZ-1” 467-537(277)


1997 Fresh Chilled 5.75/kg. “ZZZ-2”
7.5% “ZZZ-4”

3. Aug. 16-22, Gallantina P5.75 /kg. “AAAA-1” 467-537(281)


1997 Fresh Chilled 5.75/kg. “AAAA-2”
7.5% “AAAA-4”

24
Aug. 23-29,
4. 1997 Gallantina P5.75 /kg. “BBBB-1” 467-537(285)
Fresh Chilled 5.75/kg. “BBBB-2”
“BBBB-4”
7.5%

5 Sept. 6-12, Gallantina P5.75 /kg. “CCCC-1” 467-537(289)


1997 Fresh Chilled 5.75/kg. “CCCC-2”
7.5% “CCCC-4”

6. Sept. 13-19, Gallantina P5.75 /kg. “DDDD-1” 467-537(293)


1997 Fresh Chilled 5.75/kg. “DDDD-2”
7.5% “DDDD-4”

7. Sept. 20-27, Gallantina P5.75 /kg. “EEEE-1” 467-537(297)


1997 Fresh Chilled 5.75/kg. “EEEE-2”
7.5% “EEEE-4”

8. Sept. 27- Gallantina P5.75 /kg. “FFFF-1” 467-537(301)


Oct. 3, Fresh Chilled 5.75/kg. “FFFF-2”
1997 7.5% “FFFF-4”

9. Oct. 4-10, Gallantina P5.75 /kg. “GGGG-1” 467-537(305)


1997 Fresh Chilled 5.75/kg. “GGGG-2”
7.5% “GGGG-4”

10. Oct. 11-17, Gallantina P5.75 /kg. “HHHH-1” 467-537(309)


1997 Fresh Chilled 5.75/kg. “HHHH-2”
7.5% “HHHH-4”

11. Oct. 18-24, Gallantina P5.75 /kg. “IIII-1” 467-537(314)


1997 Fresh Chilled 5.75/kg. “IIII-2”
7.5% “IIII-4”

12. Oct. 25-31, Gallantina P5.75 /kg. “JJJJ-1” 467-537(318)


1997 Fresh Chilled 5.75/kg. “JJJJ-2”
7,5% “JJJJ-4”

13. Nov. 1-7, Gallantina P5.75 /kg. “KKKK-1” 467-537(322)


1997 Fresh Chilled 5.75/kg. “KKKK-2”
7.5% “KKKK-4”

14. Nov. 8-14, Gallantina P5.75 /kg. “LLLL-1” 467-537(327)


1997 Fresh Chilled 5.75/kg. “LLLL-2”
7.5% “LLLL-4”

15. Nov. 15-21, Gallantina P5.75 /kg. “MMMM-1” 467-537(329)


“MMMM-2”
1997 Fresh Chilled 5.75/kg. “MMMM-4”
7.5%

16. Nov. 22-28, Gallantina P5.75 /kg. “NNNN-1” 467-537(332)


1997 Fresh Chilled 5.75/kg. “NNNN-2”
7.5% “NNNN-4”

25
17. Nov.29- Gallantina P5.75 /kg. “OOOO-1” 467-537(335)
Dec. 5, Fresh Chilled 5.75/kg. 7.5% “OOOO-2”
1997 “OOOO-4”

18. Dec. 6-7, Gallantina P5.75 /kg. “PPPP-1” 467-537(338)


1997 Fresh Chilled 5.75/kg. “PPPP-2”
7.5% “PPPP-4”

Fourth, the rule presumes regularity in the preparation and

submission of these billings (Rule 131, Section 3 (p)

Fifth, since there is a presumption of regularity, then the

burden to prove irregularity lies upon the defendant. Defendant

failed to discharge this burden.

What the defendant-appellee was able to produce is the

naked assertion of its General Manager at that time, Jose Michael B.

Gonzales. Per his own admission, he was then a General Manager

and he became only the President of defendant Agro Food in 2003.

