Julio vs Dalandan

G.R. No. L-19012, 30 October 1967

Facts: Clemente Dalandan executed in writing that “a farm of more than four hectares” in Rizal belonged to Victoriana Dalandan.
It was posted as a security for an obligation which he assumed but failed to fulfill. Because of the non-fulfillment of the
obligation, the land was foreclosed.

Paragraph 5 stated that Clemente's children may not be forced to give up the harvest of the farm mentioned in the deed.
Paragraph 6 stated that Victoria Julio may not immediately demand the substitute (kapalit) for the forfeited land.

Victoria Julio is the daughter of Victoriana Dalandan. She claims that the 6 parcels of land stated in the document were conveyed
to her mother by pacto de retro. After the death of Clemente, she demanded from Clemente’s legitimate and surviving heirs the
possession of the land. The heirs insisted that the delivery of the land nor the fruits could not be immediately demanded, based on
their agreement. Victoria claims that she acceded to their argument and demanded that the heirs fix the period when to deliver
possession of the property. However, the heirs refused to do so. Victoria filed a complaint against the heirs.

The heirs claimed that Clemente merely promised to Victoria a farm of about 4 hectares to replace the land of Victoriana which
was foreclosed.

Issues:
1. Whether or not there was a trust instituted
2. Whether or not evidence aliunde is necessary to prove the existence of the trust

Held:
1. Yes, a trust was instituted. The instruments conveys the idea that the naked ownership of the land in substitution wastransferred
to Victoria Julio. A different interpretation would not make sense with the proviso that the fruits as well as the physical possession
of the land could not immediately be demanded by Victoria Julio from Clemente's children.

Clemente’s children are usufructuaries for an undetermined length of time. For so long as that period has not been fixed and has
not elapsed, they hold the property. Theirs is to enjoy the fruits of the land and to hold the same as trustees of Victoria Julio.

2. No, evidence aliunde is not necessary. Where the document itself imposes a duty upon the heirs to turn over both the fruits and
the possession of the property to Victoria when the proper time comes, an express trust is thereby created and no evidence
aliunde is necessary for its recognition, considering that no particular words are required for the creation of an express trust. It is
sufficient that a trust is clearly intended. Technical or particular forms of words or phrases are not essential to the manifestation of
intention to create a trust or to the establishment thereof, nor would the use of such words as "trust" or "trustee" be essential to its
constitution.

Where the deed of trust is clumsily prepared and does not specify the completedescription of the property held in trust but merely
speaks of a "farm of more than four hectares", and where the complaint avers that in the creation of such trust the parties actually
referred to the only land owned by the trustor at the time of execution thereof, such complaint, although it does not add any new
term or stipulation to the writing, actually explains an obscurity occasioned by lack of precision in the preparation of the
document, and insofar as the identity of the land involved in a trust is concerned, precedents there are that the writings, in being
considered for the purpose of satisfying the statute of frauds, are to be considered in their setting, and parol evidence is
admissible to make clear the terms of a trust the existence of which is established by a writing.
 Labasan vs Lacuesta
G.R. No. L-25931, 30 October 1978

Facts: On April 20, 1927, spouses Lacuesta executed a document transferring ownership of their unregistered and irrigated land
to spouses Labasan for an amount of Php 225. The document stipulated that the amount is for an urgent need for money and that
within ten years from conveyance, the vendor shall have the right to repurchase the land. On 1943, upon the lapse of the
redemption period, Lacuesta sought to repurchase the land but Labasan refused and claimed ownership. Hence, the complaint.
The trial court ruled in favor of defendant Labasan due to petitioner’s failure to repurchase within the stipulated time. However,
the Court of Appeals reversed the lower court’s decision. Hence, the petition.

Issue: What is nature of the document marked Exhibit "1-A"

Held: Examining Exhibit "1-A" in this case, it is evident that the terms of the document are not clear and explicit on the real
intent of the parties when they executed the aforesaid document.In view of the ambiguity caused by conflicting terminologies in
the document, it becomes necessary to inquire into the reason behind the transaction and other circumstances accompanying it so
as to determine the true intent of the parties. Once the intent becomes clear then it shall be made to prevail over what on its face
the document appears to be. Each case is to be resolved on the basis of the circumstances attending the transaction.

In the present case, the collective weight of the following considerations lead the Court to agree with the findings and conclusion
of the appellate court that Exhibit "1-A" is a mere loan with security and not a pacto de retro sale.

The reason behind the execution of Exhibit "1-A" was that the Lacuestas were in "urgent necessity for money" and had to secure
a loan of P225.00 from GelacioLabasan for which the riceland was given as "security". In Jayme, et al. v. Salvador, et al., 1930,
this Court upheld a judgment of the Court of First Instance of Iloilo which found the transaction between the parties to be a loan
instead of a sale of real property notwithstanding the terminology used in the document, after taking into account the surrounding
circumstances of the transaction. The Court through Justice Norberto Romualdez stated that while it was true that plaintiffs were
aware of the contents of the contracts, the preponderance of the evidence showed however that they signed knowing that said
contracts did not express their real intention, and if they did so notwithstanding this, it was due to the urgent necessity of
obtaining funds. 7"Necessitous men are not, truly speaking, free men; but to answer a present emergency, will submit to any terms
that the crafty may impose upon them."
 Land Settlement And Development Corporation vs. Garcia Plantation
G.R. No. L-17820, 24 April 1963

