Parole Evidence Rule Digests.docx

PAROLE EVIDENCE RULE Enriquez vs. Ramos Digest Author: FABI DOCTRINE: Parole evidence permissible if there is allegation in the pleadings that agreement does not express true intent. FACTS: 1.

Defendant purchased from plaintiffs 20 parcels of land located in Quezon City for the amount of P235,056, only the amount of P35,056 was paid on the date of sale, the balance of P200,000 being payable within two years from the date of sale.

ISSUE: W/N the parole evidence stating that there was a promise on the part of the plaintiff that is not contained in the contract can be admitted? RULING+RATIO: YES. LEGAL BASIS: GENERAL RULE: 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. EXCEPTION: However, a party may present evidence to modify, explain or add to the terms of written agreement if he puts in issue in his pleading:

2.

Provided that at least P100,000.00 should be paid during the first year, otherwise the whole unpaid balance would become immediately demandable.

3.

To secure the payment of the balance defendant executed a mortgage in favor of plaintiffs upon the 20 parcels of land sold.

4.

Plaintiffs instituted foreclosure proceedings alleging that defendant broke certain stipulations contained in the deed of sale with mortgage. a. The defendant refuse to pay the sum of P200,000 within the stipulated period. b. The mortgage on Bulacan property was never registered and, c. The realty tax for 1959 on the lots mortgage were not paid by the defendant.

In this case, defendant has specifically pleaded that the contract of sale in question does not express the true intent of the parties with regard to the construction of the roads.

CONTENTION OF DEFENDANT: (CONTRACT DOES NOT EXPRESS THE TRUE AGREEMENT OF THE PARTIES)

The failure of defendant to pay the realty and income taxes as agreed upon, as well as to register the mortgage with respect to the Bulacan property, aside from being minor matters, appear sufficiently explained in the brief of defendant-appellee.



The contract does not express the true agreement of the parties because there is a stipulation that was omitted from the contract, upon the suggestion of plaintiff’s counsel who also prepared the contract, whereby plaintiffs promised that they would construct roads in the lands on or before January, 1959;



Said condition was not placed in the contract because, according to plaintiffs’ counsel, it was a superfluity(unnecessary), because there is an ordinance in Quezon City which requires the construction of roads in a subdivision before lots could be sold.



Therefore, the construct of the roads was not included in the contract because the ordinance was deemed part of the contract.



(PURCHASE PRICE) Defendant further claims that the true purchase price of the sale was not P235,056 but only P185,000, the difference of P50,000 being the voluntary contribution of defendant for the construction of the road.

(b) The failure of the written agreement to express the true intent and agreement of the parties thereto; APPLICATION:

It appears that plaintiffs have failed to comply with the condition precedent relative to the construction of the roads in the subdivision in question, it follows that their action is premature as found by the court a quo.

DISPOSITION: CA DECISION AFFIRMED.

CONTENTION OF PLAINTIFF: 

There was no such oral agreement or understanding because all that was agreed upon between the parties was already expressed and included in the contract of sale Exhibit A executed between the parties.

RTC: Ruled in favor of DEFENDANT.; CA: Affirmed, Declared that the true purchase price is P185,000 which is approximately the price of the entire area of the land sold.

1

PAROLE EVIDENCE RULE Canuto vs. Mariano. Digest Author: FABI DOCTRINE: PAROL EVIDENCE AFFECTING WRITINGS.— The rule forbidding the admission of parol or extrinsic evidence to alter, vary, or contradict a written instrument does not apply so as to prohibit the establishment by parol of an agreement between the parties in writing, entered into subsequent to the time when the written instrument was executed, notwithstanding such agreement may have the effect of adding to, changing, modifying, or even altogether abrogating the contract of the parties as evidenced by the writing; for the parol evidence does not in any way deny that the original agreement of the parties was that which the writing purports to express, but merely goes to show that the parties have exercised their right to change or abrogate the same, or to make a new and independent contract. It makes no difference how soon after the execution of the written contract the parol one was made. If it was in fact subsequent and is otherwise unobjectionable it may be proved and enforced. FACTS:

CONTENTION OF PLAINTIFF: 

Contends that the plaintiff should not be permitted to alter, vary, or contradict the terms of the written instrument by the introduction of oral evidence.

ISSUE: W/N the parol evidence to alter, vary, or contradict a written instrument can be admitted? RULING+RATIO: YES. LEGAL BASIS: The rule forbidding the admission of parol or extrinsic evidence to alter, vary, or contradict a written instrument does not apply so as to prohibit the establishment by parol of an agreement between the parties to a writing, entered into subsequent to the time when the written instrument was executed, notwithstanding such agreement may have the effect of adding to, changing, modifying, or even altogether abrogating the contract of the parties as evidenced by the writing; for the parol evidence does not in any way deny that the original agreement of the parties was that which the writing purports to express, but merely goes to show that the parties have exercised their right to change or abrogate the same, or to make a new and independent contract.