Thus, he testified:

ON CROSS-EXAMINATION:

ATTY. FALLER:

Q. Mr. Gonzales, you said that you are the General Manager
of the defendant, am I correct?
A. Yes, sir.

Q. And that you became the President in 1996?


A. No sir I become the President only last year

Q. And prior of becoming a President, you were a General


Manager?
A. Yes, sir.

Q. And you were the General Manager since 1995 in your


corporation?
A. Yes, sir.
26
(Please refer to T.S.N. April 27, 2004, pages 34 and 35)

The excuse offered by Mr. Gonzales was that its accounting

people committed a mistake. (T.S.N. April 27, 2004, page 27). But

the evidence points otherwise.

Firstly, the billing statements containing the changes in the

rates occurred three times in a span of 89 weeks since the start of

the dressing contract. As stated earlier, changes in the rates

occurred starting June 1, 1996 or starting on the 22nd week of the

transactions. The following graphical illustration will help us

understand that the changes were the result of the agreement of

the parties and not a mistake of the accounting people of Agro Food

as it wants to impress upon the Honorable Court, viz;

Item Original 1st Amended 2nd Amended 3rd Amended


Rate Rate Rate effective Rate effective
effective effective June Aug. 3, 1996 Aug. 2, 1997
Jan. 6 to 1 to Aug. 2, to Aug. 8, to Dec. 7,
May 31, 1996 1997 1997
1996
Fresh Chilled P7.50/kilo P6.75/kilo P6.05/kilo P5.75

Neckless P7.50/kilo P6.75/kilo P6.05/kilo


Gallantina P5.50/kilo P4.95/kilo P4.55/kilo P5.75

EXHIBIT Nos “F” to “Z” “AA” to “II” “JJ” to “XXX” “YYY” to


“PPPP”

The billings for the original rates were weekly done from

January 6-12, 1996 to May 25-31, 1996 for twenty one (21) weeks.

After being used to doing these billings which were programmed,

then on the 22nd week, or beginning June 1-7, 1996 (Exhibit AA) to

July 27-August 2, 1996 (Exhitibt II), the billing statements reflected

a new rate of P6.75/kilo for fresh chilled and P4.95/kilo for

27
gallantina). Defendant did these billings (on the first changes) on a

weekly basis for nine (9) weeks. As may be noted, the billings were

computerized and programmed.

After doing these billings for nine (9) separate weeks,

defendant reflected again a new rate of dressing fees for fresh and

gallantina starting on the 31st week. Thus, from August 3-9, 1996

(Exhibit JJ) to July 26-August 1, 1997 (Exhibit XXX), the billings

show a rate of P6.05 for fresh chilled and P4.55 for gallantina.

Defendant prepared these forty one (41) billings (on the second

changes) in forty one (41) separate weeks.

After being used to prepare the billings for forty one (41)

weeks, then came the last batch of billings starting on August 2-8-,

1997 (Exhibit YYY) to December 6-7, 1997 (Exhibit PPPP) when the

transaction was terminated.

It is simply incredulous to say that the accounting people of

Agro Food committed the same mistakes thrice on the very same

transaction.

As held by the Supreme Court in one case, “the alleged error

may be given credence if committed only once” ( Valenzuela vs.

Court of Appeals, G.R. No. 83122, Oct. 19, 1990) but not when

made several times.

28
Secondly, in the last changes, the rate for gallantina was

even increased from P4.55 to P5.75 (Please compare Exhibit XXX

(and prior) with Exhibit YYY) .

Thirdly, not only the rates on the dressing fees were

changed, the billings also show that in those times that changes in

the rates happened, the percentage rate of the deduction of

amounts to be paid to plaintiff-appellant was also correspondingly

reduced. Defendant-appellee Agro Food deducted from its own

billings an amount equivalent to 10% (not 15% as written in

Exhibit A) starting June 1-7, 1996 (Exhibits AA-5 to II-5) then

7.5% of the amount of billing for the first 240,000 heads of

chickens dressed, and another 20% of the amount of billing for the

volume of chicken exceeding 240,000 heads starting on August 3-9,

1996 to December 6-7, 1997( Exhibits “JJ-5” to “XXX-5”, and

“Exhibits YYY-4 to PPPP-4). Had Agro Food did not agree on

the reduction of fees, why it did then change downward the rate of

offsetting as payment of the deposit from 15% to 10% then to

7.5%? Very clearly, the reduction in the rate of offsetting is the

concession given by plaintiff in exchanged for the reduction of the

dressing fees.

