EVIDENCE PAROL EVIDENCE

[G.R. No. 107372. January 23, 1997]

RAFAEL S. ORTAEZ, petitioner, vs. THE COURT OF APPEALS,

OSCAR
INOCENTES,
AND
ASUNCION
LLANES
INOCENTES, respondents.
RESOLUTION
FRANCISCO, J.:

On September 30, 1982, private respondents sold to petitioner two (2)

parcels of registered land in Quezon City for a consideration of P35,000.00
and P20,000.00, respectively. The first deed of absolute sale covering
Transfer Certificate of Title (TCT) No. 258628 provides in part:
"That for and in consideration of the sum of THIRTY FIVE THOUSAND
(P35,000.00) PESOS, receipt of which in full is hereby acknowledged, we have sold,
transferred and conveyed, as we hereby sell, transfer and convey, that subdivided
portion of the property covered by TCT No. 258628 known as Lot No. 684-G-1-B-2
in favor of RAFAEL S. ORTANEZ, of legal age, Filipino. whose marriage is under a
regime of complete separation of property, and a resident of 942 Aurora Blvd.,
Quezon City, his heirs or assigns."
[1]

while the second deed of absolute sale covering TCT No. 243273 provides:
"That for and in consideration of the sum of TWENTY THOUSAND (P20,000.00)
PESOS receipt of which in full is hereby acknowledged, we have sold, transferred
and conveyed, as we hereby sell, transfer and convey, that consolidated-subdivided
portion of the property covered by TCT No. 243273 known as Lot No. 5 in favor of
RAFAEL S. ORTANEZ, of legal age, Filipino, whose marriage is under a regime of
complete separation of property, and a resident of 942 Aurora Blvd., Cubao, Quezon
City his heirs or assigns.
[2]

Private respondents received the payments for the above-mentioned lots,

but failed to deliver the titles to petitioner. On April 9, 1990 the latter
demanded from the former the delivery of said titles. Private respondents,
[3]

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.
[4]

Offshoot, petitioner sued private respondents for specific performance

before the RTC. 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:
[5]

[6]

"3.3.2 Title to the other property (TCT No. 243273) remains with the defendants
(private respondents) until plaintiff (petitioner) shows proof that all the following
requirements have been met:
(i) Plaintiff will cause the segregation of his right of way amounting to 398 sq. m.;
(ii) Plaintiff will submit to the defendants the approved plan for the segregation;
(iii) Plaintiff will put up a strong wall between his property and that of defendants' lot
to segregate his right of way;
(iv) Plaintiff will pay the capital gains tax and all other expenses that may be incurred
by reason of sale. x x x."
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. Despite petitioner's
timely objections on the ground that the introduction of said oral conditions
was barred by the parol evidence rule, the lower court nonetheless, admitted
them and eventually dismissed the complaint as well as the counterclaim. On
appeal, the Court of Appeals (CA) affirmed the court a quo. Hence, this
petition.
[7]

We are tasked to resolve the issue on the admissibility of parol evidence to

establish the alleged oral conditions-precedent to a contract of sale, when the
deeds of sale are silent on such conditions.
The parol evidence herein introduced is inadmissible. First, 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.
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 130 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. 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.
[8]

[9]

[10]

[11]

[12]

[13]

Secondly, to buttress their argument, private respondents rely on the case

of Land Settlement Development, Co. vs. Garcia Plantation where the Court
ruled that a condition precedent to a contract may be established by parol
evidence. However, the material facts of that case are different from this
case. In the former, the contract sought to be enforced expressly stated that it
is subject to an agreement containing the conditions-precedent which were
proven through parol evidence. Whereas, the deeds of sale in this case, made
no reference to any pre- conditions or other agreement. In fact, the sale is
denominated as absolute in its own terms.
[14]

[15]

Third, the parol evidence herein sought to be introduced would vary,

contradict or defeat the operation of a valid instrument, hence, contrary to
the rule that:
[16]

The parol evidence rule forbids any addition to x x x the terms of a written instrument
by testimony purporting to show that, at or before the signing of the document, other
or different terms were orally agreed upon by the parties.
[17]

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.
[18]

Fourth, we disagree with private respondents' argument that their parol

evidence is admissible under the exceptions provided by the Rules,
specifically, the alleged failure of the agreement to express the true intent of
the parties. Such exception obtains only in the following instance:
"[W]here the written contract is so ambiguous or obscure in terms that the contractual
intention of the parties cannot be understood from a mere reading of the instrument. In
such a case, extrinsic evidence of the subject matter of the contract, of the relations of
the parties to each other, and of the facts and circumstances surrounding them when
they entered into the contract may be received to enable the court to make a proper
interpretation of the instrument."
[19]

In this case, the deeds of sale are clear, without any ambiguity, mistake or
imperfection, much less obscurity or doubt in the terms thereof.
Fifth, we are not persuaded by private respondents contention that they
"put in issue by the pleadings" the failure of the written agreement to express
the true intent of the parties. 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 (petitioner) and the seller (private
respondents). Such issue must be "squarely presented." Private respondents
merely alleged that the sale was subject to four (4) conditions which they tried
to prove during trial by parol evidence. Obviously, this cannot be done,
because they did not plead any of the exceptions mentioned in the parol
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. Considering
that private respondent Oscar Inocentes is a lawyer (and former judge) he
was "supposed to be steeped in legal knowledge and practices" and was
"expected to know the consequences" of his signing a deed of absolute sale.
Had he given an iota's attention to scrutinize the deeds, he would have
incorporated important stipulations that the transfer of title to said lots were
conditional.
[20]

[21]

[22]

[23]

[24]

[25]

[26]

One last thing, assuming arguendo that the parol evidence is admissible, it
should nonetheless be disbelieved as no other evidence appears from the
record to sustain the existence of the alleged conditions. Not even the other
seller, Asuncion Inocentes, was presented to testify on such conditions.