Canuto executed a deed of sale of a parcel of land to Mariano for the sum of Php 860, reserving the right to repurchase the land within 1 year from the date of the deed of sale.



Canuto failed to exercise her right to repurchase, the redemption period having elapsed.

APPLICATION:



Mariano claim absolute ownership over the land, despite the insistent demand of Canuto that she be permitted to exercise her reserved right of repurchase in accordance with an alleged oral agreement for the extension of the redemption period.



Canuto claimed that 2 days before the expiration of the original redemption period, she asked Mariano for an extension of time for the repurchase of the land and Mariano agreed.

In this case, The defendant having extended the time within which the plaintiff could repurchase the land on condition that she would find the money and make the repurchase within the extended period, it is clear that he cannot be permitted to repudiate his promise, it appearing that the plaintiff stood ready to make the payment within the extended period, and was only prevented from doing so by the conduct of the defendant himself.



"It makes no difference how soon after the execution of the written contract the parol one was made. If it was in fact subsequent and is otherwise unobjectionable it may be proved and enforced."

DISPOSITION: AFFIRMED.

After the expiration of the redemption period, Canuto decided to repurchase the land, but Mariano failed to appear at the time and place agreed upon for the payment of the purchase price and has refused to execute a deed of resale, or to reserve the purchase price agreed upon, despite Canuto’s repeated demands and tender of purchase price.

RTC: Ruled in favor of CANUTO. TESTIMONY OF PLAINTIFF: (CANUTO) 

She was washing clothes when the defendant passed by and she seized the opportunity to beg an extension to repurchase the land, promising that she would borrow money and make payment if he would extend the redemption period until the end of the month; defendant agreed, but failed to fulfill his promise to the plaintiff.



Pascual, who was present when the oral agreement to extend the time for the repurchase of the land was made, corroborated her testimony.

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PAROLE EVIDENCE RULE Yu Tek & Co. vs. Gonzalez. Digest Author: FABI



DOCTRINE: While parol evidence is admissible in a variety of ways to explain the meaning of written contracts, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing, unless there has been fraud or mistake.

Gonzales undertook to deliver a specified quantity of sugar within a specified time. The contract placed no restriction upon him in the matter of obtaining the sugar.



He was equally at liberty to purchase it on the market or raise it himself.



It may be true that Gonzales owned a plantation and expected to raise the sugar himself, but he did not limit his obligation to his own crop of sugar.

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The conclusion is that the condition which the defendant seeks to add to the contract by parol evidence cannot be considered.

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The rights of the parties must be determined by the writing itself.

FACTS: 

Yu Tek and Co. and Basilio Gonzales entered into a written contract wherein Gonzales obligated himself to deliver to Yu Tek 600 piculs of sugar of first and second grade within 3 months in consideration of the receipt of the sum of Php3,000.



It was also stipulated that in case Gonzales fails to deliver, the contract will be rescinded he will be obligated to return the P3,000 received and also the sum of P1,200 by way of indemnity for loss and damages.



Gonzales failed to carry out his obligation.



Plaintiff filed a case and proved that no sugar had been delivered to him under the contract nor had he been able to recover the P3,000.

DISPOSITION: AFFIRMED and MODIFIED by allowing the recovery of P1,200 under paragraph 4 of the contract.

CONTENTION OF DEFENDANT: (GONZALES) 

Gonzales alleges, through parole evidence, that the parties intended that the sugar was to be secured from the crop raised on his plantation, and that he was unable to fulfill the contract by reason of the almost total failure of his crop.

Judgment was rendered for P3,000 only, and from this judgment both parties appealed. (Court refused to permit parol evidence showing that the parties intended that the sugar was to be secured from the crop which the defendant raised on his plantation) ISSUE: W/N the parole evidence stating that the sugar was to be obtained exclusively from the crop raised by the defendant must be admitted? RULING+RATIO: NO. LEGAL BASIS: Parties are presumed to have reduced to writing all the essential conditions of their contract. While parol evidence is admissible in a variety of ways to explain the meaning of written contracts, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing, unless there has been fraud or mistake. APPLICATION: 

In this case, it is sought to show that the sugar was to be obtained exclusively from the crop raised by the defendant.



There is no clause in the written contract which even remotely suggests such a condition.

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PAROLE EVIDENCE RULE Land Settlement and Development Corp. vs. Garcia Plantation Co., Inc. Digest Author: FABI DOCTRINE: Parol evidence rule; Exceptions; When operation of contract depends on occurrence of an event which is a condition precedent, such may be established by parole evidence. FACTS: 

Land Settlement a 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 Plantation’s failure to pay such purchase price, LASEDECO filed an action for the collection of the P5,955.30.