Fourthly, when Agro Food received the four (4) separate

demand letters of Vitarich (Exhibits TTTT, UUUU,WWWW and XXXX)

demanding the payment of the amounts subject matter of this case,

neither Agro Food nor Mr. Chito del Castillo protested. Neither of

them disclaimed the authority of Mr. Castillo to reduce/increase the

29
dressing fees. Neither of them said at the first instance that Vitarich

paid a much lower fees. Nothing of this was heard from defendant-

appellee until plaintiff filed its complaint.

This alleged underpayment appeared for the first time only in

the amended Answer of the defendant dated March 1, 2000. (Please

refer to the redirect examination of Mr. Chito del Castillo, defendant’s Finance

Manager on pages 43-44 of T.S.N. dated October 26, 2004).

If there was really an underpayment, defendant should have

protested right after they have received the demand letters. This

vital information could not have escaped defendant’s mind. But

because, there was not really an underpayment, it did not react

when it received the four demand letters.

And so, the belated reaction of the defendant-appellee is

unbelievable. As the Supreme Court said:

“ We are thus inclined to believe that the alleged


actuations of Contreras, which could have justified
petitioner’s shooting him, was nothing but a concocted
story to evade criminal liability. (Mamangun vs.
People, 514 SCRA 44, February 2, 2007)

Fifthly, and this is the most important one, Mr. Chito

del Castillo, defendant’s witness and Finance Manager was

fully aware of the changes and conciously reflected the

reduced dressing fees in the billing statements.

30
Thus, Mr. Chito del Castillo, Agro Food’s Finance Manager,

testified as follows:

On cross examination:

“Atty. Faller:

Q. Thus billing statement Exh. AA was signed by a


certain Mr. Chito del Castillo, are you the same Chito
del Castillo who signed this?

A Yes, sir.

Q And before you prepared or signed this billing


statement you checked the veracity of the contents of
the billing statement?

A Yes, sir.

Q And you signed this?

A Yes, sir.

(page 26, TSN, October 26, 2004)

xxx xxx xxx

“Atty. Faller:

Q. You said a while ago that the billing of gallantina


and fresh chilled chicken in the amount of P4.95 and
P6.75 respectively continued to be billed by Agro Food
to Vitarich Corporation from June 1, 1996 to July 1996
as shown in Exh. AA to Exh. JJ?

A Yes, sir.

Q And that is the dressing period August 3, 1996


you charged Vitarich Corporation in the amount of
P4.95 for gallantina and P6.75 for fresh chilled chicken
but you charged Vitarich Corporation P4.55 for
gallantina and P6.05 for fresh chilled chicken, am I
correct?

A Yes, sir.

Q. And this Exh. JJ was prepared by you?

A. Yes, sir.

Q. And it was signed by you?

31
A Yes, sir.

Q And before signing the(se) exhibits, billing


statement, you examined and verified the correctness
of these billings?

A. Yes, sir.

(pages 28-30, TSN, October 26, 2004)

Q. And in fact, the amount of P4.55 and P6.05 that you


billed to Vitarich Corporation for gallantina and fresh
chilled chicken continued from August 3, 1996 up to
August 1, 1997 as shown in Exhibit JJ to Exhibit XXX?

A. Yes, sir.

Q. Now, for the dressing period August 2, 1997 up to


December 7, 1997 as shown in Exhibit YYY to PPPP, the
amount that you charged to Vitarich Corporation for
that dressing period is P5.75 for galantina and for fresh
chilled chicken it is P5.75, am I correct?