ACCORDINGLY, the appealed decision is REVERSED and the records of

this case REMANDED to the trial court for proper disposition in accordance
with this ruling.
SO ORDERED.
[G.R. No. 126006. January 29, 2004]

LAPULAPU FOUNDATION, INC. and ELIAS Q. TAN, petitioners,

vs. COURT OF APPEALS (Seventeenth Division) and ALLIED
BANKING CORP.,respondents
DECISION
CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by the
Lapulapu Foundation, Inc. and Elias Q. Tan seeking to reverse and set aside
the Decision dated June 26, 1996 of the Court of Appeals (CA) in CA-G.R.
CV No. 37162 ordering the petitioners, jointly and solidarily, to pay the
respondent Allied Banking Corporation the amount of P493,566.61 plus
interests and other charges. Likewise, sought to be reversed and set aside is
the appellate courts Resolution dated August 19, 1996 denying the petitioners
motion for reconsideration.
[1]

The case stemmed from the following facts:

Sometime in 1977, petitioner Elias Q. Tan, then President of the copetitioner Lapulapu Foundation, Inc., obtained four loans from the respondent
Allied Banking Corporation covered by four promissory notes in the amounts
of P100,000 each. The details of the promissory notes are as follows:
P/N No. Date of P/N Maturity Date Amount as of 1/23/79
BD No. 504 Nov. 7, 1977 Feb. 5, 1978 P123,377.76
BD No. 621 Nov. 28, 1977 Mar. 28, 1978 P123,411.10
BD No. 716 Dec. 12, 1977 Apr. 11, 1978 P122,322.21

BD No. 839 Jan. 5, 1978 May 5, 1978 P120,455.54

[2]

As of January 23, 1979, the entire obligation amounted to P493,566.61

and despite demands made on them by the respondent Bank, the petitioners
failed to pay the same. The respondent Bank was constrained to file with the
Regional Trial Court of Cebu City, Branch 15, a complaint seeking payment by
the petitioners, jointly and solidarily, of the sum ofP493,566.61 representing
their loan obligation, exclusive of interests, penalty charges, attorneys fees
and costs.
In its answer to the complaint, the petitioner Foundation denied incurring
indebtedness from the respondent Bank alleging that the loans were obtained
by petitioner Tan in his personal capacity, for his own use and benefit and on
the strength of the personal information he furnished the respondent Bank.
The petitioner Foundation maintained that it never authorized petitioner Tan to
co-sign in his capacity as its President any promissory note and that the
respondent Bank fully knew that the loans contracted were made in petitioner
Tans personal capacity and for his own use and that the petitioner Foundation
never benefited, directly or indirectly, therefrom. The petitioner Foundation
then interposed a cross-claim against petitioner Tan alleging that he, having
exceeded his authority, should be solely liable for said loans, and a
counterclaim against the respondent Bank for damages and attorneys fees.
For his part, petitioner Tan admitted that he contracted the loans from the
respondent Bank in his personal capacity. The parties, however, agreed that
the loans were to be paid from the proceeds of petitioner Tans shares of
common stocks in the Lapulapu Industries Corporation, a real estate firm. The
loans were covered by promissory notes which were automatically renewable
(rolled-over) every year at an amount including unpaid interests, until such
time as petitioner Tan was able to pay the same from the proceeds of his
aforesaid shares.
According to petitioner Tan, the respondent Banks employee required him
to affix two signatures on every promissory note, assuring him that the loan
documents would be filled out in accordance with their agreement. However,
after he signed and delivered the loan documents to the respondent Bank,
these were filled out in a manner not in accord with their agreement, such that

the petitioner Foundation was included as party thereto. Further, prior to its
filing of the complaint, the respondent Bank made no demand on him.
After due trial, the court a quo rendered judgment the dispositive portion of
which reads:
WHEREFORE, in view of the foregoing evidences [sic], arguments and
considerations, this court hereby finds the preponderance of evidence in favor of the
plaintiff and hereby renders judgment as follows:
1. Requiring the defendants Elias Q. Tan and Lapulapu Foundation, Inc. [the
petitioners herein] to pay jointly and solidarily to the plaintiff Allied Banking
Corporation [the respondent herein] the amount ofP493,566.61 as principal obligation
for the four promissory notes, including all other charges included in the same, with
interest at 14% per annum, computed from January 24, 1979, until the same are fully
paid, plus 2% service charges and 1% monthly penalty charges.
2. Requiring the defendants Elias Q. Tan and Lapulapu Foundation, Inc., to pay jointly
and solidarily, attorneys fees in the equivalent amount of 25% of the total amount due
from the defendants on the promissory notes, including all charges;
3. Requiring the defendants Elias Q. Tan and Lapulapu Foundation, Inc., to pay jointly
and solidarily litigation expenses of P1,000.00 plus costs of the suit.
[3]

On appeal, the CA affirmed with modification the judgment of the court a

quo by deleting the award of attorneys fees in favor of the respondent Bank
for being without basis.
The appellate court disbelieved petitioner Tans claim that the loans were
his personal loans as the promissory notes evidencing them showed upon
their faces that these were obligations of the petitioner Foundation, as
contracted by petitioner Tan himself in his official and personal character.
Applying the parol evidence rule, the CA likewise rejected petitioner Tans
assertion that there was an unwritten agreement between him and the
respondent Bank that he would pay the loans from the proceeds of his shares
of stocks in the Lapulapu Industries Corp.