CONTENTION OF DEFENDANT: (GARCIA PLANTATION) 

The defendants admitted the execution of the two promissory notes, but CONTENDED that the same had been NOVATED by a SUBSEQUENT AGREEMENT contained in a letter (EXH. L) sent by the manager of the Board of Liquidators of LASEDECO, giving the defendant Salud Garcia an EXTENSION up to May, 31 1957, within which to pay the account and since the complaint was filed on FEB 20, 1957, the claimed that the action was premature and prayed that the complaint be dismissed.

LEGAL BASIS: 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. APPLICATION: The parol evidence consisted of the testimony of Attys. Guinto and Kintanar, to the effect that in view of the plea of defendant Vicente B. Garcia to give the defendants an extension of time to pay their accounts, 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 is manifested by the second paragraph of the letter Exhibit L, quoted hereunder:

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.

CONTENTION OF PLAINTIFF: (LA SE DE CO) 

The plaintiff in the reply and answer to the counterclaim, admitted the due execution and genuineness of the letter marked Exhibit L, but contended that the same did not express the true and intent agreement of the parties, thereby placing the fact in issue, in the pleadings.

At the trial, when the plaintiff presented the 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 for the defendants) was drafted and prepared, the lower court ruled out said testimony and prevented the introduction of evidence under the parol evidence rule (Sec. 22, Rule 123). Plaintiff also intended to present the writer of the letter, to testify on the same matter, but in view of the ruling of the lower court, it rested its case. RTC: Ruled in favor of DEFENDANT, dismissig the case, stating that the action was premature.

November 20, 1956

Respectfully, (Sgd.) FILOMENO C. KINTANAR"

The subject of agreement alluded to in the second paragraph of the above letter, was the condition to be complied with or the consideration given for the extension of time, within which the Garcia spouses pay their account. 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. THEREFORE, the lower court erred in dismissing the case. DISPOSITION: REVERESED and REMANDED.

ISSUE: W/N lower court erred in excluding parole evidence, tending to prove the true intention and agreement of the parties and the existence of a condition precedent, before the extension granted the defendants, contained in Exhibit L, could become effective. RULING+RATIO: YES. The lower court should have admitted 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.

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PAROLE EVIDENCE RULE Maulini vs. Serrano. Digest Author: FABI DOCTRINE: Parol evidence is admissible to show that an indorsement was made wholly without consideration and, that in making it, the indorser acted as agent for the indorsee and as a mere vehicle for the transfer of the naked title from the maker to the indorsee. GENERAL RULE: The prohibition against the introduction of parol evidence contained in section 285 of the Code of Civil Procedure was designed to prevent alteration, change, modification, variation or contraction of the terms of a written instrument admittedly existing except in cases specifically named therein. EXCEPTION: The prohibition does not apply where the purpose of the parol evidence is to show that: 1.) no written contract ever existed, 2.) that the minds of the parties never met on the terms of such a contract, 3.) that they never mutually agreed to enter into such a contract, and 4.)that there never existed any consideration upon which such an agreement could be founded.

Facts: This is an appeal from a judgment of the Court of First Instance of the city of Manila in favor of the plaintiff for the sum of P3,000, with interest thereon at the rate of 11/2 per cent month from September 5, 1912, together with the costs. The action was brought by the plaintiff upon the contract of indorsement alleged to have been made in his favor by the defendant upon the following promissory note:

Ruling: LB: The accommodation to which reference is made in Section 29 is not one to the person who takes the note but one to the maker or indorser of the note. App: It is true, that in the case at bar, it was an accommodation to the plaintiff, in the popular sense, to have the defendant indorse the note;; but it wasn't the accommodation described in the law but rather a mere favor to him and one which in no way bound Serrano. In cases of accommodation indorsement, the indorser makes the indorsement for the accommodation of the maker. Such an indorsement is generally for the purpose of better securing the payment of the notethat is, he lends his name to the maker and not the holder. **LB: Parol evidence is admissible for the purposes named. The prohibition against parol evidence is to prevent alteration, change, modification, or contradiction of the term of a written instrument, admittedly existing, by the use of some parol evidence except in cases specifically named in the action. **App: The case at bar is not one where the evidence offered varies, alters, modifies, or contradicts the terms of indorsement admittedly existing. The evidence was not offered for that purpose. The purpose was to show that the contract of indorsement ever existed; that the minds of the parties never met on the terms of such contract; that they never mutually agreed to enter into such contract; and that there never existed a consideration upon which such an agreement could be founded.

ISSUE: 1. Whether Serrano was an accommodation indorser and liable on the note? - NO. 2. Whether the evidence is admissible? - YES.