Summary:
LSDC filed a specific action case against Garcia plantation and/or Salud and Vicente Garcia for the payment of P5,995.30 as
unpaid balance of 2 tractors they bought from plaintiff. Salud was made a party because of 2 promissory notes she issued.
Defendants assert that the PN was actually novated by a letter (Exhibit L) sent by Atty. Kintanar, the LSDC Board of Liquidators,
extending their deadline to pay until May 31, 1957. When LSDC presented its witness Atty. Lucido Guinto, the writer of the said
letter, to disclose the intention of the said agreement, defendant objected to it. The Lower Court ruled it out and said that it was
parole evidence. CA certified the case to SC. Issue: W/N the lower court erred in denying the presentation of Atty. Guinto’s
testimony, and considering it as parole evidence.

The 2nd paragraph contained a condition precedent, which states: “This matter has been the subject of agreement between your
husband and this office.” When the operation of the contract is made to depend upon the occurrence of an event, which, for that
reason is a condition precedent, such may be established by parol evidence. This is an exception to parol evidence rule. This rule
does not prevent the introduction of extrinsic evidence to show that a supposed contract never became effective by reason of the
failure of some collateral condition or stipulation, pre-requisite to liability. In the case at bar, reference is made of a previous
agreement, in the second paragraph of letter Exhibit L, and although a document is usually to be interpreted in the precise terms
in which it is couched, Courts, in the exercise of sound discretion, may admit evidence of surrounding circumstances, in order to
arrive at the true intention of the parties.

Facts:
 LSDC filed a specific action case against Garcia Plantation (Salud and Vicente Garcia) for the recovery of P5,955.30,
as unpaid balance of 2 tractors bought by respondents.
 Salud was made a co-defendant because of two promissory notes executed by her , whereby she personally assumed the
account of the company and her husbad Vicente.
 Defendants contended that it has been novated by a subsequent agreement contained in a letter (Exh. L) sent
by Filomeno C. Kintanar, Manager, Board of Liquidators of the LSDC allowing an extension to pay (Until
May 31, 1957).
 Furthermore, since the complaint was filed on February 20, 1957, they claimed that the action was premature
and prayed that the complaint be dismiss.
 LSDC admitted the genuiness of the letter but contended that the same did not express the true and intent agreement of
the parties, thereby placing the fact in issue.
 The parties requested for more time to settle the case but the court ordered a trial on the merits.
 At the trial, the defendant admitted defendant admitted the documentary evidence of its debt.
 When the plaintiff presented Atty. Lucido A. Guinto, Legal Officer of the Board of Liquidators, to testify on the true
agreement and the intention of the parties at the time the letter (Exh. L) was drafted and prepared, the lower court
judge, upon the objection of the counsel for defendants, ruled out said testimony and prevented the introduction of
evidence under the parol evidence rule (Sec. 22, Rule 123).
 Since the court ruled out Atty. Guinto’s testimony, writer of the letter in question, the plaintiff rested its case. Lower
court dismissed the case. CA certified the case to the SC.

Issue:
Whether or not the Court erred in excluding parol evidence. Yes.

Held:
The decision appealed from is reversed, and the case remanded to the lower court for further proceedings. Costs against the
appellees.

Ratio:
 The parol evidence consisted of the testimony of Attys. Guinto and Kintanar.
 Atty. Kintanar gave the defendants up to May 31, 1957, to coincide with their ramie harvest "provided that
they will make a substantial down payment immediately, with the understanding that upon non-payment of
the substantial amount, the extension shall be deemed as not granted and the LASEDECO shall feel free to
seek redress in court"
 That there was such condition precedent as manifested by the second paragraph of the letter Exhibit L:

Mrs. Salud de Garcia Tacurong, Cotabato

Dear Madam;
Please be advised that the Board has granted you an extension up to May 31, 1957, within which to pay your account.

This matter has been the subject of agreement between your husband and this office.
Respectfully,
(Sgd.) FILOMENO C. KINTANAR

 The subject of the contention was the condition to be complied with or the consideration given for the
extension of time, within which the Garcia spouses pay their account.
 The lower court should have admitted the parol evidence
 The parol evidence sought to be introduced to prove the failure of the document in question to express the
true intent and agreement of the parties.
 When the operation of the contract is made to depend upon the occurrence of an event, which, for that reason
is a condition precedent, such may be established by parol evidence. This is an exception to parol evidence
rule. *
 This is not varying the terms of the written contract by extrinsic agreement, for the simple reason that there is
no contract in existence; there is nothing to which to apply the excluding rule.
 This rule does not prevent the introduction of extrinsic evidence to show that a supposed contract never
became effective by reason of the failure of some collateral condition or stipulation, pre-requisite to liability"
(Peabody & Co. v. Bromfield & Ross, 38 Phil. 841).
 The rule excluding parol evidence to vary or contradict a writing does not preclude admission of extrinsic evidence, to
show prior or contemporaneous collateral parol agreements between the parties
 Such evidence may be received, regardless of whether or not the written agreement contains reference to such
collateral agreement (Robles v. Lizarraga Hnos., 50 Phil. 387)
 In the case at bar, reference is made of a previous agreement, in the second paragraph of letter Exhibit L, and
although a document is usually to be interpreted in the precise terms in which it is couched, Courts, in the
exercise of sound discretion, may admit evidence of surrounding circumstances, in order to arrive at the true
intention of the parties
 Re: prematurity of the case
 If the court allowed the plaintiff to prove the intention of the parties, then it could have proved that there was
a breach of the letter.
 So that, although the complaint was filed on February 20, 1957, three months before the deadline of the
extension on May 31, 1957, there would be no premature institution of the case.
 Market Developers, Inc. vs.Hon. Intermediate Appellate Court
G.R. No. 74978, 08 September 1989