Further, the CA found that demand had been made by the respondent
Bank on the petitioners prior to the filing of the complaint a quo. It noted that
the two letters of demand dated January 3, 1979 and January 30,
1979 asking settlement of the obligation were sent by the respondent Bank.
These were received by the petitioners as shown by the registry return
cards presented during trial in the court a quo.
[4]

[5]

[6]

Finally, like the court a quo, the CA applied the doctrine of piercing the veil
of corporate entity in holding the petitioners jointly and solidarily liable. The
evidence showed that petitioner Tan had represented himself as the President
of the petitioner Foundation, opened savings and current accounts in its
behalf, and signed the loan documents for and in behalf of the latter. The CA,
likewise, found that the petitioner Foundation had allowed petitioner Tan to act
as though he had the authority to contract the loans in its behalf. On the other
hand, petitioner Tan could not escape liability as he had used the petitioner
Foundation for his benefit.
Aggrieved, the petitioners now come to the Court alleging that:
I. THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE LOANS
SUBJECT MATTER OF THE INSTANT PETITION ARE ALREADY DUE AND
DEMANDABLE DESPITE ABSENCE OF PRIOR DEMAND.
II. THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE PAROL
EVIDENCE RULE AND THE DOCTRINE OF PIERCING THE VEIL OF
CORPORATE ENTITY AS BASIS FOR ADJUDGING JOINT AND SOLIDARY
LIABILITY ON THE PART OF PETITIONERS ELIAS Q. TAN AND LAPULAPU
FOUNDATION, INC.[7]

The petitioners assail the appellate courts finding that the loans had
become due and demandable in view of the two demand letters sent to them
by the respondent Bank. The petitioners insist that there was no prior demand
as they vigorously deny receiving those letters. According to petitioner Tan,
the signatures on the registry return cards were not his.
The petitioners denial of receipt of the demand letters was rightfully given
scant consideration by the CA as it held:

Exhibits R and S are two letters of demand, respectively dated January 3, 1979 and
January 30, 1979, asking settlement of the obligations covered by the promissory
notes. The first letter was written by Ben Tio Peng Seng, Vice-President of the bank,
and addressed to Lapulapu Foundation, Inc., attention of Mr. Elias Q. Tan, President,
while the second was a final demand written by the appellees counsel, addressed to
both defendants-appellants, and giving them five (5) days from receipt within which
to settle or judicial action would be instituted against them. Both letters were duly
received by the defendants, as shown by the registry return cards, marked as Exhibits
R-2 and S-1, respectively. The allegation of Tan that he does not know who signed the
said registry return receipts merits scant consideration, for there is no showing that the
addresses thereon were wrong. Hence, the disputable presumption that a letter duly
directed and mailed was received in the regular course of mail (per par. V, Section 3,
Rule 131 of the Revised Rules on Evidence) still holds.
[8]

There is no dispute that the promissory notes had already matured.

However, the petitioners insist that the loans had not become due and
demandable as they deny receipt of the respondent Banks demand letters.
When presented the registry return cards during the trial, petitioner Tan
claimed that he did not recognize the signatures thereon. The petitioners
allegation and denial are self-serving. They cannot prevail over the registry
return cards which constitute documentary evidence and which enjoy the
presumption that, absent clear and convincing evidence to the contrary, these
were regularly issued by the postal officials in the performance of their official
duty and that they acted in good faith. Further, as the CA correctly opined,
mails are presumed to have been properly delivered and received by the
addressee in the regular course of the mail. As the CA noted, there is no
showing that the addresses on the registry return cards were wrong. It is the
petitioners burden to overcome the presumptions by sufficient evidence, and
other than their barefaced denial, the petitioners failed to support their claim
that they did not receive the demand letters; therefore, no prior demand was
made on them by the respondent Bank.
[9]

[10]

Having established that the loans had become due and demandable, the
Court shall now resolve the issue of whether the CA correctly held the
petitioners jointly and solidarily liable therefor.

In disclaiming any liability for the loans, the petitioner Foundation

maintains that these were contracted by petitioner Tan in his personal capacity
and that it did not benefit therefrom. On the other hand, while admitting that
the loans were his personal obligation, petitioner Tan avers that he had an
unwritten agreement with the respondent Bank that these loans would be
renewed on a year-to-year basis and paid from the proceeds of his shares of
stock in the Lapulapu Industries Corp.
These contentions are untenable.
The Court particularly finds as incredulous petitioner Tans allegation that
he was made to sign blank loan documents and that the phrase IN MY
OFFICIAL/PERSONAL CAPACITY was superimposed by the respondent
Banks employee despite petitioner Tans protestation. The Court is hard
pressed to believe that a businessman of petitioner Tans stature could have
been so careless as to sign blank loan documents.
In contrast, as found by the CA, the promissory notes clearly showed
upon their faces that they are the obligation of the petitioner Foundation, as
contracted by petitioner Tan in his official and personal capacity. Moreover,
the application for credit accommodation, the signature cards of the two
accounts in the name of petitioner Foundation, as well as New Current
Account Record, all accompanying the promissory notes, were signed by
petitioner Tan for and in the name of the petitioner Foundation. These
documentary evidence unequivocally and categorically establish that the
loans were solidarily contracted by the petitioner Foundation and petitioner
Tan.
[11]

[12]

[13]

[14]

[15]

[16]

As a corollary, the parol evidence rule likewise constrains this Court to

reject petitioner Tans claim regarding the purported unwritten agreement
between him and the respondent Bank on the payment of the obligation.
Section 9, Rule 130 of the of the Revised Rules of Court provides that [w]hen
the terms of an agreement have been reduced to writing, it is to be 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.
[17]