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PAROLE EVIDENCE RULE Philippine National Bank vs. Seeto Digest Author: FABI DOCTRINE: PAROL EVIDENCE ON OBLIGATIONS OF INDORSER ADMISSIBLE.— Assurances made by an indorser that the drawer has funds, which assurances induced the bank to cash the check, are admissible in evidence but they are merely expressions of the obligations of the indorser as prescribed in Section 66, Negotiable Instruments Law. FACTS:

LEGAL BASIS: In the case of Tan Machan vs. De La Trinidad, , thE court held that parol evidence is admissible to show that parties signing as principals merely did so as sureties. In the case of Robles vs. Lizarraga Hermanos, it was also held by this court that parol evidence is admissable to prove "an independent or collateral agreement which constituted an inducement to the making of the sale or part of the consideration therefor." In Philips vs. Preston, the Supreme Court of the United States held that any prior or contemporaneous conversation in connection with a note or its indorsement, may be proved by parol evidence.



Seeto presented PNB at Surigao a P5,000 check, payable to cash or bearer, and drawn by Kiao against Cebu branch of PNB.



After consultation with the bank employees, Seeto made a general and unqualified endorsement of the check, which was accepted by PNB’s agency, which paid Seeto the value of the check.



Upon being presented to the drawee bank for payment, however, the check was dishonoured for INSUFFICIENT FUNDS.



PNB demanded refund from Seeto.

Therefore the supposed assurances that the drawer had funds and that the respondent would refund the amount of the check if the drawer had no funds, were the considerations or reasons that induced the branch agency of the petitioner to go out of its ordinary practice of not cashing out of town checks and accept the check and to pay its face value, the same should be provable by parol, provided that the assurances or inducements offered would not vary, alter, or destroy the obligations attached by law to the indorsement.



Seeto refused claiming that at the time of the negotiation of the check, the drawer had sufficient funds in the drawee bank, and had not PNB delayed in forwarding the check until the drawer’s funds were exhausted, the same would have been paid.

However, that the supposed assurances of refund in case of dishonor of the check are precisely the ordinary obligations of an indorser, and these obligations are, under the law, considered discharged by an unreasonable delay in the presentation of the check for payment.



Petitioner presented a complaint in the Court of First Instance.

CONTENTION OF PLAINTIFF: (PNB) 



PNB alleged that Seeto gave assurances that the drawer of the check had sufficient funds with the bank, and that Seeto had made a general and unqualified indorsement. As evidence, PNB presented two witnesses at the trial, who testified that the check was cashed due to assurances given by Seeto and the promise that he would refund the amount paid by PNB should the check be dishonored.

APPLICATION:

There was no express obligation assumed by the respondent herein that the drawer would always have funds, or that he (the indorser) would refund the amount of the check even if there was delay in its presentation. THEREFORE, while the Court of Appeals may have committed an error in disregarding the evidence submitted by petitioner at the trial of the assurances made by respondent herein at the time of the negotiation of the check, such error was without prejudice, because the supposed assurances given were part of his obligations as an indorser, which were discharged by the unreasonable delay in the presentation of the check for payment.

RTC: Ordered respondent to refund the amount he had received for the check. CA: Ruled that petitioner was guilty of unreasonably retaining and withholding the check, and that the delay in the presentment for payment was inexcusable, so that respondent was thereby discharged from liability.

DISPOSITION: The judgment appealed from is, therefore, affirmed.

Also held that parol evidence is incompetent to show that one signing a check as indorser is merely a surety or guarantor, rejecting the evidence adduced at the trial court about the respondent's assurances and promise to refund. ISSUE: W/N parol evidence with respect to the verbal assurances made by Seeto be admitted as evidence?. RULING+RATIO: YES.

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PAROLE EVIDENCE RULE Ortañez vs. Court of Appeals Digest Author: FABI DOCTRINE: Parol evidence is admissible to explain the meaning of a contract but cannot incorporate additional contemporaneous conditions which are not mentioned at all in the writing unless there has been fraud or mistake FACTS: 

The private respondents Inocentes spouses sold to petitioner Ortanez 2 parcels of registered land in Quezon City for a consideration of P35,000.00 and P20,000.00, respectively.



The spouses received the payments, but failed to deliver the titles to petitioner. Ortanez demanded from the former the delivery of said titles.



Private respondents, however, refused on the ground that the title of the first lot is in the possession of another person, and petitioner's acquisition of the title of the other lot is subject to certain conditions.



Petitioner sued private respondents for specific performance before the RTC.



Private respondents alleged the existence of the following oral conditions which were never reflected in the deeds of sale: 1. that plaintiff will cause the segregation of his right of way amounting to 398 sq. m., 2. Plaintiff will submit to the defendants the approved plan for the segregation, 3. Plaintiff will put up a strong wall between his property and that of defendants' lot to segregate his right of way, and 4. Plaintiff will pay the capital gains tax and all other expenses that may be incurred by reason of sale.



During trial, private respondent Inocentes, a former judge, orally testified that the sale was subject to the above conditions, although such conditions were not incorporated in the deeds of sale.



Despite petitioner's timely objections on the ground that the introduction of said oral conditions was barred by the parole evidence rule, the lower court, admitted them and eventually dismissed the complaint as well as the counterclaim. On appeal, the CA AFFIRMED.