Facts: On June 20, 1978, petitioner Market Developers, Inc. (MADE) entered into a written barging and towage contract with
private respondent Gaudioso Uy for the shipment of the former's cargo from Iligan City to Kalibo, Aklan, at the rate of P1.45 per
bag.

The petitioner was allowed 4 lay days and agreed to pay demurrage at the rate of P5,000.00 for every day of delay, or in excess of
the stipulated allowance. On June 26, 1978, Uy sent a barge and a tugboat to Iligan City and loading of the petitioner's cargo
began immediately. It is not clear who made the request, but upon completion of the loading on June 29, 1978, the parties agreed
to divert the barge to Culasi, Roxas City, with the cargo being consigned per bill of lading to Modern Hardware in that city. This
new agreement was not reduced to writing.

The shipment arrived in Roxas City on July 13, 1978, and the cargo was eventually unloaded and duly received by the consignee.
There is some dispute as to the time consumed for such unloading. At any rate, about six months later, Uy demanded payment of
demurrage charges in the sum of P40,855.40 for an alleged delay of eight days and 4/25 hours.

MADE ignored this demand, and Uy filed suit. He was sustained by the trial court, which ordered the petitioner to pay him the
said amount with interest plus P4,000.00 attorney's fees and the cost of the suit. This decision was fully affirmed on appeal to the
respondent court, which is the reason for this petition. Agreeing with the trial court, the respondent court held that since the
diversion of the cargo to Roxas City was not covered by a new written agreement, the original agreement must prevail.

Issue: Whether or not the first written contract must prevail since the new contract did not contain any stipulation for demurrage
and because it was not in writing.

Held: No. To hold that the old agreement was still valid and subsisting notwithstanding this substantial change was to impose
upon the petitioner a condition he had not, and would not have, accepted under the new agreement.

Article 1356 of the Civil Code provides:

Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential
requisites for their validity are present. However, when the law requires that a contract be in some form in
order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is
absolute and indispensable . . .

We affirmed this rule only recently when we said in Tong v. Intermediate Appellate Court that "a contract may be entered into in
whatever form except where the law requires a document or other special form as in the contracts enumerated in Article 1388 of
the Civil Code. The general rule, therefore, is that a contract may be oral or written."

The contract executed by MADE and Uy was a contract of affreightment. As defined, a contract of affreightment is a contract
with the shipowner to hire his ship or part of it, for the carriage of goods, and generally takes the form either of a charter party or
a bill of lading.

Article 652 of the Code of Commerce provides that "a charter party must be drawn in duplicate and signed by the contracting
parties" and enumerates the conditions and information to be embodied in the contract, including "the lay days and extra lay days
to be allowed and the demurrage to be paid for each of them." (requisites of charter party)

But while the rule clearly shows that this kind of contract must be in writing, the succeeding Article 653 just as clearly provides:

If the cargo should be received without a charter party having been signed, the contract shall be understood
as executed in accordance with what appears in the bill of lading, the sole evidence of title with regard to
the cargo for determining the rights and obligations of the ship agent, of the captain and of the charterer.
(form of charter party)

We read this last provision as meaning that the charter party may be oral, in which case the terms thereof, not having been
reduced to writing, shall be those embodied in the bill of lading.

Therefore, the first written contract was cancelled and replaced by the second verbal contract because of the change in the
destination of the cargo.
The parol evidence rule is clearly inapplicable because that involves the verbal modification usually not allowed a written
agreement admittedly still valid and subsisting. In the case at bar, the first written agreement had not merely been modified but
actually replaced by the second verbal agreement, which is perfectly valid even if not in writing like the first. As has been
correctly held:

No principle of law makes it necessary that a new contract upon the same subject between the same persons
shall be reduced to writing because the old contract was written.
 Abrenica vs. Gonda
G.R. No. L-10100, 15 August 1916

Facts: This case was brought by the plaintiff to compel the defendants to return the two parcels of land described in the complaint
which he claimed were sold to the defendants under the right of repurchase for seven years and for the sum of 75Php. Further, the
plaintiff alleged that the defendant refused to deliver the same when, upon the expiration of the period, mentioned, he is entitled
to redeem the subject parcels of land upon the payment of the amount agreed upon.

