VDA. DE CORPUS v.

BRABANGCO (1963) Facts: Tiburcia Brabangco is the declared owner of two parcels of land at Bugang, Alimodia, Iloilo, which the surviving widow and children of German Corpus alleged were sold by the former to Corpus in 1925 for P450, of which P300 was paid right upon the execution of the deed of sale in due form, as witnessed by Pablo and Bonifacio Villareal and acknowledged by Tiburcia before the Notary Public, Jose Tirador. The balance was also alleged to have been paid by Corpus to Tiburcia, as evidenced by a receipt. Corpus heirs claim that Corpus had been in possession of said lands from 1925 until his death. Six months after Corpus death, however, the defendants, with the aid and protection of policemen, entered the property, cut down and carried away 1,000 bamboos as well as 2 and sacks of corn. Tiburcia denied having sold the land, alleging that she simply accommodated and allowed the Corpuses to build their evacuation cottage when Japanese forces occupied the Philippines. Corpus heirs could not produce the deed of sale, however, which had allegedly been lost during the war. The trial court ruled in favor of the heirs and upheld the sale. Issue: Were the heirs of Corpus able to establish the contents of the deed of sale despite the absence of the original document? Held: Yes. As the heirs alleged, the original deed of sale signed by Tiburcia was lost during the war. Corpus heirs made efforts to trace the whereabouts of Notary Public Jose Tirador to get a copy of the deed, but the latters children said that their parents were already dead and that their house in chich their father had kept his documents had burned down. The existence of the deed, however, was convincingly proven not only by the testimony of Corpus widow, and by the environmental facts disclosed by the evidence, but also by the disinterested testimony of Pablo Ableza, a municipal counselor who served as one of the witnesses in the execution of the sale. After proper proof of the due execution and delivery of the instrument, and its loss or destruction, oral evidence may be given of its contents by any person who signed the document or read it. It is not necessary that the witness should be able to testify with verbal accuracy as to the contents of a lost instrument; it is sufficient that the contents are stated in substance. Witnesses cannot be expected to recite the content word for word. It is enough if intelligent witnesses have read the paper and can state substantially its contents and import with reasonable accuracy.

VILLA REY TRANSIT v. FERRER (1968) Facts: Jose Villarama, the operator of the Villa Rey Transit bus company pursuant to certificates of public convenience (CPC) granted to him by the Public Service Commission, sold two of the CPCs to the Pangasinan Transportation Company (Pantranco), with the condition that Villarama shall not, for 10 years, apply for any TPU service identical or competing with the buyer. Three months later, the Villa Rey Transit Inc. (VRTI) was formed, with Villaramas wife and relatives as stockholders and incorporators. VRTI bought 5 CPCs from Valentin Fernando, two of which was levied pursuant to a writ of execution in favor of Eusebio Ferrer, a creditor of Fernando. The CPCs were sold at auction, of which Ferrer was the highest bidder. Ferrer then sold the CPCs to Pantranco. VRTI filed a complaint for annulment of the sheriffs sale in favor of Ferrer and the subsequent sale of the CPCs to Pantranco. Pantranco, on its part, alleged that Jose Villarama and VRTI were one and the same; hence, the non-competition clause in the abovementioned deed of sale executed by Villarama is also binding to VRTI. As evidence, Pantranco presented photostatic copies of ledger entries and vouchers, the admissibility of which was assailed by Villarama on the ground that the best evidence were the originals themselves. Issue: Were the photostatic copies of the ledger entries and vouchers of VRTI sufficient to prove Pantrancos allegations, and thereby are admissible as evidence? Held: Yes. The photostatic copies of the ledger entries and vouchers showing that Villarama had co-mingled his personal funds and transactions with those made in the name of VRTI are very illuminating evidence. The requisites for the admissibility of secondary evidence when the original is in the custody of the adverse party are: a) the adverse partys possession of the original; b) reasonable notice to the adverse party to produce the same; c) satisfactory proof of its existence; and d) the failure or refusal of the adverse party to produce the original in court.

Villarama himself admitted the previous existence of the files of VRTI. He said that the originals were missing and that VRTI was no longer in possession of the same. However, it is not necessary for a party seeking to introduce secondary evidence o show that the original is in the actual possession of the adversary. It is enough that circumstances show that the writing is in his possession or under his control. It is also not required that the party entitled to the custody of the instrument, upon notice to produce it, admit having it in his possession. The party seeking its production may introduce a copy thereof as in the case of loss because among the exceptions to the best evidence rule is when the original has been lost, destroyed or cannot be produced in court. The original of the vourchers in this case must be deemed to have been lost, thus, secondary evidence are admissible. Doctrine: The requisites for the admissibility of secondary evidence when the original is in the custody of the adverse party are: a) the adverse partys possession of the original; b) reasonable notice to the adverse party to produce the same; c) satisfactory proof of its existence; and d) the failure or refusal of the adverse party to produce the original in court. However, it is not necessary for a party seeking to introduce secondary evidence o show that the original is in the actual possession of the adversary. Neither is it required that the party entitled to the custody of the instrument, upon notice to produce it, admit having it in his possession.