A. Yes, sir.

Q. And these billing statement(s) from Exhibit YYY to


Exhibit PPPP was (sic) prepared and approved by you?

A. Yes, sir.

Q. Before signing or approving this billing statement,


you examined the correctness of the contents of this
billing statement(s)?

A. Yes, sir.

(T.S.N. i.d. pages 31 and 32)

xxx xxx xxx

Q. So, in short, Mr. Castillo, from the original price or


fees of P5.50 for galantina and P7.50 for fresh chilled
chicken, the amount of toll fee that Vitarich paid to you
were reduced thrice?

A. Yes, sir.

Q. And that reduced amount was the basis in the


offsetting arrangement?
A. Yes, sir.

(T.S.N. i.d. page 33)

32
These billing statements were solely made by defendant-

appelee Agro Food. Plaintiff-appellant Vitarich did not participate in

the preparation of these statements. This is a fact admitted by the

witnesses of Agro Food and that they certified to the correctness of

the entries made therein. Let us read the testimony of Mr. Jose

Michael Gonzales, President of Agro Food on April 27, 2004. Thus,

Mr. Gonzales testified:

On cross-examination:

“ATTY. FALLER:

Q So Mr.Gonzales Exhibit AA and Exhibit JJ were the


billing statement(s) prepared solely by your finance
people, am I correct?

A Yes, sir.

Q. And these were signed by (the finance to) your


Finance Manager, am I correct?

A: Yes, sir.

Q: Did any of the Vitarich employees participate in


the preparation of this billing statement (sic)?

A: None sir.

(pages 58-59, TSN, April 27, 2004)

Mr. Chito del Castillo,


the Finance Manager of
defendant-appellee Agro Food,
was authorized to reduce the dressing fees

Having been confronted with the various billing statements

signed by its Finance Manager, defendant appellee’s General

Manager (President since 2003 only) next said that its Finance

Manager was not authorized to reduce the dressing fees, but he did

33
not say why the rate of offsetting for payment on the deposit was

also reduced from 15% to 10% then to 7.5%.

Again, the evidence extant on record abundantly and

positively show that Mr. Chito del Castillo, Agro Food’s Finance

Manager, was authorized to reflect the agreement on the reduced

fees. From his own mouth, Mr. Chito del Castillo categorically

stated upon direct examination that he was authorized to make the

adjustments in the dressing fees. Thus, he testified as follows:

ON DIRECT EXAMINATION

COURT:

Q. When you implemented the reduction, did you seek


or did you try to seek an advice from your higher up or
the President of Agro Food?

A. Yes, sir.

(T.S.N., October 26, 2004, page 14)

Atty. Macapagal (defendant Agro Food counsel)

Q. Before you sent?

A. Yes, Sir.

(T.S.N, i.d. page 14)

Xxx xxx xxx

Court:

Q. But before you tried to reduce the billings you


sought the advice of your higher up, meaning the
President?

A. Yes, your Honor

34
Q. When you sought the advice of the assistance of the
President, could you more or less tell us what was the
tenor of the assistance you sought with the President?

A. I was told that there was a negotiation but it is


discretionary on my part to decide so that I can
make the adjustment x x x

(T.S.N. i.d. pages 14-15)

On cross examination, Mr. del Castillo affirmed his authority

when he answered the question of Atty. Faller, in this way:

Q. Now did you personallty approve the


reduction?

A. Yes, sir.

Q. You did not consult or sought (sic) clearance


from the general manager or the President?

A. I mentioned that to you, your Honor, there


was a meeting between the President and me and he
told me that it is discretionary on my part if the
reduction of the rates will be approved.

(T.S.N. i.d. page 37)

According to Mr. Gonzales, the General Manager of Agro

Food, the authority to make changes is vested on the President of

the Company. Thus, he testified on direct examination as follows:

ATTY. MACAPAGAL

Q. And whom do you consider has the authority to


cause the amendment of the toll fees as contained in
that tolling agreement dated October 4, 1995?