In this case, the promissory notes are the law between the petitioners and
the respondent Bank. These promissory notes contained maturity dates as
follows: February 5, 1978, March 28, 1978, April 11, 1978 and May 5, 1978,
respectively. That these notes were to be paid on these dates is clear and
explicit. Nowhere was it stated therein that they would be renewed on a yearto-year basis or rolled-over annually until paid from the proceeds of petitioner
Tans shares in the Lapulapu Industries Corp. Accordingly, this purported
unwritten agreement could not be made to vary or contradict the terms and
conditions in the promissory notes.
Evidence of a prior or contemporaneous verbal agreement is generally not
admissible to vary, contradict or defeat the operation of a valid contract.
While parol evidence is admissible 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
writing, unless there has been fraud or mistake. No such allegation had been
made by the petitioners in this case.
[18]

[19]

Finally, the appellate court did not err in holding the petitioners jointly and
solidarily liable as it applied the doctrine of piercing the veil of corporate entity.
The petitioner Foundation asserts that it has a personality separate and
distinct from that of its President, petitioner Tan, and that it cannot be held
solidarily liable for the loans of the latter.
The Court agrees with the CA that the petitioners cannot hide behind the
corporate veil under the following circumstances:
The evidence shows that Tan has been representing himself as the President of
Lapulapu Foundation, Inc. He opened a savings account and a current account in the
names of the corporation, and signed the application form as well as the necessary
specimen signature cards (Exhibits A, B and C) twice, for himself and for the
foundation. He submitted a notarized Secretarys Certificate (Exhibit G) from the
corporation, attesting that he has been authorized, inter alia, to sign for and in behalf
of the Lapulapu Foundation any and all checks, drafts or other orders with respect to
the bank; to transact business with the Bank, negotiate loans, agreements, obligations,
promissory notes and other commercial documents; and to initially obtain a loan
for P100,000.00 from any bank (Exhibits G-1 and G-2). Under these circumstances,

the defendant corporation is liable for the transactions entered into by Tan on its
behalf.
[20]

Per its Secretarys Certificate, the petitioner Foundation had given its
President, petitioner Tan, ostensible and apparent authority to inter alia deal
with the respondent Bank. Accordingly, the petitioner Foundation is estopped
from questioning petitioner Tans authority to obtain the subject loans from the
respondent Bank. It is a familiar doctrine that if a corporation knowingly
permits one of its officers, or any other agent, to act within the scope of an
apparent authority, it holds him out to the public as possessing the power to
do those acts; and thus, the corporation will, as against anyone who has in
good faith dealt with it through such agent, be estopped from denying the
agents authority.
[21]

In fine, there is no cogent reason to deviate from the CAs ruling that the
petitioners are jointly and solidarily liable for the loans contracted with the
respondent Bank.
WHEREFORE, premises considered, the petition is DENIED and the
Decision dated June 26, 1996 and Resolution dated August 19, 1996 of the
Court of Appeals in CA-G.R. CV No. 37162 are AFFIRMED in toto.
SO ORDERED.
G.R. No. 55691 May 21, 1992
ESPERANZA BORILLO, in her behalf and in behalf of her children, petitioner,
vs.
HONORABLE COURT OF APPEALS and CATALINA BORILLO, respondents.
Crisostomo F. Parias for petitioner.

DAVIDE, JR., J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court filed on 24 November 1980, petitioner
urges this Court to review and reverse the decision 1 of the Court of Appeals (Third Division) in C.A.-G.R. No.

64536-R, promulgated on 3 September 1980, which reversed and set aside the 3 June 1978 decision of
Branch II of the then Court of First Instance (now Regional Trial Court) of Abra in Civil Case No. 1043.

On 10 February 1977, petitioner, for herself and on behalf of her children, filed before the abovementioned trial court
a complaint against private respondent and Marcos Borillo for the recovery of several parcels of land located at
Bugbuguis, Quillat, Langiden, Abra particularly described in said complaint, under the first cause of action, as follows:
(a) A parcel of land (Riceland unirr. and pastureland) . . . with an area of 1231 sq. m.; with assessed
value in the sum of P40.00; under Tax Declaration No. 6319 in the name of Esperanza Borillo, et
al.;
(b) A parcel of land (Riceland unirr.) . . . with an area of 980 sq. m.; with an assessed value in the
sum of P40.00; under Tax Declaration No. 6320 in the name of Esperanza Borillo, et al.;
(c) A parcel of land (Riceland unirr.) . . . with an area of 698 sq. m.; with assessed value in the sum
of P20.00; under Tax Declaration No. 6321 in the name of Esperanza Borillo, et al.;
(d) A parcel of land (Cornland) . . . with an area of 570 sq. m.; with an assessed value of P20.00;
under Tax Declaration No. 6322 in the name of Esperanza Borillo, et al. 2
and one-fifth (1/5) undivided portion of two (2) parcels of land, also located in the same place as the above
four (4) parcels, particularly described under the second cause of action, thus:
(e) A parcel of land (Riceland unirr.) . . . with an area of 1440 sq. m.; with an assessed value of
P60.00; under Tax Declaration No. 1745 in the name of Venancio Borillo;
(f) A parcel of land (Cornland) . . . with an area of 684 sq. m.; with an assessed value of P20.00;
under Tax Declaration No. 0746 in the name of Venancio Borillo. 3
The complaint was docketed as Civil Case No. 1043.
In the complaint, petitioner alleges that the abovementioned parcels (a), (b), (c) and (d) were originally owned by her
late husband, Elpidio Borillo, with whom she had four (4) children, namely: Patricia, Melecio, Bonifacia and Quirino.
Although said parcels of land were unregistered, they were declared in 1948 in the name of Elpidio under Tax
Declaration Nos. 0731, 0732, 0733 and 0734, respectively. 4 Elpidio had been in peaceful, public, continuous