COMPAIA MARITIMA v. ALLIED FREE WORKERS UNION, ET AL. (1977) Facts: On August 11, 1952, the Compaia Maritima and the Allied Free Workers Union entered into a written contract whereby the union agreed to perform arrastre and stevedoring work for Compaia Maritimas vessels at Iligan City. The contract was to be effective for one month. The company could revoke the contract before its expiration if the union failed to render proper service, and it could be renewed by agreement of the parties. The company would also not be liable for the payment of the services of the union for the loading, unloading and delivery of cargoes, which should be paid for by the owners and consignees of the cargoes. The shippers and consignees paid the union only for the arrastre work (handling and hauling of cargo on the wharf or between the establishment of the consignee or shipper and the ships tackle), but refused to pay for the stevedoring service (handling of the cargo in the holds of the vessel or between the ships tackle and the holds of the vessel). They claimed that the shipowner was the one obligated to pay for the stevedoring service because the bill of lading provided that the unloading of the cargo was at the shipowners expense. However, the company refused to pay for the stevedoring service on the basis of the contract. As the union workers were in dire need of work, the contract was not terminated, and was verbally renewed upon its expiration. The union requested recognition as the exclusive bargaining unit, but was denied. Hence, the union filed with the CIR a petition for certification. The company terminated the contract and entered into a new stevedoring contract with Iligan Stevedoring Association. The union filed an Unfair Labor Practice suit and picketed the wharf to prevent the Iligan Stevedoring from performing the arrastre and stevedoring work. The company then sued the union, and the trial court awarded in favor of the company actual damages and other damages based on auditors reports showing alleged losses sustained by the company due to the acts of the union members. The union assailed the admissibility of said reports, alleging that they were hearsay evidence. Issue: Were the auditors reports admissible in evidence as proof of the original records, books of accounts, reports or the like? Held: No. The exception to the best evidence rule, which states that when the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole, the original writings need not be produced, cannot be applied in this case. The voluminour character of the records on which the accountants reports were based was not duly established. Moreover, in order for said rule to be applied, the records and accounts should be made accessible to the adverse party so that the correctness of the summary may be tested on cross-examination. The general rule is that an audit made by or the testimony of a private auditor is inadmissible in evidence as proof of the original records, books of accounts, reports or the like. The company failed to show the difficulty or impossiblity of producing the records in court and their examination and analysis as evidence by the court.

Doctrine: The general rule is that an audit made by or the testimony of a private auditor is inadmissible in evidence as proof of the original records, books of accounts, reports or the like, unless it is proved that there would be difficulty or impossibility in producing the records in court and the examination and analysis thereof.

VERONICO TENEBRO VS. THE HONORABLE COURT OF APPEALS (2004) Facts:

Veronico Tenebro contracted marriage with Leticia Ancajas on April 10, 1990. The two were wed by a judge at Lapu-Lapu City. The two lived together continuously and without interruption until the later part of 1991, when Tenebro informed Ancajas that he had been previously married to a certain Hilda Villareyes on Nov. 10, 1986. Tenebro showed Ancajas a photocopy of a marriage contract between him and Villareyes. Invoking this previous marriage, petitioner thereafter left the conjugal dwelling which he shared with Ancajas, stating that he was going to cohabit with Villareyes. On January 25, 1993, petitioner contracted yet another marriage, this one with a certain Nilda Villegas. When Ancajas learned of this third marriage, she verified from Villareyes whether the latter was indeed married to the petitioner. Villareyes confirmed in handwritten letter that indeed Tenebro was her husband. Ancajas thereafter filed a complaint for bigamy against petitioner. During trial, Tenebro admitted having married to Villareyes and produced two children. However, he denied that he and Villareyes were validly married to each other, claiming that no marriage ceremony took place. He alleged that he signed a marriage contract merely to enable her to get the allotment from his office in connection with his work as a seaman. The trial court found him guilty of bigamy.