However, the plaintiff stated that the agreement for the sale with right of repurchase was done verbally between him and Gonda
(one of the defendants). When he was placed on the stand as a witness, he testified at length and answered all the questions asked
by his lawyer regarding the said agreement/contract, including its details, the persons who witnessed it, the place it was made,
and the various other circumstances connected with its execution. The defendant’s counsel failed to raise an objection to the
examination. The defendant’s lawyer also challenged one of the questions as leading and claimed another question was irrelevant.
Moreover, he only moved to strike out all of the testimony and statements given by the plaintiff when the examination was
already terminated on the ground that the period for the fulfillment of the contract exceeded one year and that it could not be
proven except by means of a written instrument. The lawyer also did a cross examination and asked several questions relative to
the plaintiff’s ownership of the parcels of land.

Issue: Whether the two parcels of land were sold under the right of repurchase by the plaintiff to the defendant.

Held: Yes. The two parcels of land were sold under the right of repurchase by the plaintiff to the defendant with the seven year
term for 75 php. This agreement, though verbally made is ratified by the failure of the defendant’s party to object to the
presentation of oral evidence to prove the same as expressed on Article 1405 of the New Civil Code.

Moreover, the fact that the defendants’ counsel asked various cross-questions, both of the plaintiff and of the other witness, in
connection with the answers given by them in their direct examination, with respect to particulars concerning the contract,
implies a waiver on his part to have the evidence stricken out.

Now then, it has been repeatedly laid down as a rule of evidence that a protest or objection against the admission of any evidence
must be made at the proper time, and that if not so made it will be understood to have been waived. The proper time to make a
protest or objection is when, from the question addressed to the witness, or from the answer thereto, or from the presentation of
the proof, the inadmissiblity of the evidence is, or may be, inferred.

A motion to strike out parol or documentary evidence from the record is useless and ineffective if made without timely protest,
objection, or opposition on the part of the party against whom it was presented.

Objection to the introduction of evidence should be made before the question is answered. When no such objection is
made, a motion to strike out the answer ordinarily comes too late. (De Dios Chua Soco vs. Veloso, 2 Phil. Rep., 658).

In the case of Conlu vs. Araneta and Guanko (15 Phil. Rep., 387) in which one of the points discussed was the inadmissibility of
parol evidence to prove contracts involving real property, in accordance with the provisions of section 335 of the Code of Civil
Procedure, no objection having been made to such evidence, this court said:

A failure to except to the evidence because it does not conform with the statute, is a waiver of the provisions of the law.

An objection to a question put to a witness must be made at the time question is asked. (Kreigh vs. Sherman, 105 Ill.,
49; 46 Am. Dig., Century Ed., 932.)

Objections to evidence and the reason therefor must be stated in apt time." (Kidder vs. McIlhenny, 81 N. C., 123; 46 Am. Dig.,
Century Ed., 933.)

No timely objection or protest was made to the admission of the testimony of the plaintiff with respect to the contract; and as the
motion to strike out said evidence came to late; and, furthermore, as the defendants themselves, by the cross- questions put by
their counsel for the witnesses in respect to said contract, tacitly waived their right to have it stricken out, that evidence, therefore,
cannot be considered either inadmissible or illegal.The plaintiff made use of his right to recover the property within the period
stipulated by the contract and which did not exceed ten years, and as he deposited with the clerk of the court the sum of P75, the
price of the purchase, in due time, the defendant is not entitled to oppose the recovery, and the said parcels of land must be
delivered to the plaintiff, even though they be in the possession of the other defendant, Marcelino de Garcia, to whom they were
sold by his codefendant Gonda, for the latter could not sell them to De Gracia except under the condition that they could be
repurchased by the plaintiff within the said period of seven years.
 Air France vs. Carrascoso
G.R. No. L-21438, 28 September 1966

Facts: In March 1958, Rafael Carrascoso and several other Filipinos were tourists en route to Rome from Manila. Carrascoso was
issued a first class round trip ticket by Air France. But during a stop-over in Bangkok, he was asked by the plane manager of Air
France to vacate his seat because a white man allegedly has a “better right” than him. Carrascoso protested but when things got
heated and upon advise of other Filipinos on board, Carrascoso gave up his seat and was transferred to the plane’s tourist class.
After their tourist trip when Carrascoso was already in the Philippines, he sued Air France for damages for the embarrassment he
suffered during his trip. In court, Carrascoso testified, among others, that he when he was forced to take the tourist class, he went
to the plane’s pantry where he was approached by a plane purser who told him that he noted in the plane’s journal the following:
First-class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene

The said testimony was admitted in favor of Carrascoso. The trial court eventually awarded damages in favor of Carrascoso. This
was affirmed by the Court of Appeals.
Air France is assailing the decision of the trial court and the CA. It avers that the issuance of a first class ticket to Carrascoso was
not an assurance that he will be seated in first class because allegedly in truth and in fact, that was not the true intent between the
parties.
Air France also questioned the admissibility of Carrascoso’s testimony regarding the note made by the purser because the said
note was never presented in court.
Issue 1: Whether or not Air France is liable for damages and on what basis.
Issue 2: Whether or not the testimony of Carrasoso regarding the note which was not presented in court is admissible in evidence.
Held 1: Yes. It appears that Air France’s liability is based on culpa-contractual and on culpa aquiliana.
Culpa Contractual
There exists a contract of carriage between Air France and Carrascoso. There was a contract to furnish Carrasocoso a first class
passage; Second, That said contract was breached when Air France failed to furnish first class transportation at Bangkok;
and Third, that there was bad faith when Air France’s employee compelled Carrascoso to leave his first class accommodation
berth “after he was already, seated” and to take a seat in the tourist class, by reason of which he suffered inconvenience,
embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation,
resulting in moral damages.
The Supreme Court did not give credence to Air France’s claim that the issuance of a first class ticket to a passenger is not an
assurance that he will be given a first class seat. Such claim is simply incredible.
Culpa Aquiliana
Here, the SC ruled, even though there is a contract of carriage between Air France and Carrascoso, there is also a tortuous act
based on culpa aquiliana. Passengers do not contract merely for transportation. They have a right to be treated by the carrier’s
employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct,
injurious language, indignities and abuses from such employees. So it is, that any rule or discourteous conduct on the part of
employees towards a passenger gives the latter an action for damages against the carrier. Air France’s contract with Carrascoso is
one attended with public duty. The stress of Carrascoso’s action is placed upon his wrongful expulsion. This is a violation of
public duty by the Air France — a case of quasi-delict. Damages are proper.
Held 2: Yes. The testimony of Carrascoso must be admitted based on res gestae. The subject of inquiry is not the entry, but the
ouster incident. Testimony on the entry does not come within the proscription of the best evidence rule. Such testimony is
admissible. Besides, when the dialogue between Carrascoso and the purser happened, the impact of the startling occurrence was
still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are admissible
as part of the res gestae. The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the
circumstances of the ouster incident. Its trustworthiness has been guaranteed. It thus escapes the operation of the hearsay rule. It
forms part of the res gestae.
 Soriano vs.Tabacos De Filipinas
G.R. No. L-17392, 17 December 1966

Facts: That sometime in September 1937, defendant granted plaintiff a crop loan account to finance the planting, cultivation,
harvesting, and milling of sugar cane in plaintiff's various sugar cane plantations in Negros Occidental; that to secure payment of
the various amounts which plaintiff would withdraw from said crop loan account, plus the correspondent interest, plaintiff on
September 17, 1937, executed a deed of mortgage in favor of defendant, mortgaging to the latter the properties specified and
described therein; that the parties expressly stipulated that subject to its terms and conditions, the deed of mortgage could be
renewed upon their mutual agreement at the end of the crop year; that pursuant to the said renewal clause, plaintiff and defendant
executed on or about August 5, 1941 another document entitled "Credito Sobre Azucar Renovacion De hipoteca Con Garnatia
Adicional" for the 1941-42 crop year, by virtue of which the former deed of mortgage was renewed and plaintiff granted an
additional crop loan of P253,000.00 for the 1941-42 crop year; that to guarantee the payment of this additional crop loan plus the
interest that would be due thereon as well as the payment of the outstanding balance under the previous crop loans, plaintiff
mortgaged in favor of defendant the same sugar plantations formerly mortgaged under the previous deed; that as additional
security therefor, plaintiff likewise mortgaged the sugar cane crops that would be planted and harvested from the sugar
plantations during the 1941-42 crop year, the sugar that would be produced and milled from said sugar cane crops during the said
crop year, and all the centrifugal sugar with 96 degrees or more of polarization that would be produced from any sugar cane
plantation of plaintiff for the 1941-42 crop year; that plaintiff obligated himself to assign and deliver to defendant the
correspondent quedans pertaining to all the sugar mortgaged; that during the crop year 1941-42 plaintiff produced a total of
65,787.53 piculs of export sugar, which, together with the other sugar produced by plaintiff, was, pursuant to the agreement,
delivered by plaintiff to defendant for its sale at the most advantageous prices, the proceeds of which sale to be credited to
plaintiff's account; that pursuant to the agreement of August 5, 1941, plaintiff had been obtaining various sums from defendant
from time to time, which with interest thereon, and after deducting the proceeds of the sale in 1941 of a small part of plaintiff's
sugar delivered to defendant, amounted to P648,806.06 as of December 29, 1941; that in the computation of the balance due from
plaintiff, defendant did not include the proceeds of the sale of 51,528,01 piculs of sugar belonging to plaintiff and delivered to
defendant, which sale was willfully withheld from plaintiff; that the amount of P648,806.06 was carried in the books of the
defendant as the total indebtedness of plaintiff for which defendant continued to charge plaintiff interest at the rate of seven per
cent (7%) per annum compounded every six months, which was and is the usual rate of interest charged by defendant on crop
loans granted by it to planer; that during the Japanese occupation defendant sent periodic statement of accounts to plaintiff, who,
noticing from said statements that his debt was considerably increasing due to the accumulation of the interest charged by the
defendant and in view of defendant's demand for payment as expressed or implied in said statements of account, decided to pay
and did pay as much of his supposed debt as he could during the Japanese occupation by borrowing money from his business
associates and selling some of his valuable real and personal properties; that shortly after the liberation, plaintiff made several
inquiries from defendant about the status of his export sugar produced during the 1941-42 crop year amounting to 65,787.53
piculs which plaintiff delivered to defendant; that plaintiff was informed by the defendant that said sugar was destroyed during
the war and it advised plaintiff to file a war damage claim before the War Damage Commission of the United States; that acting
on the said advice and by virtue of the certification in writing issued by defendant attesting to the loss of said sugar during the
war, plaintiff filed the corresponding war damage claim and was accordingly paid by the War Damage Commission the sum of
P130,000.00 which plaintiff is willing to return to the United States Government; that plaintiff received from defendant an
itemized statement of account dated May 28, 1949 regarding his pre-war crop loan for the 1940-41 and 1941-42 crop years,
which account, after deduction of the payments made by plaintiff during the Japanese occupation, showed a balance of
P28,677.35 due the defendant as of March 10, 1945 which amount increased to P37,078.00 as of December 29, 1948 as a result
of the addition of compound interest being charged by defendant; that after receipt of the above mentioned statement of account,
plaintiff investigated as to what really happened to the export sugar he delivered to defendant and discovered that 51,528.01
piculs of sugar, instead of having been burned and destroyed during the last war as falsely represented by the defendant to
plaintiff and to the War Damage Commission, had actually been shipped to and sold by the defendant in the United States on
different dates in 1941, months before the out break of the war; that the proceeds of such sale were kept and retained by
defendant for its own use without crediting the same for the account of plaintiff, to the damage and prejudice of plaintiff; that on
June 27, 1956, plaintiff wrote defendant a letter informing it of what he had recently discovered and demanded that it pay to
plaintiff the proceeds of the sale of the 51,528.01 piculs of sugar; that as defendant could not deny this startling discovery, it
disclosed and admitted on August 2, 1956, in a letter of even date and or other occasions subsequent thereto, that it really had
sold plaintiff's export sugar amounting to 51,528.01 piculs before the outbreak of the war, after a long negotiation and several
exchange of communication between plaintiff and defendant, the latter proposed to fix the price at P6.20 per picul which plaintiff
accepted; that notwithstanding repeated demands defendant refused and still refuses to pay plaintiff the value of the 51,528.01
piculs of sugar in the total sum of P319,473.66 plus accrued interest of seven per cent (7%)per annum compounded semi-
annually from the dates the sugar shipments were respectively sold; that the total proceeds, with interest thereon as above alleged,
amounted to P737,681.00 as of June 30, 1956; that defendant in representing to and inducing plaintiff to believe that the export
sugar produced during the 1940-41 crop year was destroyed during the war, when in fact it had sold said sugar, and in retaining
the proceeds of said sale while charging plaintiff 7% interest compounded semi-annually on plaintiff's debts, and compelling
plaintiff to sell his valuable property to liquidate practically the whole of said debt, acted in bad faith and with malice and wanton
attitude for which it stands liable to pay plaintiff moral and exemplary damages; that as a consequence of the willfull refusal of
defendant to pay plaintiff the amounts mentioned, plaintiff was forced to engage the services of counsel for the purpose of
recovering the said amounts, the reasonable value of which service is submitted to the discretion of the court.