Private respondents’ oral testimony on the alleged conditions, coming from a party who has an interest in the outcome of the case, depending exclusively on human memory, is not as reliable as written or documentary evidence

LEGAL BASIS: Spoken words could be notoriously unreliable unlike a written contract which speaks of a uniform language. Thus, under the general rule in Section 9 of Rule 13010 of the Rules of Court, when the terms of an agreement were reduced to writing, as in this case, it is deemed to contain all the terms agreed upon and no evidence of such terms can be admitted other than the contents thereof. APPLICATION: In this case, Considering that the written deeds of sale were the only repository of the truth, whatever is not found in said instruments must have been waived and abandoned by the parties. Examining the deeds of sale, we cannot even make an inference that the sale was subject to any condition. As a contract, it is the law between the parties. Although parol evidence is admissible to explain the meaning of a contract, “it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing unless there has been fraud or mistake.”  No such fraud or mistake exists in this case. In addition, the deeds of sale are clear, without any ambiguity, mistake or imperfection, much less obscurity or doubt in the terms. DISPOSITION: appealed decision is REVERSED and the records of this case REMANDED to the trial court for proper disposition in accordance with this ruling.

ISSUE: W/N parole evidence should be admitted on to establish the alleged oral conditions-precedent to a contract of sale, when the deeds of sale are silent on such conditions. RULING+RATIO: NO. The parole evidence herein introduced is inadmissible.

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CHARLES F. WOODHOUSE v. FORTUNATO F. HALILI Topic: Parole Evidence Rule Doctrine: If an act or statement was not sought to be introduced to change or alter the terms of the agreement, but to prove the representations or inducements, or fraud, with which or by which he secured the other party's consent thereto, it is excluded from the parole evidence rule. Facts: 

Plaintiff entered into a written agreement with the defendant to the effect that: o they shall organize a partnership for the bottling and distribution of soft drinks, o plaintiff to act as industrial partner ormanager, and the defendant a capitalist furnishing the capital necessary therefor.



The defendant claims that his consent to the agreement was secured by the representation of plaintiff that he was the owner, or was about to become owner, of an exclusive bottling franchise, which representation was false.



The fraud and false representation were sought to be proven by means, among others, of the drafts of the agreement prior to the final one, which drafts are presumed to have already been integrated into the final agreement.

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. Where 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. The parol evidence rule expressly allows the evidence to be introduced when the validity of an instrument is put in issue by the pleadings (sec. 22-a of Rule 123) ANALYSIS: The general rule under the current rules (Rule 130 §9) is that when the terms of the agreement have been reduced in 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. One exception to this rule is when a party puts in issue in his pleading the failure of the written agreement to express the true intent and agreement of the parties thereto. In this case, there is no need to apply the provision because the purpose of considering the drafts is not to vary, alter, or modify the agreement, but only to discover the intent of the parties thereto and the circumstances surrounding the execution of the contract. The same is provided for by the proposed rules of evidence. However, if the offeror will attempt to modify, explain or add terms to the agreement, the petition must be verified.

ISSUE: Whether those prior drafts excluded from the prohibition of the parol evidence rule? YES. Ruling: LB: The purpose of considering the drafts 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. App: 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.

8

ZACARIAS ROBLES v. LIZARRAGA HERMANOS Topic: Parole Evidence Rule Doctrine: The rule against the admission of parole evidence 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 any reference to such collateral agreement, and whether the action is at law or in equity.

APP: In this case, the deed of conveyance purports to transfer to Lizarraga Hermanos only such interests in certain properties as had come to the conveyors by inheritance, not those which Robles, Jr. had acquired by lease or purchase, or those that he had placed thereon by way of improvement. The verbal contract established in this case is therefore clearly independent of the main contract of conveyance, and evidence of such is admissible under the doctrine above stated. The written contract is complete in itself, the oral agreement is also complete in itself, and it is a collateral to the written contract, notwithstanding the fact that it deals with related matters.

Facts:

ANALYSIS:



Anastacia de la Rama, as administratrix of the estate of her husband, leased the hacienda ‘Nahalinan’ to Zacarias robles, Jr. for six years.



Robles, Jr. still had over 2 yrs in his lease contract, he was asked to surrender such last 2 yrs and permit Lizarraga Hermanos to take possession as buyer. Lizarra Hermanos agreed to pay him the value of all betterments made on the hacienda and to buy from him all that belonged to him personally on the hacienda.

The general rule under the current rules (Rule 130 §9) is that when the terms of the agreement have been reduced in 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. One exception to this rule is when a party puts in issue in his pleading the failure of the written agreement to express the true intent and agreement of the parties thereto.









However, no reference of such surrender of Robles’ rights as lessee, except in fixing the date when the lease should end, nor of anything said concerning the improvements of property of a peronal nature, was placed in the instrument of conveyance later excused. Robles, Jr filed a complaint against Lizarraga Hermanos for the recovery of compensation for improvements made by him on the hacienda and the value of implements and farming equipment supplied by him, as well as damages for breach of contract. As evidence, he presented a letter written by Severiano Lizarraga to him, in which a reference is made to an appraisal and liquidation. Lizarraga Hermanos, however, assailed the admission of the letter as being prohibited parole evidence.