ISSUE: WON the petitioner is guilty of the crime of bigamy DECISION: YES. Decision AFFIRMED. HELD: First, the prosecution presented sufficient evidence, both documentary and oral, to prove the existence of the first marriage between the petitioner and Villareyes. Documentary evidence presented was in the form of: (1) a copy of a marriage contract between Tenebro and Villareyes, dated Nov. 10, 1986, which, as seen on the document, was solemnized at the Manila City Hall before Rev. Torres, a Minister of the Gospel, and certified to by the Office of the Civil Registrar, and (2) a handwritten letter from Villareyes to Ancajas dated July 12, 1994, informing Ancajas that Villareyes and Tenebro were legally married. The documents presented by the defense (certification from NSO and certification from Civil Registry, both attesting that the issuing offices have no record of a marriage celebrated between Tenebro and Villareyes) cannot adequately assail the marriage contract, which in itself would already have been sufficient to establish the existence of a marriage between Tenebro and Villareyes. All 3 of the docs fall in the category of public documents, and the RoC provisions relevant to public docs are applicable to all. o The certified copy of the marriage contract was admissible as the best evidence of its contents. o An examination of the wordings of the certification issued by the NSO and the Civil Registry would plainly show that neither document attests as a positive fact that there was no marriage celebrated between Tenebro and Villareyes. Rather, the docs merely attests that the respective issuing offices have no record of such a marriage. Documentary evidence as to the absence of a record is quite different from documentary evidence as to the absence of a marriage ceremony, or documentary evidence as to the invalidity of the marriage between Tenebro and Villareyes. o The marriage contract presented by the prosecution serves as positive evidence as to the existence marriage. o There is no evidence presented by the defense that would indicate that the marriage between Tenebro and Villareyes lacked any requisite for validity, apart from the self-serving testimony of the accused himself.

REPUBLIC v. MARCOS-MANOTOC (2012) FACTS:

Pres. Corazon Aquino, through EO 1, created the PCGG. Numerous cases were subsequently filed. One of the civil cases filed before the Sandiganbayan to recover the Marcoses' alleged ill-gotten wealth was Civil Case No. 0002, now subject of this Petition. PCGG and assisted by the OSG, filed a Complaint for Reversion, Reconveyance, Restitution, Accounting and Damages against Ferdinand E. Marcos, who was later substituted by his estate upon his death; Imelda R. Marcos; and herein respondents Imee Marcos-Manotoc, Irene Marcos-Araneta, Bongbong Marcos, Tomas Manotoc, and Gregorio Araneta III. Imelda; Imee and Bongbong; Irene and Gregorio; Yeung Chun Kam, Yeung Chun Ho and Yeung Chun Fan; and the PEA-PTGWO subsequently filed their Demurrers to Evidence Sandiganbayan issued the assailed Resolution, which granted all the Demurrers to Evidence except the one filed by Imelda R. Marcos. o The Sandiganbayan denied Imelda R. Marcos' Demurrer primarily because she had categorically admitted that she and her husband owned properties enumerated in the Complaint, while stating that these properties had been lawfully acquired. The court held that the evidence presented by petitioner constituted a prima facie case against her, considering that the value of the properties involved was grossly disproportionate to the Marcos spouses' lawful income. o Secondly, the court pointed out that Rolando Gapud, whose deposition was taken in Hong Kong, referred to her as one directly involved in amassing ill-gotten wealth. The court also considered the compromise agreement between petitioner and Antonio O. Floirendo, who disclosed that he had performed several business transactions upon the instructions of the Marcos spouses. o Moreover, the court held that the evidence, were considered hearsay, because their originals were not presented in court, nor were they authenticated by the persons who executed them. Furthermore, the court pointed out that petitioner failed to provide any valid reason why it did not present the originals in court. These exhibits were supposed to show the interests of Imee Marcos-Manotok in the media networks IBC-13, BBC-2 and RPN-9, all three of which she had allegedly acquired illegally. These exhibits also sought to prove her alleged participation in dollar salting through De Soleil Apparel. o Finally, the court held that the relationship of respondents to the Marcos spouses was not enough reason to hold the former liable.

ISSUE: WON the Best Evidence Rule was observed DECISION: Dismissed. HELD: Petitioner failed to observe the best evidence rule. First, petitioner does not deny that what should be proved are the contents of the documents themselves. It is imperative, therefore, to submit the original documents that could prove petitioner's allegations. o Thus, the photocopied documents are in violation Rule 130, Sec. 3 of the Rules of Court, otherwise known as the best evidence rule, which mandates that the evidence must be the original document itself. The first ground judges have gone upon in departing from strict rules, is an absolute strict necessity. Secondly, a presumed necessity. In the case of writings, subscribed by witnesses, if all are dead, the proof of one of their hands is sufficient to establish the deed: where an original is lost, a copy may be admitted; if no copy, then a proof by witnesses who have heard the deed, and yet it is a thing the law abhors to admit the memory of man for evidence. Petitioner did not even attempt to provide a plausible reason why the originals were not presented, or any compelling ground why the court should admit these documents as secondary evidence absent the testimony of the witnesses who had executed them. o The fact that these documents were collected by the PCGG in the course of its investigations does not make them per se public records referred to in the rule (Secs. 19-20, R132). Petitioner presented as witness its records officer, Magno, who testified that these public and private documents had been gathered by and taken into the custody of the PCGG in the course of the Commission's investigation. However, given the purposes for which these documents were submitted, Magno was not a credible witness who could testify as to their contents. To reiterate, "[i]f the writings have subscribing witnesses to them, they must be proved by those witnesses." Witnesses can testify only to those facts