A. As can be gleaned from the Tolling Agreement is no


less than the President who is empowered to make such
change or amendment in the contract…”

35
(T.S.N. April 27, 2004, pages 28 and 29)

Since Mr. Castillo got the authority from the President to

make the changes, then the defense of lack of authority is totally

baseless.

Actually, Mr. Gonzales is incompetent to testify on the actions

of the Board of Directors. He was not a member of the Board for he

was not the President, but merely the General Manager, at the time

the changes were agreed upon. The Corporate Secretary who could

authoritatively testify on the actions of the Board was not presented

by the defendant-appellee.

Doctrine of apparent authority

It is very convenient for defendant Agro Food to deny the

authority of Mr. Castillo to reduce/increase the dressing fees. Agro

Food is a close family corporation. The meetings of the board, if

there were any, were held without outside persons in attendance.

As the Supreme Court pointed out in Ramirez vs. Orientalist Co.,

38 Phil. 634, that proof that a corporate officer was given

authority by the board is usually not accessible to stranger who

deals with the corporation.

Fortunately, Mr. Castillo was caught by his mouth when he

said that he had authority to make the adjustments as narrated

above.

36
But even without his admission, Agro Food cannot deny,

under the “doctrine of apparent authority” the authority of Mr.

Castillo to make the adjustments and reflect in the billing

statements the rates agreed upon by the parties. In the case of

Inter-Asia Investments Industries, Inc. vs. Court of Appeals,

403 SCRA 452, 457 (June 10, 2003), the Supreme Court citing

People’s Aircargo and Warehousing Co., Inc vs. Court of Appeals

(297 SCRA 170), held, that:

“…The authority of such individuals to bind the


corporation is generally derived x x x authorization from the
board, either expressly or impliedly by habit, custom or
acquiescence in the general course of business,

The authorization of an officer of a corporation need

not always be expressed. It may be implied like

acquiescence on the part of the Board.

Mr. Castillo, the Finance Manager, sent 89 weekly billing

statements to plaintiff. This is a two year transactions.

Surely, defendant-appellee’s President or Board knew the

transactions with plaintiff. Surely, the President or the

Board knew or should have known the billing statements.

After all, the amounts involved over a hundred million of

pesos. Yet, defendant-appellee kept silent.

In First Philippine International Bank vs. Court of

Appeals, G.R. No. 115849, January 24, 1996, the Manager of

the Property Management Department of the Bank who dealt with

37
buyers of the acquired assets of the corporation was held to have

implied or apparent authority to bind his principal, the corporation.

Thus:

“The authority of a corporate officer in dealing with


third persons may be actual or apparent. The doctrine
of "apparent authority", with special reference to banks,
was laid out in Prudential Bank vs. Court of Appeals31,
where it was held that:

Conformably, we have declared in countless


decisions that the principal is liable for obligations
contracted by the agent. The agent's apparent
representation yields to the principal's true
representation and the contract is considered as
entered into between the principal and the third person
(citing National Food Authority vs. Intermediate
Appellate Court, 184 SCRA 166).

In the present case, it was defendant Finance Manager who

signed the various billing statements. As a Finance Manager, Mr.

Chito del Castillo was in charge with the management of money and

credit of the defendant. Black’s Law Dictionary defines Finance as

the system in business concerned with the management of money,

credit, banking and investment. (1999 Edition page 644)

The General Manager of the defendant who became President

thereof in 2003 tried to repudiate del Castillo’s authority. But as

held by the Supreme Court in the same case of First Philippine

International Bank, his testimony is self-serving and baseless.

Thus, the Supreme Court, said:

“To be sure, petitioners attempted to repudiate Rivera's


apparent authority through documents and testimony
which seek to establish Rivera's actual authority. These
pieces of evidence, however, are inherently weak as

38
they consist of Rivera's self-serving testimony and
various inter-office memoranda that purport to show his
limited actual authority, of which private respondent
cannot be charged with knowledge.”