and uninterrupted possession thereof in concept of owner even before his marriage to petitioner and until
his death in 1970. After his death, petitioner continued to possess and cultivate said parcels of land and
enjoy the fruits thereof until sometime in 1971-1972 when private respondent and Marcos Borillo, Elpidio's
siblings, forcibly and unlawfully dispossessed her of the property. Despite repeated demands, Marcos and
the private respondent refused to return the property to the petitioner and her children. In 1974, new Tax
Declarations, namely Nos. 6319, 6320, 6321 and 6322 5 for parcels (a), (b), (c) and (d), respectively, were
issued in her name. Upon the other hand, parcels (e) and (f), also unregistered, were inherited by Elpidio,
his brother Marcos and sisters Catalina, Aurelia and Rosita, from their father, Venancio Borillo. Elpidio's
1/5 pro-indiviso share therein was unlawfully taken by private respondent sometime in 1971; the latter
refused to return it to petitioner and her children, who are Elpidio's heirs, despite repeated demands.
Petitioner then prays that judgment be rendered declaring her and her children owners of parcels (a), (b), (c) and (d),
as well as the 1/5 pro-indiviso portion of parcels (e) and (f), and ordering the private respondent and Marcos Borillo to
pay actual and moral damages plus costs.
In their Answer filed on 14 March 1977, private respondent claims that parcels (a), (c) and (d) were sold to her by her
late brother Elpidio in 1935, while Marcos Borillo claims that parcel (b) was sold to him by Elpidio sometime in 1937,
long before Elpidio's marriage to petitioner. Although they did not declare these parcels for taxation purposes in their
respective names, they immediately took possession and occupied the same as owners thereof. Private respondent

had been paying the realty taxes on parcels (a), (c) and (d) since 1948 6 and explains her failure to secure in her

name tax declarations for said parcels during Elpidio's lifetime by alleging that she trusted him because
he was her brother and he had assured her that she could transfer in her favor the title thereto anytime.
After the Second World War, Elpidio and Rosita, another sibling, sold to her their respective undivided
shares in parcels (e) and (f).
On 15 March 1977, private respondent alone filed an Amended Answer. On the other hand, on 5 April 1977, Patricia
and Melencio Borillo filed a motion to withdraw as co-plaintiffs on the ground that they did not authorize their inclusion
as such and that the private respondent is the true and lawful owner of the land in question. 7
At the trial, private respondent relied heavily on Exhibit "3", a private document purportedly showing that Elpidio sold
to her all his property for P40.00, and Exhibit "4", which she claims to be a deed of sale of parcels (a), (c) and (d)
allegedly executed by Elpidio Borillo in 1935. Upon the other hand, Marcos Borillo claimed that the deed of sale
evidencing the sale to him of parcel (b) was lost during the Second World War. Both parties claim actual possession
of the property. Private respondent and Marcos Borillo even claimed possession for more than thirty (30) years.
After trial on the merits, the lower court rendered on 3 June 1978 a decision in favor of herein petitioner, the
dispositive portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered declaring the plaintiffs as the
true owners of parcels A, B, C and D described in par. 4 of the complaint and as co-owners of
parcels E and F described in par. 6 of the complaint with Rosita Borillo, Aurelia Borillo and the
defendants Catalina Borillo and Marcos Borillo. With costs against the defendants. 8
The trial court arrived at this decision on the basis of the following findings of fact:
The claim of ownership by the plaintiffs with respect to the four parcels of land described in par. 4 of
the complaint is preponderantly established by Tax Declaration Nos. 731, 732, 733 and 734,
Exhibits, "A, A-1, A-2 and A-3" for the plaintiffs. These tax declarations covering the four parcels of
land in question are tax declarations issued in 1948 and is (sic) in the name of Elpidio Borillo,
husband of plaintiff Esperanza Borillo. Defendants never declared it (sic) in their name (sic) and no
action or attempt whatsoever was made by the defendants to declare it (sic) in their name (sic)
during the lifetime of Elpidio Borillo. It was only after the death of Elpidio Borillo and the institution
of this action by the plaintiffs that defendants took action and strangely declared it (sic) in their
names.
Obviously, the bulk of evidence for the plaintiffs are (sic) the tax declarations in the name of Elpidio
Borillo which do not absolutely prove their ownership. But the circumstances obtaining in this case
renders (sic) the tax declarations Exhibits "A, A-1, A-2 and A-3", reliable and predominantly point
that plaintiffs are owners of the four parcels of land described in par. 4 of the complaint as against
the plaintiffs (sic). First, it will be noted that Exhibits A, A-1, A-2 and A-3 were prepared and issued
long before the death of Elpidio Borillo. He was then a bachelor having married the plaintiff
Esperanza Borillo in 1950. Defendant Catalina Borillo married long before the 2nd World War.
Defendant Marcos Borillo likewise married before World War II. Defendants have properties
declared in their names. Marcos Borillo accompanied the Assessors who measured the four
parcels of land according to him (sic). Despite the status of the parties and the Assessors having
been accompanied by defendant Marcos Borillo, still the four parcels of land were declared in the
name of Elpidio Borillo. It is unconceivable (sic) why it was (sic) declared in the name of Elpidio
Borillo, if it does (sic) not belong to him. True, that tax declarations are not conclusive proof of
ownership, but it cannot be gainsaid especially in rural areas like Langiden, Abra where lands are
not surveyed and titled, that tax declarations are strong evidence of possession and ownership.