which are of their personal knowledge; that is, those derived from their own perception.Thus, Magno could only testify as to how she obtained custody of these documents, but not as to the contents of the documents themselves. Neither did petitioner present as witnesses the affiants of these Affidavits or Memoranda submitted to the court. Basic is the rule that, while affidavits may be considered as public documents if they are acknowledged before a notary public, these Affidavits are still classified as hearsay evidence. The reason for this rule is that they are not generally prepared by the affiant, but by another one who uses his or her own language in writing the affiant's statements, parts of which may thus be either omitted or misunderstood by the one writing them. Moreover, the adverse party is deprived of the opportunity to cross-examine the affiants. For this reason, affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on the witness stand to testify thereon. o As to the copy of the TSN of the proceedings before the PCGG, while it may be considered as a public document since it was taken in the course of the PCGG's exercise of its mandate, it was not attested to by the legal custodian to be a correct copy of the original. This omission falls short of the requirement of Rule 132, Secs. 24 and 25 of the Rules of Court. In summary, we adopt the ruling of the Sandiganbayan, to wit: o The presentation of the originals of the exhibits is not validly excepted under R130, Section 3 (a), (b), and (d) of the RoC. Under par (d), when `the original document is a public record in the custody of a public officer or is recorded in a public office,' presentation of the original thereof is excepted. However, as earlier observed, all except one of the exhibits introduced by the plaintiff were not necessarily public documents. The TSN of the proceedings purportedly before the PCGG, the plaintiff's exhibit "Q", may be a public document, but what was presented by the plaintiff was a mere photocopy of the purported TSN. The Rules provide that when the original document is in the custody of a public officer or is recorded in a public office, its contents may be proved by a certified copy issued by the public officer in custody thereof. Exhibit "Q" was not a certified copy and it was not even signed by the stenographer who supposedly took down the proceedings. o The rest of the above-mentioned exhibits cannot likewise be excepted under paragraphs (a) and (b) of Section 3. Section 5 of the same Rule provides that `when the original documents has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.' Thus, in order that secondary evidence may be admissible, there must be proof by satisfactory evidence of (1) due execution of the original; (2) loss, destruction or unavailability of all such originals and (3) reasonable diligence and good faith in the search for or attempt to produce the original. None of these requirements were complied with by the plaintiff. Similar to exhibit `Q', exhibits `P', `R', `S', and `T' were all photocopies. `P', `R', and `T' were affidavits of persons who did not testify before the Court. Exhibit `S' is a letter which is clearly a private document. Not only does it not fall within the exceptions of Section 3, it is also a mere photocopy. As We previously emphasized, even if originals of these affidavits were presented, they would still be considered hearsay evidence if the affiants do not testify and identify them. Thus, absent any convincing evidence to hold otherwise, it follows that petitioner failed to prove that the Marcos siblings and Gregorio Araneta III collaborated with former President Marcos and Imelda R. Marcos and participated in the first couple's alleged accumulation of ill-gotten wealth insofar as the specific allegations herein were concerned.

FERNANDO MAULINI, ET AL. v. ANTONIO SERRANO G.R. No. L-8844. December 16, 1914 Facts: Don Antonio Serrano loaned P3,000 to Padern, Moreno & Co. in behalf of Don Fernando Maulini. The loan was covered by a promissory note signed by F. Moreno in behalf of his own and in behalf of his partner Jose Padern, payable to Serrano. Said promissory note was indorsed by Serrano in favor of Maulini, who is the real creditor. Padern & Co. failed to pay at the time of the due date so Maulini instituted an action against the company and Serrano for the collection of a sum of money. Serrano presented parole evidence, claiming that he was merely