In the earlier case of Philippine National Bank vs. Court

of Appeals, 94 SCRA 357, November 21, 1979, it was declared

therein that a bank is bound by the acts of its branch manager

because “if a private corporation intentionally or negligently clothes

its officers or agents with apparent power to perform acts for it, the

corporation will be estopped to deny that such apparent authority is

real with respect to innocent third parties dealing in good faith with

such officers or agents.” Furthermore, the Supreme Court, in the

said case held:

“On equitable principles, particularly on the


ground of estoppel, we must rule against petitioner
Bank. "The doctrine of estoppel is based upon the
grounds of public policy, fair dealing, good faith and
justice, and its purpose is to forbid one to speak against
his own act, representations, or commitments to the
injury of one to whom they were directed and who
reasonably relied thereon. The doctrine of estoppel
springs from equitable principles and the equities in the
case. It is designed to aid the law in the administration
of justice where, without its aid injustice might result'.
It has been applied by this Court wherever and
whenever special circumstances of a case so demand.”

ONE WHO ACCEPTED THE


BENEFITS IS BOUND THEREBY

Lastly, defendant-appellee benefited also from the oral

amendments. In the original agreement, defendant was obliged to

apply fifteen (15%) of the gross receipts (on dressing fees) as its

partial payment for the deposit of P20M delivered to it by the

39
plaintiff until the deposit is fully paid. (please refer to No. 2, Period of

Acceptance or Denial of the Offer to Purchase of the MOA, Exhibit A which is also

Exhibit 1 for the defendant.)

But because of the verbal agreements, defendant-appellee

deducted from the gross receipts, a lower percentage. From June

1-7, 1996 billing (Exh. AA-5) up to August 3-9, 1996 billing (Exh.

II-5), Agro Food deducted only 10% of the gross receipts of the

dressing fees (instead of 15% as written in the MOA) as its

payment to Vitarich’s deposit of P20M. From August 3-9, 1996

billing (Exh. JJ-5) up to July 26-August 1, 1997 billing (Exhibit XXX-

5), defendant-appellee deducted only 7.5% of the gross receipts

on the dressing fees as its payment to Vitarich’s deposit of P20M

(instead of 15% as written in the MOA). The same rate of 7.5%

continued up to the last billing of defendant-appellee on December

6-7, 1997.( Exhibits YYY-4 to PPPP-4)

Clearly, defendant-appellee had implemented the agreed

lower percentage of deduction from the dressing fees in partial

payment to the deposit of P20M of Vitarich. Accordingly, it is not

fair for the defendant to deny the agreement on the reduction of

dressing fees but on the same breadth accepted the benefit of a

lower repayment scheme.

In Pan Pacific Company (Philippines) vs. Philippine

Advertising Corporation, et al, G.R. No. L-22050 June 13, 1968,

the Supreme Court ruled that:

40
"His acceptance of the equipment and supplies and
accessories, and the use he made of them is an implied
conformity to the terms of the invoices and he is bound
thereby."

Statute of Frauds does not apply

The fact that the verbal amendments on the Memorandum of

Agreement were not reduced into writing is of no moment. The

Statute of Frauds does not apply to contracts executed fully or

partially. The parol evidence rule does not apply also to executed

contract especially so if the oral agreements are put in issue. This

is exactly what happened in this case as narrated above. In Sps.

Alfredo et al vs. Sps. Borras, 404 SCRA 145, 158, June 17,

2003, the Supreme Court ruled that:

“The Statute of Frauds applies only to executory


contracts and not to contracts either partially or totally
performed. Thus, where one party has performed one’s
obligation, oral evidence will be admitted to prove the
agreement. In the instant case, the parties have
consummated the sale of the Subject Land, with both
sellers and buyers performing their respective
obligations under the contract of sale. In addition, a
contract that violates the Statute of Frauds is ratified by
the acceptance of benefits under the contract.
Godofredo and Carmen benefited from the contract
because they paid their DBP loan and secured the
cancellation of their mortgage using the money given
by Armando and Adelia. Godofredo and Carmen also
accepted payment of the balance of the purchase price.
Godofredo and Carmen cannot invoke the Statute of
Frauds to deny the existence of the verbal contract of
sale because they have performed their obligations, and
have accepted benefits, under the verbal contract.
Armando and Adelia have also performed their
obligations under the verbal contract. Clearly, both the
sellers and the buyers have consummated the verbal
contract of sale of the Subject Land. The Statute of
Frauds was enacted to prevent fraud. This law cannot

41
be used to advance the very evil the law seeks to
prevent.”