Secondly, the four parcels of land described in par. 4 of the complaint were declared in the name of
Elpidio Borillo for 29 years and no action whatsoever was taken by the defendants to have the tax
declarations (Exhibits A, A-1, A-2 and A-3) be (sic) cancelled and declared the lands (sic) in their
names during the lifetime of the declared owner Elpidio Borillo and immediately after his death. It
was only in 1977 after the filing of the complaint and after the plaintiffs caused the cancellation of
Exhibits A, A-1, A-2 and A-3 and declared the lands in their names when defendants attempted to
declare it (sic) also in their names. The unfathomable tolerance of the defendants of having the four
(4) parcels of land be (sic) declared in the name of their deceased brother, Elpidio Borillo in 1948
and remained (sic) in his name after his marriage with (sic) the plaintiff Esperanza Borillo in 1950
even (sic) after his death in 1971, is fatal and strongly negate their (sic) defendants' claim of
ownership. No person like the defendants will ever allow his/her property be (sic) declared in the
name of another for twenty-nine (29) years. The fact that the lands were declared in the name of
Elpidio Borillo for twenty-nine (29) years coupled by (sic) his actual possession during his lifetime
until his death in 1971 as testified to by Esperanza Borillo and Clemente Llaneza who is an
uninterested witness strongly outweighed the evidence for the defendants and convincingly indicate
that the four parcels of land described in par. 4 of the complaint really belong to Elpidio Borillo. The
claim of defendants that they are (sic) in actual possession before World War II up to the present is
persuasively belied by Exhibits A, A-1, A-2 and A-3 and the testimony of Clemente Llaneza.
The claim of defendant Catalina Borillo that she purchased parcels A, C and D described in par. 4
of the complaint from her deceased brother Elpidio Borillo before World War II as evidence (sic) by
Exhibits "3" and "4" appears unreliable and incredible. Exhibit "3" which is an acknowledgment
receipt dated May 12, 1946 made no mention of what property has been sold. There is no evidence
of any transfer of ownership. In fact, there is nothing clear from the evidence as to what land of
Elpidio Borillo is referred to in Exhibit "3". From the terms of Exhibit "3" and the alleged
consideration thereof, it thus becomes obvious that it is only a receipt evidencing a loan of P40.00.
Exhibit "4" (receipt) which is the main basis of the claim of ownership by defendant Catalina Borillo
with respect to parcels A, C and D in par. 4 of the complaint, appears unreliable and cannot prevail
against the evidence for the plaintiffs. This Exhibit "4" for defendant Catalina Borillo is undated and
unsigned. Defendant Catalina Borillo testified that she does not know the contends of Exhibit "4".
Elpidio Borillo as shown by Exhibit "3" for defendant Catalina Borillo and Exhibits E and F for the
plaintiffs knows how to write his name. Yet, Exhibit "4" was not signed by him. Aside from the patent
defects of Exhibit "4" on its face which renders it unreliable, it will be noted that during the pre-trial
proceedings, defendant Catalina Borillo presented Exhibit "4" to support her claim as alleged in her
answer of having purchased parcels A, C and D from Elpidio Borillo in 1935. Clearly embodied,
however, in Exhibit "4" are tax declarations Nos. 0732, 0731 and 0734 which are indeed tax
declarations in 1948 in the name of Elpidio Borillo. Considering that Exhibit "4" is a document
executed in 1935 according to the defendant Catalina Borillo, why are Tax Declarations Nos. 731,
732 and 734 which were issued only in 1948 incorporated? The inclusion of non-existent document
(sic) in Exhibit "4" at the time of its alleged execution absolutely renders Exhibit "4" wholly unworthy
and undeserving of any credence. 9
Private respondent appealed from the adverse decision to the respondent Court. Her co-defendant, Marcos Borillo,
did not.
The appeal was docketed as C.A.-G.R. No. 64536-R. In her Appellant's Brief, private respondent assigns the
following errors:
I
THAT THE FACTS RELIED UPON IS (sic) NOT SUPPORTED BY EVIDENCE.

II
THAT THE DECISION IS NOT IN ACCORDANCE WITH LAW.
On 3 September 1980, the respondent Court promulgated its decision 10 reversing the decision of the trial court,

thus:
WHEREFORE, the judgment appealed from is hereby set aside and another judgment is hereby
rendered declaring defendant Catalina Borillo as the owner of parcels (a), (c) and (d) and of the
one-fifth portion of Elpidio Borillo in parcels (e) and (f); that defendant Marcos Borillo is the owner of
parcel (b); with costs against the plaintiffs.
SO ORDERED.
The respondent Court made the following disquisitions to support its decision:
We are convinced that the preponderance of the evidence tilt (sic) heavily in favor of defendant.
Defendant established she has been in possession in the concept of owner of said three parcels of
land (a), (c) and (d) since her purchase of the same long before the war and she cultivated the
same in the concept of owner, paying the real estate taxes and thereafter declaring it in her name
while Marcos Borillo acquired parcel (b) from Elpidio since 1938 of which he took possession in the
concept of owner, and declared the same in his name paying the real estate taxes. No less than
Melecio Borillo, son of plaintiff Esperanza, not only withdrew as party plaintiff with his sister Patricia
but he even testified that he knew from the very mouth of his father Elpidio while he was still alive
that he sold the property in question to defendant Catalina Borillo. It has also been shown that
Elpidio Borillo sold his 1/5 portion of parcels (e) and (f) also before the war to defendant and she
had been in continuous possession since then in the concept of owner.
Under Article 1137 of the Civil Code, such uninterrupted, adverse, open possession for thirty (30)
years by defendants regardless of their title or good faith upholds said defendants' right over the
property. (Parcotillo vs. Parcotillo, 12 SCRA 435, 440).
In finding for the plaintiffs the trial court relied on the tax declarations in the name of Elpidio as
proof that plaintiffs are the owners of the questioned property since the property is untitled; that for
29 years no action was taken by defendants to declare the property in their name (sic) and it was
only in 1977 after the filing of the complaint that defendants so declared the properties in their
name (sic); that Exhibit 4 is unreliable being unsigned by Elpidio when there is evidence that he
could sign his name; that Exhibit 3 did not mention the property sold; that Exhibit 4 was made in
1935 as alleged in the answer but surprisingly it embodied Tax Declarations 731, 732 and 734
which were issued only in 1948; and that the alleged sale of the right of Elpidio over parcels (e) and
(f) are without receipts.
We disagree. Declaration of ownership for taxation purposes, or assessment declaration and tax
receipts do not constitute evidence of ownership. They are only prima facie evidence of
possession. (Evangelista vs. Tabayuyong, 7 Phil. 607; Casimiro vs. Fernandez, 9 Phil. 562)
However, if the holder of a (sic) land presents a deed of conveyance in his favor from the former
owner thereof to support his claim of ownership, the declaration of ownership and tax receipts
relative to the property may be used to prove good faith on his part in occupying and possessing
the same. (Elumbaring vs. Elumbaring, 12 Phi. 384) And while it is true that tax receipts do not
prove titled (sic) to a land, nevertheless when considered with the actual possession of the property
by the applicant, they constitute evidence of great weight in support of the claim of title of