negotiating as agent in behalf of Maulini to loan money to the company, and that he received no other consideration for the said note other than a small amount for his services. Hence, he could not be held liable as an indorser. As there was no consideration, Serrano could not be deemed an indorser. Maulini claimed that all parole evidence should not have been admitted, the terms of the agreement having been deemed reduced to writing. The promissory note, as it serves as evidence that there was a contract of indorsement, should be the only evidence admitted to determine the facts and circumstances of the case. Issue: Should parole evidence be admitted to show the true intent of the parties? Held: Yes. The prohibition in Section 285 of the Code of Civil Procedure does not apply to this case. The purpose of that prohibition is to prevent alteration, change, modification or contradiction of the terms of a written instrument, admittedly existing, by the use of parole evidence, except in the cases specifically named in the section. In this case, the evidence offered was not for the purpose of varying, altering, modifying or contradicting the terms of the contract of indorsement admittedly existing between the parties, but to deny that there ever existed any agreement whatever. In other words, the purpose of the parole evidence was to demonstrate that a relation of any kind whatever was created or existed between him and the indorsee by reason of the writing on the back of the instrument and that no consideration ever passed to sustain an indorsement of any kind whatsoever. Where an indorser claims that his name was forged, it is clear that parole evidence is admissible to prove that fact, and, if he proves it, it is a complete defense, the fact being that the indorser never made any such contract, that no such relation ever existed between him and the indorsee, and that there was no consideration whatever to sustain such a contract. In this case, while the indorser does not claim that his name was forged, he does claim that it was obtained from him in a manner which, between the parties themselves, renders the contract as completely inoperative as if it had been forged. Doctrine: The purpose of the prohibition against parole evidence is to prevent alteration, change, modification or contradiction of the terms of a written instrument, admittedly existing, by the use of parole evidence, except in the cases specifically named in the section. Where an indorser claims that his name was forged, however, it is clear that parole evidence is admissible to prove that fact, and if he proves it, it is a complete defense.

PALANCA v. FRED WILSON & CO. (1918) FACTS:

As the culmination of negotiations, Song Fo and Co., of Manila, through its manager Carlos Palanca, entered into a contract with Fred Wilson and Co. for the purchase of a distilling apparatus. Wilson and Co. ordered the apparatus of Turner, Schon and Co., London. About five months after the machine was installed, Palanca wrote Wilson and Co. that the rectifying machine had been examined by a number of competent persons who stated that the machine was not capable of producing the amount of alcohol stipulated in the contract. Getting no satisfaction from the reply of Wilson and Co., action for damages for breach of contract was begun in the CFI, praying first that the defendant be ordered to comply strictly with the terms of the contract and second that the defendant be ordered to pay damages. Defendant answered with a general denial and a cross-complaint asking judgment against the plaintiff, the final installment claimed to be due as the purchase price of the machine. Court ruled for the defendant. ISSUE: WON the defendant is liable DECISION: Judgment AFFIRMED. HELD: It is undeniable from the evidence, that the apparatus in question, while it could treat 6,000 liters of raw material a day, did not produce 6,000 liters a day, but on the contrary only something over 480 liters a day. This being true, appellant vigorously asserts that there has been a breach of the contract. o Appellant would require that all the terms of the contract be given effect with special emphasis upon the phrase de un grado de 96-97 Gay Lussac. This last phrase in connection with the previous one de una capacidad de 6,000 litros cada 24 horas de trabajo according to appellant could not possibly mean that the machine was only to take in 6,000 liters for this would be improbable in view of the express mention of the grade of the product.

Appellee on the other hand relies on the ordinary meaning of the word capacity as indicating receptivity and on the preliminary negotiations as explaining the intention of the parties. The evidence is of little assistance in resolving the question. Thus, Carlos Palanca, the manager of Song Fo and Co., and now the successor of the company, testified that he told the agents of Wilson and Co. that he need a machine that would produce at least 6,000 liters of alcohol a day. The agent of Wilson and Co., James F. Loader, squarely contradicted this on the stand and said that Palanca asked him to get on an apparatus to treat 6,000 liters. The Court approached the subject from two directions. Under the first view, it took up the meaning of the words themselves. Under the second, believing that it is necessary to explain intrinsic ambiguity in the contract, the Court went, as it is permitted to do under chapter IV title II, book IV of the Civil Code, and chapter X of the Code of Civil Procedure, especially section 285, to evidence of the circumstances under which the agreement was made. The terms of the contract disclose the following essential constituents: (1) A machine Guillaume, type C (Agricola) as described on page 30 of the Catalogue Egrot, edition of 1907; (2) a machine of a capacity of 6,000 liters for every 24 hours of work, and (3) a machine producing alcohol of a grade 96-97 Gay Lussac. Type C (Agricola) as described on pages 30 and 31 of the catalogue mentions the grade of alcohol guaranteed of 96-97 Gay Lussac, but contains no mention of a capacity of 6,000 liters a day. Passing the second element for the moment, there is no dispute in the record, or more properly speaking the plaintiff did not prove, that the machine did not turn out alcohol of the grade 96-97 Gay Lussac. Predicated therefore on the description to be found in the catalogue, it is plain that the defendant sold to the plaintiff the machine there mentioned. This leaves for interpretation the one word capacity. That in connection with the distilling of liquor, the word capacity may have different meanings unless restricted in terminology, is disclosed by the decision of the United States SC in Chicago Distilling Co. vs. Stone, where the qualifying phrases working capacity and producing capacity are specifically mentioned. The ordinary meaning of the word is defined in the English Dictionaries as ability to receive or contain; cubic extent; carrying power or space; said of that within which any solid or fluid may be placed, and also used figuratively; as the keg has a capacity of 10 gallons; the ships capacity is 1,000 tons. The ordinary meaning of the Spanish equivalent capacidad as disclosed by the Spanish Dictionaries is a mbito que tiene alguna cosa y es suficiente para contener en si otra; como el de una vasijia, arca, etc. En el vaso se debe atender la disposicion y capacidad. Both definitions denote that which anything can receive or contain. The Court thinks, however, that it can be laid down as a premise for further discussion that there is intrinsic ambiguity in the contract which needs explanation. Section 285 of the Code of Civil Procedure providing that a written agreement shall be presumed to contain all the terms, nevertheless does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, or to explain an intrinsic ambiguity. o Wilson and Co. in their offer to Song Fo and Co., while mentioning capacity, only did so in express connection with the name and description of the machine as illustrated in the catalogue. They furnished Song Fo and Co. with plans and specifications of the distilling apparatus; and these describe a capacity of 6,000 liters of jus (ferment). Wilson and Co.s order to manufacturer, while mentioning a capacity of 6,000 liters per day, does so again in connection with the description in the makers catalogue. And, finally, it was stated during the trial, and it has not been denied, that a machine capable of producing 6,000 liters of rectified alcohol every 24 hours from nipa ferment would cost between P35,000 and P40,000. The proper construction of clause 1 of the contract, in question in connection with the conduct of the parties and surrounding circumstances, is that Wilson and Co. were to furnish Song Fo and CO. a distilling apparatus, type C (Agricola), as described on page 30 of the makers catalogue, capable of receiving or treating 6,000 liters every 24 hours of work and of producing alcohol of a grade 96-97 Gay Lussac.

