G.R. No. 79962 - Cruz vs. Court of Appeals

The dispute involves petitioner Lucio Cruz and private respondent Conrado Salonga, who were engaged in business transactions involving the buying and selling of fish.
Salonga, a private respondent, initiated a complaint for collection and damages based on alleged financial transactions with Cruz.

Salonga claimed that during their business dealings, Cruz received from him various sums of money, which were purportedly part of a contractual arrangement.
The controversy centered on an alleged water-tight agreement whereby:

In May 1982, Cruz allegedly borrowed an amount of P35,000, as attested by a receipt (Exhibit D) dated May 4, 1982.
Of P35,000, only P20,000 was purportedly repaid, leaving a balance due.
Additional receipts evidenced further transactions including amounts of P8,000 (Exhibit E), P500 (Exhibit F), P3,000 (Exhibit G), and P3,750 (Exhibit H) from August to September 1982.
A separate receipt (Exhibit I) dated May 14, 1982 purportedly acknowledged a payment of P28,000 as consideration for a "pakyaw" (buying in bulk) agreement.

Salonga alleged that the transactions were part of an agreement involving an exclusive right for him to purchase fish from certain fishponds leased by Cruz, with the loan amounts linked to this understanding.
Cruz, however, denied the existence of a loan contract, asserting instead that the money received was for a twofold purpose:

Payment for a “pakyaw” agreement (P28,000), and
An advance payment (P7,000) for a sublease of the fishpond which spanned one year commencing August 15, 1982.

Cruz further maintained that Salonga was indebted to him for unpaid rentals during his occupation of the fishpond, while Salonga countered by asserting additional amounts received for separate fish purchase transactions.

At the pre-trial conference on August 24, 1984, both parties entered into a partial stipulation of facts which outlined:

The existence of a “pakyaw” contract for a sum of P28,000, arising in May 1982, and the delivery of P35,000 by Salonga to Cruz as recorded by Exhibit D.
The subsequent verbal agreement for the sublease of the fishpond for one year for the amount of P28,000, with corresponding receipts evidencing payments on specific dates (August 15, September 4, September 19, and September 30, 1982).
The occurrence of an event on June 15, 1983, when the owner of the fishpond, Nemesio Yabut, repossessed the property, impacting the contractual obligations.

The stipulation captured key elements of their transactions without settling all the disputed characterizations — notably, whether the amounts pertained to loans or were genuine consideration for the pakyaw and sublease agreements.

Petitioner Cruz testified that the amount of P35,000 received on May 4, 1982, comprised full payment for the pakyaw agreement (P28,000) plus an advance (P7,000) for the sublease agreement.
Salonga asserted that an additional payment of P28,000 (Exhibit I) validated a separate acknowledgment of their pakyaw agreement.
Testimonies from witnesses — including the preparer of the receipt evidencing the transaction — corroborated Cruz’s version of splitting the payment into the agreed contractual components.
Discrepancies arose between the parties as Salonga later alleged that the transactions were in fact loans, a classification which Cruz repeatedly refuted.

The Regional Trial Court (RTC) ruled in favor of petitioner Cruz, ordering Salonga to pay a computed deficiency along with litigation expenses and attorney’s fees.
The Court of Appeals reversed the RTC’s ruling, recharacterizing the nature of the transactions as loans rather than contractual sales and sublease agreements.
The Supreme Court granted the petitioner’s appeal, questioning the proper application of evidentiary rules, notably the parol evidence rule, and addressing the binding nature of the partial stipulation of facts.

Disregarding parol evidence introduced by Cruz to elucidate the context and nature of the receipts (Exhibits D and I) under the exceptions provided by Section 7, Rule 130 of the Rules of Court; and
Conclusively characterizing the financial transactions as loans rather than as parts of a pakyaw and sublease agreement.

Whether, assuming that Exhibits D and I evidenced separate transactions, Exhibit I should be excluded given that it was not pleaded as a cause of action.

Whether the partial stipulation of facts agreed upon during the pre-trial conference is binding upon both parties and the court, thereby integrating those facts into the determination of the disputed transaction.

Whether the failure of Salonga to timely object to the introduction and explanation of evidence (notably the parol evidence regarding the receipts) amounts to a waiver of the right to invoke the parol evidence rule.