Issue: Whether plaintiff is entitled to be credited with the proceeds of the sale of the said 35,528.01 piculs of sugar

Held: There was no need for an authorization from plaintiff to export his sugar because the defendant was expressly authorized to
sell plaintiff's sugar delivered to it, in pursuance to the crop loan agreement. Although defendant presented evidence to show its
alleged practice of first securing its client's permission to sell sugar, the evidence is inadmissible. The agreement between the
parties had been reduced to writing, and under its terms defendant could sell and was so authorized to sell plaintiff's sugar in any
manner it deemed convenient, provided that the proceeds thereof be credited to plaintiff's account. Defendant now cannot be
permitted to adduce evidence to prove its alleged practice, which to all purposes, would alter the terms of the written agreement.
Section 22, Rule 123 of the Rules of Court provides: "When the terms of an agreement have been reduced to writing, it is to be
considered as containing all those terms, and therefore, 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, except in the following cases: ...." Whatever
therefore is not found in the writing must be understood to have been waived and abandoned (3 Moran 189). Inasmuch as the
case at bar does not fall under any of the exceptions mentioned in the Rule cited, defendant may not adduce evidence to show a
practice other than that permitted by the terms of the agreement. The lower court therefore correctly ruled against the
admissibility of such evidence.

Mactan Cebu vs. CA

Facts: Sometime in 1949, officers of the National Airport Corporation informed the owners of the various lots surrounding
the Lahug Airport that the government will purchase their lands for the expansion of the airport. The landowners were convinced
to sell their properties, otherwise, the government will be forced to institute expropriation proceedings in courts. They were also
assured that their properties will be returned to them when these are no longer being used by the airport. Initially, Inez Ouano did
not want to sell her property because she does not have enough to bequeath to her grandchildren and the price offered by the
government was very low. Nonetheless, she agreed to sell since the government was going to expropriate the land anyway. She
was also reassured by the promise that the land will be returned to her when it is no longer in use. Eufemio Vercide, one of the
affected landowners testified that in a meeting called by the NAC, the landowners were given documents to sign, and he asked
for a rider or certification which would indicate that the land will be returned to him should it not be used by the airport. He
testified that it was only after the rider was given to him that he signed the document of sale. The rider dated 8 November, 1949,
signed by Mariano Reyes for the NAC and Vercide reads, as follows:

This RIDDER (sic), shall remain in full force up to whensoever and whatever the Lahug Airport may happen in the future. All
statements in anticipations herein below stated, shall remain valid in favor of the landowners.