WOODHOUSE v. HALILI (1953) FACTS On November 29, 1947, plaintiff Woodhouse entered into a written agreement with defendant Halili stating among others that: 1) that they shall organize a partnership for the bottling and distribution of Mission softdrinks, plaintiff to act as industrial partner or manager, and the defendant as a capitalist; 2) that plaintiff was to secure the Mission Soft Drinks franchise for and in behalf of the proposed partnership and 3) that the plaintiff was to receive 30% of the net profits of the business.

ISSUES

Prior to entering into this agreement, plaintiff had informed the Mission Dry Corporation of LA, California, that he had interested a prominent financier (defendant) in the business, who was willing to invest half a million dollars in the bottling and distribution of the said beverages, and requested, in order that he may close the deal with him, that the right to bottle and distribute be granted him for a limited time under the condition that it will finally be transferred to the corporation. Pursuant to this request, plaintiff was given a thirty days option on exclusive bottling and distribution rights for the Philippines. The contract was finally signed by plaintiff on December 3, 1947. When the bottling plant was already in operation, plaintiff demanded of defendant that the partnership papers be executed. Defendant Halili gave excuses and would not execute said agreement, thus the complaint by the plaintiff. Plaintiff prays for the : 1.execution of the contract of partnership; 2) accounting of profits and 3)share thereof of 30 percent with 4) damages in the amount of P200,000. The Defendant on the other hand claims that: 1) the defendants consent to the agreement, was secured by the represent ation of plaintiff that he was the owner, or was about to become owner of an exclusive bottling franchise, which representation was false, and that plaintiff did not secure the franchise but was given to defendant himself 2) that defendant did not fail to carry out his undertakings, but that it was plaintiff who failed and 3)that plaintiff agreed to contribute to the exclusive franchise to the partnership, but plaintiff failed to do so with a 4) counterclaim for P200,00 as damages. The CFI ruling: 1) accounting of profits and to pay plaintiff 15 % of the profits and that the 2) execution of contract cannot be enforced upon parties. Lastly, the 3) fraud wasnt proved.