II

ON THE SECOND ASSIGNED ERROR/ SECOND ISSUE

On the counterclaim, it is defendant-appellee which has the

burden to prove it. It is an elementary rule of law that he who

alleges must prove his allegations.

“…it must be emphasized that the party which


alleges a fact as a matter of defense has the burden of
proving it.” (Prudential Guarantee and Assurance, Inc.
vs. Trans-Asia Shipping Lines, Inc. 491 SCRA 411, 433)

Here, according to the decision in question, defendant-

appellee merely presented a statement of account of the alleged

obligation of the plaintiff. This statement of account was prepared

after the complaint was filed in court. Defendant did not even

inform plaintiff about this precisely because it was made after the

complaint was filed. As stated earlier, the alleged underpayment is

merely a concocted story.

Concocted, the alleged underpayment was not brought by the

defendant-appellee despite of its receipt of the four (4) demand

letters (Exhibits TTTT, UUUU,WWWW and XXXX) of plaintiff upon it.

As we said earlier this belated issue of underpayment of

dressing fees is unbelievable. As the Supreme Court said:

42
“ We are thus inclined to believe that the alleged
actuations of Contreras, which could have justified
petitioner’s shooting him, was nothing but a concocted
story to evade criminal liability. (Mamangun vs.
People, 514 SCRA 44, February 2, 2007)

Additionally, Mr. Castillo did not even explain how it arrive at

the amount. He merely identified the statement of account when he

testified. Plaintiff-appellant cannot even locate the said statement

of account (alleged Exhibit 3) in the records. Very clearly, the

statement of account is a self serving evidence. It was made to

suit the needs of defendant. In MCC Industrial Sales

Corporation v. Ssangyong Corporation 536, SCRA 408, October

17, 2007, the Supreme Court held:

“The statement of account and the details of the


losses sustained by respondent due to the said breach
are, at best, self-serving. It was respondent
Ssangyong itself which prepared the said documents.
The items therein are not even substantiated by official
receipts. In the absence of corroborative evidence, the
said statement of account is not sufficient basis to
award actual damages.”

III

ON THE THIRD ASSIGNED ERROR/THIRD ISSUE

On its first cause of action, Vitarich


entitled to a legal interest at the rate
of 12% consistent with Eastern
Shipping doctrine.

On its second cause of action, Agro


Food is liable to pay interests on the

43
unpaid purchases of live broilers at
the rate of 24%.

The amount of P4,734,906.57 due to Vitarich under its first

cause of action is not disputed. In fact, during the pre-trial

conference, defendant-appellee admitted that it was able to pay

only the sum of P15,265,093.43 out of the P20M deposit of Vitarich.

(please refer to pre-trial order dated September 27, 2000, page

229 of the records).

Yet, the trial court failed to grant this amount to the plaintiff-

appellant. Plaintiff-appellant, therefore, should be granted this

amount.

Additionally, a legal interest at the rate of 12% per annum

from the extra judicial demand should be granted, too.

In the landmark case of Eastern Shipping Lines, Inc. vs.

Court of Appeals, July 12, 1994, the Supreme Court, held:

“When the obligation is breached, and it consists in the


payment of a sum of money, i.e., a loan or forbearance
of money, the interest due should be that which may
have been stipulated in writing. Furthermore, the
interest due shall itself earn legal interest from the time
it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 12% per
annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to
the provisions of Article 1169 23 of the Civil Code.”
(emphasis supplied)

Thus, under its first cause of action, Vitarich is entitled to

recover from Agro Food, the sum of P4,734,906.57, plus legal

interest at the rate of 12% per annum from the time the instant

44
complaint is filed on January 9, 1998 until the full amount is paid.