That in the event that this Lahug Airport will be left dead and of no use, or be transferred to another place or locality, then the
parcels of land mentioned in the attached Doc. no. 698, Page 8, Book No. XVII, Series of 1949 by Atty. Daniel Tumulak, shall be
returned to the same owner, EUFEMIO O. VERCIDE at the same selling price without any interest (Exhibit F-1; Records, p. 92).

The sale of Inez property was covered by a Deed of Sale signed by her and Mariano Reyes representing the NAC. The deed
indicates that the Lot 742 was sold for P2,596.40; and Lot 953 for P1,125.20. The deed does not contain any provision regarding
Inez right to repurchase the properties. Nor does she have any rider such as the one given to Vercide.

Nonetheless, during her lifetime, Inez used to remind her granddaughter Melba Limbaco, who was living with her, about the
assurance by the NAC officials that the properties will be returned. Inez also made Melba understand that the latter can recover
the land herself should Inez die before the proper time arises.

Upon learning that other landowners were able to recover their properties and that the then Pres. Aquino had ordered that the
airport be transferred to Mactan, the appellees tried to repurchase the properties originally owned by their grandmother. On 2
October 1991, they wrote to Capt. Antonio Oppus, the manager of appellant, signifying their intention to repurchase the
properties originally owned by their grandmother. Capt. Oppus replied denying their request because the deed of sale covering
the properties does not contain any condition relating to the right to repurchase. These properties, it was explained, had become
the absolute properties of the NAC. Private respondents thereafter filed a case for reconveyance with the Regional Trial Court
(RTC) which ruled in their favor. On appeal to the CA, the same was affirmed in toto.

Issue: Whether or not there was an agreement allowing inez ouano and her successors to repurchase the lots in question absent
any rider in the deed of sale similar to the sales of adjacent lots which contained riders.

Held: The CAs finding that there was an agreement allowing the right of repurchase, was established after admitting the parol
evidence presented by private respondents. We reject petitioners argument that in the absence of any rider providing for such
right of repurchase, no evidence, whatsoever can be received to establish that such a right indeed exists. Both the RTC and the
CA correctly ruled that the right of repurchase granted by the NAC to Inez Ouano can be sufficiently established by parol
evidence. The Court of Appeals, based on the parol evidence presented by private respondents, thus stated:

We see no reason, however, why Inez should be considered as not similarly situated as the owners of these other lots. All these
lots surround the LahugAirport and were acquired by the government for the proposed expansion of the airport. The appellee has
not presented any evidence to show that Inez lots were acquired for a different purpose or under different conditions. Why then
should the sale of such lots be singled out as not subject to the right to repurchase when a good number of the lots around them
were already repurchased by their original owners?

Under the parol evidence rule, when the terms of an agreement have been reduced into writing, it is considered as containing all
the terms agreed upon, and there can be, between the parties and their successors-in-interest, no evidence of such terms other than
the contents of the written agreement. However, a party may present evidence to modify, explain or add to the terms of the
written agreement if he puts in issue in his pleading, the failure of the written agreement to express the true intent of the parties
thereto.In the case at bench, the fact which private respondents seek to establish by parol evidence consist of the agreement or
representation made by NAC that induced Inez Ouano to execute the deed of sale; that the vendors and their heirs are given the
right of repurchase should the government no longer need the property. Where a parol contemporaneous agreement was the
moving cause of the written contract, or where the parol agreement forms part of the consideration of the written contract, and it
appears that the written contract was executed on the faith of the parol contract or representation, such evidence is admissible. It
is recognized that proof is admissible of any collateral parol agreement that is not inconsistent with the terms of the written
contract though it may relate to the same subject matter. The rule excluding parol evidence to vary or contradict a writing does
not extend so far as to preclude the admission of existing evidence to show prior or contemporaneous collateral parol agreements
between the parties, but such evidence may be received, regardless of whether or not the written agreement contains any
reference to such collateral agreement, and whether the action is at law or in equity. More importantly, no objection was made by
petitioner when private respondents introduced evidence to show the right of repurchase granted by the NAC to Inez Ouano. It
has been repeatedly laid down as a rule of evidence that a protest or objection against the admission of any evidence must be
made at the proper time, and if not so made, it will be understood to have been waived.
 Peabody vs. Bromfield
G.R. No. L-13510, 23 October 1918