ownership by prescription. (Viernes vs. Agpaoa, 41 Phil. 286; Land Registration and Mortgages by
Ventura, pp. 125-126)
Plaintiffs admitted that defendants are in possession of the lands in question and the records show
that even during the lifetime of Elpidio, the defendant had been paying the real property taxes of
the property (Exhs. 1 to 1-I). The sale of parcels (a), (c) and (d) to defendant is evidenced by
Exhibits 3 and 4. Although Exhibit 3 does not indicate the property subject of the sale, such
deficiency can be attributed to the fact that this was a document executed between brother and
sister without the assistance of a lawyer but testimonial evidence has been adduced that cured this
defect. True it is that Exhibit 4 appears not to have been signed by Elpidio and he merely imprinted
a cross over his name when it appears that he knew how to sign. However, defendants Catalina
and Marcos Borillo categorically testified that Elpidio signed his name only by copying a sample.
Hence, it is understandable if Elpidio did not sign Exhibit 4 for he must not have been furnished a
(sic) guide to be copied. No evidence was adduced that Exhibit 4 was actually executed in 1935.
What was established is that Elpidio sold said three parcels to defendant Catalina before the war.
In confirmation of said sale, Exhibit 4 must have been executed on or before 1948 that is why it
reflects the Tax Declarations of said property to be effective in the same year.
On the other hand, outside of the fact that the property remained to be declared in the name of
Elpidio plaintiffs have not adduced any other evidence to buttress their claim of ownership. Plaintiff
Esperanza paid for the real property taxes of the property only on June 22, 1977 after the complaint
was filed in court. (Exhibit C) It is not improbable that the reason why the properties remained in the
name of Elpidio inspite of the fact that it has long been sold to defendants is because this is a sale
between brother and sister where mutual trust and confidence is to be expected. Indeed, during the
lifetime of Elpidio he never questioned the acts of ownership exercised by the defendants over the
property and even after his death in 1970, plaintiff Esperanza only remembered to assert their
alleged right in 1976 when she attempted to talk to defendant who told her it was already sold to
them and yet it was only in 1977 that the complaint was filed.
Petitioner took this present recourse asking Us to review the respondent Court's findings of facts and reverse its
decision on the ground that the same is based solely on "speculation, surmise and conjecture," and that it committed
a "misapprehension of facts."
After private respondent filed her Comment and the petitioner submitted a Reply, this Court gave due course to the
petition 11 and required the petitioner to submit her Brief within thirty (30) days from notice, 12 which she

complied with. 13Private respondent subsequently filed her Brief.

14

The petition is meritorious.

To begin with, the respondent Court committed a grave error in reversing the trial court's judgment insofar as it
concerns defendant Marcos Borillo. As earlier stated, the latter did not appeal from the trial court's decision. As
against him, and more particularly with respect to parcel (b), the decision has long become final and the respondent
Court is without jurisdiction to review the same. 15 Otherwise stated, beyond the period to appeal, a judgment is

no longer within the scope of the power of review of any court. 16 The appeal interposed by private
respondent did not benefit Marcos Borillo because the former does not have anything to do with parcel (b)
and the defense in respect thereto is exclusive to the latter.
The respondent Court likewise erred in reversing the trial court and ruling that private respondent is the owner of
parcels (a), (c) and (d) and Elpidio Borillo's 1/5 pro-indiviso share in parcels (e) and (f).
It is of course settled that the appellate court's findings of fact are binding and must be respected by this
Court. 17 There are, however, recognized exceptions thereto, 18 among which are when the factual findings

of the trial court and the appellate court are conflicting, 19 when they are totally devoid of support in the
record or are so glaringly erroneous as to constitute serious abuse of discretion. 20
These exceptions obtain in the present case.
The fact that parcels (a), (c) and (d) were originally owned by Elpidio Borillo is not disputed by private respondent. In
fact, she claims to have derived her title over the same from the former through a sale in 1935. Thus, the question to
be resolved is whether or not Elpidio Borillo did in fact sell the said parcels of land to the private respondent.
To substantiate her claim, private respondent presented two (2) documents, Exhibits "3" and "4". The trial court in its
judgment described Exhibit "3", dated 12 May 1946, as a mere acknowledgment receipt of a loan of P40.00 and not a
sale for it does not mention any property sold and is not acknowledged before a notary public. It then concluded that
said instrument is a mere receipt evidencing a loan. On the other hand, Exhibit ''4'' is an undated and unsigned
document written in lead pencil on simple grade paper. The instrument has no witnesses, is not acknowledged before
a notary public and has a mere cross over the written name of Elpidio Borillo. It was duly proven that Elpidio knew
how to write and sign his name. Although Exhibit "4" was purportedly executed in 1935, the same mentions Tax
Declaration Nos. 0731, 0732, 0733 and 0734 issued in 1948 in the name of Elpidio Borillo. Private respondent herself
testified that she had no knowledge of the contents of said instrument. The trial court ruled Exhibit "4" as "wholly
unworthy and undeserving of any credence."
In reversing the foregoing findings, the respondent Court tried to justify the deficiencies and discrepancies in Exhibit
"3" by saying that the absence of specifications as to what property was sold is understandable because the
transaction was between brother and sister. It added that this defect was cured by testimonial evidence. It made no
attempt, however, to explain the variance in the date of the alleged sale (1935) and the date of the instrument (1946).
As to Exhibit "4", the respondent Court accepted private respondent's explanation for the absence of the signature of
Elpidio Borillo on the purported deed of sale saying that contrary to petitioner's assertion, Elpidio did not really know
how to write his name. Private respondent and Marcos Borillo testified that Elpidio's signature appeared on his voter's
registration record and voter's ID card 21 only because he was given a sample to copy. They declared that