The computation of the interest payment is reckoned from January

9, 1998 because this was the date of the extra-judicial demand

made by Vitarich upon Agro Food.

IV.

On the fourth assigned error/ issue

Agro Food has an unpaid


purchases of live broilers in the
amount of P3,989,851.82, plus
24% interest

In its Order dated May 11, 2000, the court a quo ordered the

parties to meet for the purposes of reconciling their respective

records. After reconciliation of accounts, it was established that

Agro Food still owed Vitarich in the amount of P3,989,851.82. On

this issue, plaintiff agreed with the findings of the court a quo.

Thus:

“Shiela Santos testified that pursuant to the


Court’s order order dated May 11, 2000, both parties
agreed to the process and manner for the reconciliation
of the acounts with respect to the sale of live broilers
(TSN, September 24, 2002, p.12); and, as in fact
proceeded to reconcile the accounts on May 23 and 25,
2000 and sometime in June, 2000 by the respective
representatives of both parties. Thereafter, the parties
were able to reconcile the accounts. Witness Shiela
Santos presented a summary of the reconciled accounts
conducted and signed by the representative of both
parties and denominated as Exhibit “AAAAA” comprises
Exhibits “CCCCC-1” to “CCCCC-3” which is the summary
of the undisputed sales invoice amounting to
P56,000,170.67 and Exhibit “CCCCC-4” to “CCCCC-5”
which represents the summary of the undisputed
payments of the defendant from its purchases of live
broilers amounting to P52,010,318.85. Consequently,
with the reconciled amount of the parties of the
summary of undisputed sales invoices and the
undisputed payments made thereto, defendant Agro

45
Food still had an unpaid obligation to plaintiff Vitarich in
the amount of P3,989,851.82. Further, considering
that the interest on the unpaid obligation remains
unrebutted by defendant Agro Foods, such interest
prevails.” (underlining and bold facing ours for
emphasis)

(please refer to pages 3 and 4 of the decision dated December 29, 2005, pages

701 and 702 of the records)

Under the terms of the charge sales invoices (Exh. “YYYY” to

“YYYY-7”), Agro Food was obligated to pay stipulated interest at the

rate of 24% per annum on all unpaid account from the time the

account became due and demandable. The payment of stipulated

interest is explained by Ermelinda Santiago when she took the

witness stand. Defendnt Agro Food must be adjudged, therefore, to

pay the stipulated interest on the unpaid account of

P3,989,851.82 at the rate of 24% per annum from the date of

demand, that is, November 1997, until the full amount is paid.

PRAYER

WHEREFORE, it is respectfully prayed of this Honorable

Court that the decision of the court a quo dated December 29, 2005

be partially reversed by deleting the award of the amount of P25M

plus interest to defendant-appellee and instead shall order

defendant-appellee Agro Food Processing and Development

Corporation to pay Vitarich Corporation the following:

46
(1) the amount P4,734,906.57, representing the admitted
balance on the P20M deposit of plaintiff-appellee plus legal interest
at the rate of 12% per annum from the time the instant complaint
was filed on January 9, 1998.

(2) the amount P3,989,851.82 (the reconciled amount as


found by the trial court, not P4,770,916.82 as ordered by the trial
court) representing the outstanding obligation of defendant-
appellee on the sale of broilers plus interest at the rate of 24% per
annum (not 12% as ruled by the trial court) from November 1997,
until the full amount is paid.

Plaintiff-appellant further prays for such other reliefs as are


just and equitable in the premises.

April 25, 2012

DABU & ASSOCIATES


Counsel for plaintiff-appellant
Suites A 20 & 22, 3rd Floor Francesca Tower
Edsa corner Scout Borromeo Street, Quezon City
E mail Add:

PEDRO T. DABU, JR.


PTR No.
IBP No.
Roll No.

Copy furnished (2 copies):

Atty. Diosdado V. Macapagal


Counsel for the Defendant-Appellee
Suite 304, Silahis Bank Building
Balagtas, Bulacan

47

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