The Court was correct when it did not apply the provision in this case because the purpose of considering the drafts is not to vary, alter, or modify the agreement, but only to discover the intent of the parties thereto and the circumstances surrounding the execution of the contract. The same is provided for by the proposed rules of evidence. However, if the offeror will attempt to modify, explain or add terms to the agreement, the petition must be verified.

Issue: Whether the letter admissible as evidence apart from the instrument of conveyance? - YES. Ruling: LB: The purpose of the parole evidence is to enforce an independent or collateral agreement constituting an inducement or the making of the sale, or part of the consideration therefore. There is no rule of evidence of wider application than that which declares intrinsic evidence inadmissible either to contradict or vary the terms of a written contract, such being deemed to supersede all oral negotiations or stipulations concerning its terms and the subject-matter which preceded the execution of the instrument, in the absence of accident, fraud or mistake of fact. However, such rule 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 any reference to such collateral agreement, and whether the action is at law or in equity.

9

LUCIO R. CRUZ v. COURT OF APPEALS Topic: Parole Evidence Rule Doctrine: The parole evidence rule is predicated on the existence of a document embodying the terms of an agreement. A receipt is not such a document as it merely attests to the receipt of money and it is not and could have not been intended by the parties to be the sole memorial of their agreement. Facts: 



Conrado Salonga filed a complaint for collection and damages against petitioner Lucio Cruz alleging that in the course of their business transactions of buying and selling fish, the petitioner borrowed from him an amount of P35,000.00, evidenced by a receipt (Exhibit D). Salonga claimed that of this amount, only P20,000.00 had been paid. Salonga also claimed that he and Cruz agreed that the latter would grant him an exclusive right to purchase the harvest of certain fishponds leased by Cruz in exchange for certain loan accommodations and that pursuant thereto, Salonga delivered to Cruz various loans totaling P15,250.00, evidenced by four receipts and an additional P4,000.00, the receipt of which had been lost.



Salonga further claimed that Cruz failed to comply with his part of the agreement by refusing to deliver the alleged harvest of the fishpond and the amount of his indebtedness.



Cruz denied having contracted any loan from Salonga. By way of special defense, he alleged that he was a lessee of several hectares of a fishpond owned by Nemesio Yabut and that he entered into an agreement with Salonga whereby the latter would purchase (pakyaw) fish in certain areas of the fishpond.

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They also agreed that immediately thereafter, Salonga would sublease the same fishpond for a period of one year.

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Cruz admitted having received the amounts mentioned but he contended that these amounts were received by him not as loans but as consideration for their "pakyaw" agreement and payment for the sublease of the fishpond.

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Cruz presented an instrument (Exh. I) executed to evidence their "pakyaw" agreement and to fix its duration. He was corroborated by 2 witnesses.

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The trial court ruled in favor of the Cruz but the CA reversed stating that Exhibit "I" is very clear in its non-reference to the transaction behind Exhibit "D." Thus, its tenor must not be clouded by any parole evidence introduced by the Cruz

Ruling: LB: The parole evidence rule is not applicable in the case at bar. Section 7, Rule 130 is predicated on the existence of a document embodying the terms of an agreement, but Exhibit D does not contain such an agreement. App: It is only a receipt attesting to the fact that petitioner received from the private respondent the amount of P35,000. It is not and could have not been intended by the parties to be the sole memorial of their agreement. As a matter of fact, Exhibit D does not even mention the transaction that gave rise to its issuance. At most, Exhibit D can only be considered a casual memorandum of a transaction between the parties and an acknowledgment of the receipt of money executed by the petitioner for the private respondent's satisfaction. The "pakyaw" was mentioned only in Exhibit I, which also declared the petitioner's receipt of money as consideration for the agreement. The petitioner and his witnesses testified to show when and under what circumstances the money was received. Their testimonies do not in any way vary or contradict the terms of Exhibit I. The statement in Exhibit I of the petitioner's receipt of the money is just a statement of fact. It is a mere acknowledgment of the distinct act of payment made by the private respondent. Parole evidence may therefore be introduced to explain Exhibit I. Even if it were assumed that Exhibits D and I are covered by the parole evidence rule, its application by the CA was improper. The record shows that no objection was made by the private respondent when the petitioner introduced evidence to explain the circumstances behind the execution and issuance of the said instruments. For failure of private respondent to object to the evidence introduced by the petitioner, he is deemed to have waived the benefit of the parole evidence rule. ANALYSIS: The Court correctly applied the Revised Rules on Evidence in this case. The Parole Evidence Rule only applies when a document embodying the agreement between the parties is present. The case would have been decided the same way if the Proposed Rules of Evidence were applied since there is no change in the requirements for the Parole Evidence Rule to apply, under the Proposed Rules.