1. WON plaintiff falsely represented that he had an exclusive franchise to bottle Mission beverages 2. WON false representation, if it existed, annuls the agreement to form the partnership HELD 1. Yes. Plaintiff did make false representations and this can be seen through his letters to Mission Dry Corporation asking for the latter to grant him temporary franchise so that he could settle the agreement with defendant. The trial court reasoned, and the plaintiff on this appeal argues, that plaintiff only undertook in the agreement to secure the Mission Dry franchise for and in behalf of the proposed partnership. The existence of this provision in the final agreement does not militate against plaintiff having represented that he had the exclusive franchise; it rather strengthens belief that he did actually make the representation. The defendant believed, or was made to believe, that plaintiff was the grantee of an exclusive franchise. Thus it is that it was also agreed upon that the franchise was to be transferred to the name of the partnership, and that, upon its dissolution or termination, the same shall be reassigned to the plaintiff. Again, the immediate reaction of defendant, when in California he learned that plaintiff did not have the exclusive franchise, was to reduce, as he himself testified, plaintiffs participation in the net pr ofits to one half of that agreed upon. He could not have had such a feeling had not plaintiff actually made him believe that he(plaintiff) was the exclusive grantee of the franchise. The trial court did not consider this draft on the principle of integration of jural acts. We find that the principle invoked is inapplicable, since the purpose of considering the prior draft is not to vary, alter, or modify the agreement, but to discover the intent of the parties thereto and the circumstances surrounding the execution of the contract. The issue of fact is: Did plaintiff represent to defendant that he had an exclusive franchise? Certainly, his acts or statements prior to the agreement are essential and relevant to the determination of said issue. The act or statement of the plaintiff was not sought to be introduced to change or alter the terms of the agreement, but to prove how he induced the defendant to enter into it to prove the representations or inducements, or fraud, with which or by which he secured the other party's consent thereto. These are expressly excluded from the parol evidence rule. (Bough and Bough vs. Cantiveros and Hanopol, 40 Phil., 209; port Banga Lumber Co. vs. Export & Import Lumber Co., 26 Phil., 602; III Moran 221,1952 rev. ed.) Fraud and false representation are an incident to the creation of a jural act, not to its integration, and are not governed by the rules on integration. Were parties prohibited from proving said representations or inducements, on the ground that the agreement had already been entered into, it would be impossible to prove misrepresentation or fraud. Furthermore, the parol evidence rule expressly allows the evidence to be introduced when the validity of an instrument is put in issue by the pleadings (section 22, par. (a), Rule 123, Rules of Court),as in this case. 2. No. In consequence, article 1270 of the Spanish Civil Code distinguishes two kinds of (civil) fraud, the causal fraud, which may be ground for the annulment of a contract, and the incidental deceit, which only renders the

party who employs it liable for damages only. The Supreme Court has held that in order that fraud may vitiate consent, it must be the causal (dolo causante), not merely the incidental (dolo incidente) inducement to the making of the contract. The record abounds with circumstances indicative of the fact that the principal consideration, the main cause that induced defendant to enter into the partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive franchise to bottle and distribute for the defendant or for the partnership. The original draft prepared by defendants counsel was to the effect that plaintiff obligated himself to secure a franchise for the defendant. But if plaintiff was guilty of a false representation, this was not the causal consideration, or the principal inducement, that led plaintiff to enter into the partnership agreement. On the other hand, this supposed ownership of an exclusive franchise was actually the consideration or price plaintiff gave in exchange for the share of 30 per cent granted him in the net profits of the partnership business. Defendant agreed to give plaintiff 30 per cent share in the net profits because he was transferring his exclusive franchise to the partnership. Having arrived at the conclusion that the contract cannot be declared null and void, may the agreement be carried out or executed? The SC finds no merit in the claim of plaintiff that the partnership was already a fait accompli from the time of the operation of the plant, as it is evident from the very language of the agreement that the parties intended that the execution of the agreement to form a partnership was to be carried out at a later date. , The defendant may not be compelled against his will to carry out the agreement nor execute the partnership papers. The law recognizes the individuals freedom or liberty to do an act he has promised to do, or not to do it, as he pleases. Dispostive Postion: With modification above indicated, the judgment appealed from is hereby affirmed.

LAND SETTLEMENT & DEVELOPMENT CORP. v. GARCIA PLANTATION, ET AL. G.R. No. L-17820. April 24, 1963 Facts: Land Settlement and Development Corp. (LASEDECO) sold 2 tractors to Garcia Plantation. The payment of the purchase price was secured by two promissory notes signed by Salud de Garcia. Upon the Plantations failure to pay such purchase price, LASEDECO filed an action for the collection of P5,955.30. By way of defense, the Sps. Garcia claimed that the two promissory notes had been novated by a subsequent agreement between them and Filomeno Kintanar, the manager of the Board of Liquidators of LASEDECO, whereby the deadline of payment was extended to May 31, 1957. To prove this, they presented a letter written by Kintanar, dated November 20, 1956 and addressed to Mrs. De Garcia, providing for an extension of deadline of payment on the condition that she will make a substantial downpayment immediately, or else the extension shall be deemed not granted. As de Garcia had failed to pay such substantial downpayment, LASEDECO claims the obligation had become due and demandable. Issue: May parole evidence be admitted to show the true intention of the parties as to the letter executed subsequent to the deed of sale? Held: Yes. The subject of agreement alluded to in the letter of Kintanar was the condition to be complied with or the consideration given for the extension of time within which the Sps. Garcia may pay their account. The lower court should have admitted the parole 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 parole evidence. 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.