Facts: The liability which is sought to be established is based upon a document (Exhibit B) purporting to be a contract of
guaranty signed by the two defendants herein, J. F. Bromfield and James Ross, also by Edward B. Bruce, the latter not being
included as a defendant in this action. At the time when the document in question was executed, the Commercial Vehicle
Company, a corporation organized under the laws of the Philippine Islands, was engaged in the business of selling automobiles
and automobile supplies in the city of Manila, its purchases being made in the United States through the plaintiff, Henry W.
Peabody & Company, a partnership having its office in the city of New York. The capital resources of the Commercial Vehicle
Company were apparently inadequate for the business it was conducting, and it was compelled to rely upon the credit extended to
it by the plaintiff. In the original contract, dated November 11, 1911, by which henry W. Peabody & Company undertook to
purchase and forward merchandise to the Commercial Vehicle Company, it was provided that the plaintiff's local manager should
be a member of the board of directors of the Commercial Vehicle Company and should have the right to determine whether
orders given by the Commercial Vehicle Company for goods shipped from the United States were from responsible people. In
conformity with this provision Scott became a member of the board of directors of the Commercial Vehicle Company, attended
its meetings upon all occasions, and consulted with the other directors about the company's business. In order to qualify him in
this respect one share of the stock of the Commercial Vehicle Company was issued to him, and in July, 1912, when the stock
issue was increased he subscribed for common shares of the Vehicle Company in the sum of P2,000 and for preferred shares of
the same company in a like amount. The evidence shows that the taking of these shares in the name of P.M. Scott was a mere
formality and that the real subscriber, or party in interest, was the house of henry W. Peabody & Company itself. This clearly
appears in a letter written on July 29, 1917, by Scott to Bradlee, manager of the home office in New York City, wherein Scott
says: "As I do not desire to become personally interested I have taken up these shares in the interest of Henry W. Peabody &
Company." With reference to the relation of P.M. Scott to the home office of Henry W. Peabody & Company it is further to be
observed that, as manager in this city, he exercised authority in the conduct of the affairs of this branch; and so far as the facts
pertinent to this lawsuit are concerned, it must be considered that Henry W. Peabody & Company in Manila and P.M. Scoot are
one and the same. The home office did not interfere in any way with his management, and Scott exercised in this city, throughout
the transactions which are now under scrutiny, all the powers of a vice-principal.

After the plaintiff had, as above stated, notified the management of the Commercial Vehicle Company that its capital must be
increased, several of the individuals principally interested in the affairs of the latter company discussed the matter among
themselves and arrived at the conclusion that the necessary capital could not be raised by an increase of stock. The meeting of the
board of directors at which this conclusion was announced and accepted occurred apparently in July, 1912. There were present on
this occasion, of the board of directors, Edward B. Bruce, J. F. Bromfield, James Ross, and P.M. Scott, the latter in representation
of Henry W. Peabody & Company should remain firm and discontinue or curtail its credit, the Commercial Vehicle Company
would have to be liquidated. When Clarke, at the meeting above mentioned, informed the directors that the business of the
Commercial Vehicle Company was in a promising condition and could be liquidated at a profit, one of the directors interested
exclusive in the Commercial Vehicle Company, speaking for all three, observed that it would be better to liquidate than for them
to give a guaranty of the tenor above stated. Upon this Scott said that he saw no reason why this should be done, as his company
— Henry W. Peabody & Company — merely desired something that would serve in lieu of an increased capitalization. One of
the three Bruce, Bromfield, or Ross, thereupon said to Scott that, if this were so, he (Scott) would probably have no objection to
becoming a party to such a guaranty himself. Scott assented and after some further conversation it was agreed that the four, to
wit, Bruce, Bromfield, Ross, and Scott, would sign the guaranty. That Scott made this agreement is proved not only by the
testimony of Ross but also by a letter written a few days later by Scott himself to Bradlee, to his own house in New York City. It
is furthermore noteworthy that, although Scott appeared in court as a witness for the plaintiff, he did not deny making the
agreement to sign the guaranty. It is therefore to be considered that the making of this agreement is as fully and satisfactorily
demonstrated as if its existence had been formally admitted in court by the adverse party. The proof shows that the labor of
drafting the contract of guaranty, in pursuance of the mutual agreement which had been made, was assigned to Bruce..

Issue: Whether it would be possible to allow a recovery in favor of the plaintiff to the extent to which the defendant herein would
have been liable if Scott had signed the guaranty.

Held: This suggestion contemplates performance by Scott and the enforcement of the obligation as thus reformed or completed.
Apart from the fact that no such relief is sought by either litigant, it is apparent that the facts involved supply no basis for any
such equitable adjustment of liability. the plaintiff neither asks nor offers to do equity. It stands upon its legal right under the
supposed contract, and is met by a defense based on the assertion that no contract was made. The case must, in our opinion, be
determined on the issue thus defined. In this connection it should be observed that by the terms of the contract in question the
liability of the parties was solidary and not apportionable The impossibility of such a course must be apparent when it is
considered that the parties to the preliminary negotiation intended that a contract should be executed as the formal repository of
their agreement. It was, indeed, necessary that their agreement should be reduced to writing in order to satisfy that provision of
the law which says that a promise to answer for the debt or default of another shall be unenforceable unless reduced to writing
and subscribed by the party to be charge. (Section 335, subsection 2, Code of Civil Procedure.) It is therefore evident that the
parties could not have intended that any contract should exist except that which should be executed in accordance with this
intention. Their purpose, as we have seen, failed of effect because the agent of the plaintiff, himself one of the proposed
guarantors, refrained from performing the act which would have made him liable with the other signatory parties. The necessary
consequence, in our opinion, is that no action can be maintained by the plaintiff either on the preliminary verbal agreement or the
imperfect contact which failed of effect.It is no doubt true that if the three gentlemen who signed the contract (Exhibit B) had so
desired, they could upon learning of Scott's failure to sign the document, have forced him to sign it or return it to them; and this
could have been accomplished by legal action, supposing that the parties could have had access to his letter file and have
obtained the communication to Bradlee in which the making of the agreement is admitted in writing. We are unable, however, to
see that this circumstance strengthens the case of the plaintiff company as against them.From what has been said it is apparent
that the trial court committed no error in absolving the defendants.