Issue: Whether the CA erred in disregarding parole evidence to Exhibits "D" and "I" to explain the real transaction between the parties? YES.

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VICTORIA LECHUGAS v. COURT OF APPEALS Topic: Doctrine: The parole 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. Facts:  Petitioner Lechugas filed a complaint for forcible entry with damages against the private respondents Lozas, alleging : o that the latter by means of force, intimidation, strategy and stealth, unlawfully entered 2 portion of the property owned by the petitioner. 

Lechugas testified that: o she bought the subject land from Leoncia Lasangue as evidenced by a public Deed of Absolute Sale. o While Guinta, tenant of Lechugas, was plowing the land, defendants entered the land and forced him to stop his work and threatened him. o Lechugas reported the incident to the Chief of Police but the defendants stayed adamantly on the lot and refused to surrender the possession thereof.

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Defendants, on the other hand, maintain that the land which plaintiff bought from Lasangue is different from the land now subject of this action.

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Defendant's evidence in chief shows that Hugo Loza purchased a 2 parcels of land from Victorina Limor and Emetrio Lasangue and these two lands were consolidated during the cadastral survey. The Lozas claim that the land bought by Lechugas is south of the land in question.

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Leoncia Lasangue (the vendor) testified for the defendants stating that she sold her inherited property to Lechugas under a public instrument which was prepared at the instance of Victoria Lechugas and thumbmarked by herself. Although she was illiterate, she was still able to specifically point out the land which she sold to the petitioner. This property is south of the land in question. – complaint was dismissed.

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Petitioner then appealed to the then CFI of Iloilo.

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While the appeal was pending, the petitioner instituted another action before the CFI of Iloilo for recovery and possession of the same property against the private respondents. CFI dismissed both complaints. CA affirmed.

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Petitioner filed a petition for review invoking the parole evidence rule as it imputes grave abuse of discretion on the part of the CA for admitting and giving credence to the testimony of the vendor regarding the sale of the disputed lot. The testimony is contrary to the contents of the deed of sale executed by the vendor in favor of the petitioner.

ISSUE: Whether the CA erred in considering parole evidence in order to vary the subject matter of the deed of sale? NO.

Ruling: LB: The parole 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. App: The petitioner's reliance on the parole evidence rule is misplaced. The rule is not applicable where the controversy is between one of the parties to the document and third persons. The deed of sale was executed by Leoncia Lasangue in favor of Victoria Lechugas. The dispute over what was actually sold is between petitioner and the private respondents. In the case at bar, through the testimony of Leoncia Lasangue, it was shown that what she really intended to sell, but not being able to read and write and fully relying on the good faith of her first cousin, the petitioner, she just placed her thumbmark on a piece of paper which petitioner told her was the document evidencing the sale of land. The deed of sale described the disputed lot instead. From the foregoing, there can be no other conclusion but that Lasangue did not intend to sell as she could not have sold, a piece of land already sold by her father to the predecessor-in-interest of the respondents. ANALYSIS: The Parole Evidence Rule under the Revised Rules on Evidence is not applicable where the controversy is between a party to the document in question and third persons. The case was decided correctly under such Rules as well as under the Proposed Rules on Evidence.

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BALDOMERO INCIONG, JR. v. COURT OF APPEALS Doctrine: For the parole evidence rule to apply, a written contract need not be in any particular form, or be signed by both parties. What is required is that the agreement be in writing since written evidence is so much more certain and accurate than that which rests in fleeting memory only. FACTS:  Inciong incurred liability through a promissory note in the amount of P50,000.00 which he signed with Naybe and Pantanosas, holding themselves jointly and severally liable to private respondent PBCOM, Cagayan de Oro City branch. 

The promissors were not able to pay when the note became due.

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PBC made demands but when they were not heeded, PBC filed a complaint for collection against the three obligors.

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In his answer, Inciong alleged that he was approached by his friend, Rudy Campos, who told him that he was a partner of Pio Tio, the branch manager of PBC in Cagayan de Oro City, in the falcata logs operation business.

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Campos persuaded petitioner to act as a "co-maker" with Naybe in a loan in order to buy a chainsaw to contribute to the partnership.

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Petitioner allegedly acceded but with the understanding that he would only be a comaker for the loan. Petitioner alleged further that 5 copies of a blank promissory note were brought to him by Campos at his office.

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He affixed his signature thereto but in one copy, he indicated that he bound himself only for the amount of P5,000.00. Thus, it was by trickery, fraud and misrepresentation that he was made liable for the amount of P50,000.00.