The rule excluding parole evidence to vary or contradict a writing does not extend so far as to preclude the admission of extrinsic evidence, to show prior or contemporaneous collateral parole agreements between the parties, but such evidence may be received, regardless of whether or not the written agreement contains reference to such collateral agreemeent. Here, reference is made of a previous agreement in the second paragraph of the latter, 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. Had LASEDECO been allowed to prove the condition precedent to the extension of the payment, LASEDECO would have been able to show that because of the failure to pay a substantial down payment, the agreement was breached and the contract never became effective, and the extension should be considered as not having been given at all. Doctrine: 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 parole evidence.

VICTORIA LECHUGAS v. COURT OF APPEALS, ET AL. 143 SCRA 335 (1986) Facts: Victoria Lechugas allegedly bought the subject properties from Leoncia Lasangue, as evidenced by a public Deed of Absolute Sale which was registered with the Register of Deeds. Lechugas claimed that the Lozas, by means of fraud, intimidation, strategy and stealth, unlawfully entered said properties and appropriated the produce thereof for themselves, refusing to surrender the same despite demands. The Lozas, however, deny that the properties which Lechugas bought from Lasangue in 1950 was the same subject land. They claimed that their predecessor, Hugo Loza, had bought a parcel of land from one Victorina Limor, and another adjoining land from one Emeterio Lasangue. The remaining portion of the lot bought from Limor was allegedly the one bought by Lechugas. This was corroborated by Lasangue in her testimony, who, although illiterate, was able to specifically point out the land sold to Lechugas. Such testimony, however, was contrary to the contents of the deed of sale executed between Lasangue and Lechugas. Issue: Should parole evidence have been admitted to determine the land bought by Lechugas? Held: Yes. The Parole Evidence Rule does not apply where the controversy is between one of the parties to the document and third persons. While the deed of sale was executed between Lasangue and Lechugas, the dispute over what was actually sold was between Lechugas and the Lozas. Lasangue, therefore, is a stranger to the dispute and is not bound by the rule. The Parole Evidence Rule applies only as between parties to the written agreement or their privies, and not to strangers. It does not apply where either one of the parties between whom the question arises is a stranger to the written agreement and does not claim under or through one who is party to it. Doctrine: The parol evidence rule does not apply, and may not properly be invoked by either party to the litigation against the other, where at least one of the parties to the suit is not party or a privy of a party to the written instrument in question and does not base a claim on the instrument or assert a right originating in the instrument or the relation established thereby. BALDOMERO INCIONG, JR. v. COURT OF APPEALS, ET AL. G.R. No. 96405. June 26, 1996 Facts: Baldomero Inciong, Jr., along with Rene Naybe and Gregorio Pantanosas, signed a promissory note in the amount of P50,000.00, holding themselves jointly and severally liable to the Philippine Bank of

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Communications (PBC). Having failed to pay their obligation on the expiration date of the note, PBC sent letters to both Inciong and Naybe, demanding payment of the debt. When neither Inciong nor Naybe respondend, PBC filed a complaint for the collection of a sum of money against the three debtors, of whom only Inciong was served summons. In his answer, Inciong attempted to adduce evidence in order to defeat the terms of the promissory note, claiming that parole evidence may should be allowed as the note was not a public deed but a mere commercial paper which did not bear the signature of attesting witnesses. Inciong alleged that he was only persuaded by third parties to act as a co-maker to the loan incurred by Naybe, who was allegedly interested ina certain falcata logs operation business but was unable to procure money to buy a chainsaw to be contributed thereto. Inciong claimed he only signed as co-maker for the loan of P5,000.00, not P50,000.00, stressing that he indicated such in one of the five copies of the blank promissory note which he signed. He claimed that, through trickery, fraud and misrepresentation, he was made liable for P50,000.00. Issue: Does a promissory note fall under the Parole Evidence Rule? Held: Yes. The first paragraph of the parole evidence rule states: When the terms of an agreement have been reduced to 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. Clearly, the rule does not specify that the written agre ement be a public document. What is required is that such be in writing. Thus, for the parole evidence rule to apply, a written contract need not be in any particular form or signed by both partes. As a general rule, bills, notes and other instruments of a similar nature are not subject ot be varied or contradicted by parole or extrinsic evidence. In this case, however, Inciong can adduce parole evidence to prove a contemporaneous agreement that was the inducing and moving cause of the written agreement. Inciong can prove by alleging fraud that he agreed to a loan of only P5,000.00. However, fraud must be established by clear and convincing evidence, which Inciong failed to do. Doctrine: For the parole evidence rule to apply, a written contract need not be in any particular form or signed by both partes. As a general rule, bills, notes and other instruments of a similar nature are not subject ot be varied or contradicted by parole or extrinsic evidence.

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