CRUZ v.

CA
GR No. 79962 | December 10, 1990 | Parol Evidence Rule
Digest by: Genria Nicole Guzman
Doctrine: Sec. 7 Rule 130 of the ROC is predicated on the existence of a document embodying the
terms of an agreement. The parol evidence rule does not apply in cases where the evidence is a mere
receipt attesting to the fact that a party has received from the other party a certain amount. A piece of
evidence considered only as a casual memorandum of a transaction between the parties and an
acknowledgement of the receipt of money executed by one party for the other party’s satisfaction is not
covered by the parol evidence rule.

Summary of the Case: Private respondent adduced receipts as proof of his agreement with petitioner
in relation to the buying and selling of fish and the sublease of certain agreed areas of a fishpond. The
Court held that the rule on parol evidence does not apply because the receipts were a mere attestation to
the fact that money was received on a certain date and were statements of fact and a mere
acknowledgement of the distinct act of payment.

Facts:
● Private respondent Salonga filed a complaint for collection and damages against petitioner Cruz.
○ Salonga alleged that as evidence by a receipt, marked as Exhibit D, petitioner had
borrowed P35,000 from him in the course of their business transactions of buying and
selling fish
○ Salonga claimed that Cruz was not able to pay the entire amount he borrowed and that in
exchange for certain loan accommodations, Cruz would grant him an exclusive right to
purchase and harvest certain fishponds Cruz leased and in exchange for such, Salonga
granted Cruz several loans amounting to P15,250, evidenced by 4 receipts and another
P4,000, the receipt of which had been lost
○ Salonga alleged that Cruz failed to comply with his part of the agreement as he refused to
deliver the alleged harvest of the fishpond as well as the payment of his additional loans
● Petitioner Cruz denied obtaining a loan from Salonga and alleged that he leased several hectares
of fishpond from another and that he later entered into an agreement with Salonga, whereby
Salonga would buy (pakyaw) fish in certain areas of the fishpond for a a few months and that
immediately thereafter, Salonga would sublease the same fishpond for 1 year
○ Cruz admitted that he received P35,000 and certain amounts on several occasions which
totaled to P15,250 but that these amount were considerations for their pakyaw agreement
and payment for the sublease of the fishponds, not loans
○ Cruz claimed that it was Salonga who owed him money since he had yet to pay 10
months worth of rental and that he owed an additional P4,000 for the purchase of fich
from areas of his leased fishpond
○ Cruz also testified that he entered into a pakyaw an sublease with Salonga for P28,000
and that out of the P35,000 he received from Salonga, P28,000 covered the full payment
of their pakyaw agreement while the remaining P7,000 was supposed to be an advance
payment for their sublease agreement
○ Cruz denied having received another P28,000 from Salonga and contended that the
instrument (Exhibit I) was executed to evidence their pakyaw agreement and to fix its
duration
 ■ Such claims were corroborated by the testimony of a witness who prepared the
receipt of P35,000, P28,000 of which was payment for the pakyaw and the excess
as advance for the sublease
● RTC: ruled in favor of petitioner Cruz
○ Found that the transaction between Cruz and Salonga were indeed pakyaw and sublease
agreements
● CA: reversed the decision of the RTC
○ Held that the oral testimonies given by the defendant and his 2 witnesses show that
Exhibit I (receipt for P28k) is an explanation for the transaction behind Exhibit D (receipt
for P35k). Since Exhibit I is very clear in its language, its tenor must not be clouded by
any parol evidence introduced by the defendant
○ Found that certain amounts given were not payments for the pakyaw and sublease
agreement but for loans extended by Salonga

Issue: WON the receipts adduced as evidence (Exhibit D and Exhibit I) covered by the parol evidence
rule (NO)

Ruling:
● The Court stated that the reason the the rule on parol evidence is the presumption that when the
parties have reduced their agreement to writing they have made such writing the only repository
and memorial truth, and whatever us not found in the writing must be understood to have been
waived or abandoned
○ However, the Court held that such rule is NOT applicable in the present case because
Sec. 7 Rule 130 of the ROC is predicated on the existence of a document embodying the
terms of an agreement but Exhibit D does not contain such an agreement
○ Exhibit D is a mere receipt attesting to the fact that the petitioner received the amount of
P35,000 from private respondent on a certain date. Thus, it is not and could not have been
intended by the parties to be the sole memorial of their agreement and at the same time,
Exhibit D does not even mention the transaction that gave rise to its issuance
○ The Court stated that at most, Exhibit D could only be considered as an
acknowledgement of the receipt of money executed by petitioner for private respondent’s
satisfaction and as per Wigmore’s observation a writing of this nature is NOT covered by
the parol evidence rule
● The Court highlighted that a distinction should be made between a statement of fact expressed in
the instrument and the terms of the contractual act
○ parol evidence may vary a statement of fact expressed in the instrument but not the terms
of the contractual act
○ Sec. 7 Rule 130 clearly refers to the terms of an agreement and provides that “there can
be, between the parties and their successors in interest, no evidence of the terms of the
agreement other than the contents of the writing”
○ The Court thus held that the statement in Exhibit I of the petitioner’s receipt of the
P28,000 is just a statement of fact and a mere acknowledgement of the distinct act of
payment made by private respondent
 ○ Exhibit I’s reference to the amount of P28,000 as consideration of the pakyaw contract
does not make it part of the terms of their agreement, Thus, paril evidence may be
introduced to explain Exhibit I, particularly with respect to the petitioner's receipt of the
amount of P28,000.00 and of the date when the said amount was received.
● The Court stated that even if Exhibits D and I were covered by the parol evidence rule, its
application by the CA was improper because based on the records, private respondent did not
object when petitioner introduced the evidence to explain the circumstances behind the execution
and issuance of the said instruments
○ The rule is that objections to evidence must be made as soon as the grounds therefor
become reasonably apparent.
○ In the case of testimonial evidence, the objection must be made when the objectionable
question is asked or after the answer is given if the objectionable features become
apparent only by reason of such answer
○ Since private respondent failed to object to the evidence introduced by the petitioner, he
is deemed to have WAIVED the benefit of the parol evidence rule

Held: WHEREFORE the decision of the CA is REVERSE and that of the RTC AFFIRMED, with
modification