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RTC ruled in favor of PBC noting that the typewritten figure “50,000” clearly appears directly below the signature of the petitioner in the promissory note. - CA affirmed.

memory only, that it would be unsafe, when parties have expressed the terms of their contract in writing, to admit weaker evidence to control and vary the stronger and to show that the parties intended a different contract from that expressed in the writing signed by them." Thus, for the parole evidence rule to apply, a written contract need not be in any particular form, or be signed by both parties. As a general rule, bills, notes and other instruments of a similar nature are not subject to be varied or contradicted by parol or extrinsic evidence. App: By alleging fraud in his answer, petitioner was actually in the right direction towards proving that he and his co-makers agreed to a loan of P5,000.00 only considering that, where a parole contemporaneous agreement was the inducing and moving cause of the written contract, it may be shown by parole evidence. However, fraud must be established by clear and convincing evidence, mere preponderance of evidence, not even being adequate. Petitioner's attempt to prove fraud must, therefore, fail as it was evidenced only by his own uncorroborated and, expectedly, self-serving testimony. ANALYSIS: Under the Revised Rules on Evidence, the only requirement for the application of the Parole Evidence Rule is that the agreement be in writing. There is no requirement that the agreement be in a public document. As such, this case was decided properly. Even under the Proposed Rules on Evidence, this case will still be decided the same way since there are no additional requirements provided under such Rules.

Petitioner’s Contention: Petitioner asserted that since the promissory note is not a public deed with the formalities prescribed by law but a mere commercial paper which does not bear the signature of attesting witnesses, parole evidence may overcome the contents of the promissory note. Issue: Whether Inciong can present parole evidence to prove that he was only liable for P5,000.00 and not for P50,000.00 as provided in the promissory note? – NO. Ruling: LB: The parole evidence rule does not specify that the written agreement needs to be a public document. What is required is that the agreement be in writing since written evidence is so much more certain and accurate than that which rests in fleeting 12

RAFAEL S. ORTAÑEZ v. THE COURT OF APPEALS Doctrine: Although parole evidence is admissible to explain the meaning of a contract, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing unless there has been fraud or mistake. FACTS: 

The private respondents Inocentes spouses sold to petitioner Ortanez 2 parcels of registered land in Quezon City for a consideration of P35,000.00 and P20,000.00, respectively.

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The spouses received the payments for the above-mentioned lots, but failed to deliver the titles to petitioner. Ortanez demanded from the former the delivery of said titles.

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Private respondents, however, refused on the ground that the title of the first lot is in the possession of another person, and petitioner's acquisition of the title of the other lot is subject to certain conditions. Petitioner sued private respondents for specific performance before the RTC.

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In their answer with counterclaim private respondents merely alleged the existence of the following oral conditions which were never reflected in the deeds of sale: (1) that plaintiff will cause the segregation of his right of way amounting to 398 sq. m., (2) Plaintiff will submit to the defendants the approved plan for the segregation, (3) Plaintiff will put up a strong wall between his property and that of defendants' lot to segregate his right of way, and (4) Plaintiff will pay the capital gains tax and all other expenses that may be incurred by reason of sale.

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During trial, private respondent Oscar Inocentes, a former judge, orally testified that the sale was subject to the above conditions, although such conditions were not incorporated in the deeds of sale.

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Despite petitioner's timely objections on the ground that the introduction of said oral conditions was barred by the parole evidence rule, the lower court nonetheless, admitted them and eventually dismissed the complaint as well as the counterclaim. – CA affirmed.

LB: Spoken words could be notoriously unreliable unlike a written contract which speaks of a uniform language. Considering that the written deeds of sale were the only repository of the truth, whatever is not found in said instruments must have been waived and abandoned by the parties. App: Private respondents' oral testimony on the alleged conditions, coming from a party who has an interest in the outcome of the case, depending exclusively on human memory, is not as reliable as written or documentary evidence. Examining the deeds of sale, we cannot even make an inference that the sale was subject to any condition. As a contract, it is the law between the parties. LB: Although parole evidence is admissible to explain the meaning of a contract, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing unless there has been fraud or mistake. App: No such fraud or mistake exists in this case. The deeds of sale are clear, without any ambiguity, mistake or imperfection, much less obscurity or doubt in the terms thereof. The Record shows that private respondents did not expressly plead that the deeds of sale were incomplete or that it did not reflect the intention of the buyer and the seller. Private respondents merely alleged that the sale was subject to 4 conditions which they tried to prove during trial by parole evidence. Obviously, this cannot be done, because they did not plead any of the exceptions mentioned in the parole evidence rule. Their case is covered by the general rule that the contents of the writing are the only repository of the terms of the agreement. ANALYSIS: This case was decided properly under the Revised Rules on Evidence since the court applied the Parole Evidence Rule correctly. There was no fraud or mistake shown in the contract between the parties and so no parole evidence was admissible to explain the meaning of such. Under the Proposed Rules on Evidence, the case would have been decided the same way since there is no major revision under such Rules regarding the Parole Evidence Rule.

Issue: Whether parole evidence should be admitted on to establish the alleged oral conditions-precedent to a contract of sale, when the deeds of sale are silent on such conditions? – NO Ruling:

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