unlike those occasions, at the time of the sale, Elpidio was not given any sample to copy; this explains
why he just printed a cross over his name. As to why it mentions tax declarations issued in 1948, although
it is claimed to have been executed in 1935, the respondent Court theorizes and speculates that:
. . . In confirmation of said sale, Exhibit 4 must have been executed on or before 1948 that is why it
reflects the Tax Declarations of said property to be effective in the same year. 22
It is thus clear that what was originally submitted by private respondent as the original deed of sale was later
accepted by the respondent Court as a deed of confirmation of sale.
Both Exhibits "3" and "4" are private documents. Hence, before they may be received in evidence, their due
execution and authenticity must first be proven by the party presenting them. 23 At the hearing of this case before

the trial court, the controlling rule on this point was Section 21, Rule 132 of the Rules of Court which
provided:
Sec. 21. Private writing, its execution and authenticity, how proved. Before any private writing
may be received in evidence, its due execution and authenticity must be proved either:
(a) By anyone who saw the writing executed;
(b) By evidence of the genuineness of the handwriting of the maker; or

(c) By a subscribing witness. 24

Private respondent did not present anyone who actually saw the execution of Exhibits "3" and "4", witnessed Elpidio
affix his signature on Exhibit "3" or make the cross over his written name in Exhibit "4". There are no subscribing
witnesses. The due execution then of Exhibits "3" and "4", as the alleged deeds of sale transferring title over said
parcels of land to private respondent, was not satisfactorily proven; thus, the same can not be received in evidence.
Even if We are to assume that Exhibits "3" and "4" are admissible in evidence, they still do not satisfactorily prove the
transfers of titles over the subject parcels to the private respondent. As earlier pointed out, Exhibit "3" makes no
mention of any property sold. Hence, it hardly qualifies as a deed of sale. It suffers from a patent and not just an
intrinsic ambiguity. The respondent Court then committed an error by giving credence to the testimonies offered to
cure such ambiguity. It disregarded the parol evidence rule then applicable, namely, Section 7, Rule 130 of the Rules
of Court, which provided as follows:
Sec. 7. Evidence of written agreement. When the terms of an agreement have been reduced to
writing, it is to be considered as containing all such terms, and, therefore, there can be, between
the parties and their successors in interest, no evidence of the terms of the agreement other than
the contents of the writing, except in the following cases:
(a) Where a mistake or imperfection of the writing, or its failure to express the
true intent and agreement of the parties, or the validity of the agreement is put in
issue by the pleadings;
(b) When there is an intrinsic ambiguity in the writing.
The term "agreement" includes wills. 25
Before parol evidence may be admitted in order to identify, explain or define the subject matter of a writing, it must
first be shown that the writing itself already contains a description sufficient to serve as a foundation for the admission
of such parol evidence; the evidence should also be consistent with the writing. Otherwise stated, in order to admit
parol evidence to aid in the description of the subject matter of a deed or other writing, there must be a description
that will serve as a foundation for such evidence; the writing must at least give some data from which the description
may be found and made certain. Parol evidence is not admissible to identify the property where the description
thereof is so vague as to amount to no description at all. In other words, parol evidence is not permitted to supply a
description, but only to apply it. 26
In his Commentary on the Rules of Court, 27 former Chief Justice Manuel V. Moran explains the rule in the

evident of patent ambiguity, as is the case in Exhibit "3":

. . . The rule is that "if the words of a document are so defective or ambiguous as to be unmeaning,
no evidence can be given to show what the author of the document intended to say." (Steph,
Evidence, Art. 91) The reason for the rule, in the language of Mr. Justice Story, is that "if the
language be too doubtful for any settled construction, by the admission of parol evidence you
create and do not merely construe the contract. You attempt to do that for the party which he has
not chosen to do for himself; and the law very property denies such an authority to courts of
Justice." (Peisch v. Dickson, Fed. Cas. No. 10, 911, 1 Mason, 9.) As Lord Bacon said, "Ambiguitas
patens cannot be holpen by averment." (Bacon, Max., 23) A case of patent ambiguity is that of a
deed wherein "a parcel of land" without description is donated. The donation is void. The
uncertainty cannot be explained by parol evidence. (Wigmore on Evidence, 2d. ed., p. 414.) The
following appears to be the most accurate and most comprehensive statement of the rule regarding
patent ambiguity: "In other words and more generally, if the court, placing itself in the situation in
which the testator or contracting party stood at the time of executing the instrument, and with a full

understanding of the force and import of the words, cannot ascertain his meaning and intention
from the language of the instrument, then it is a case of incurable, hopeless uncertainty and the
instrument is, therefore, so far inoperative and void." (Palmer v. Albee, 50 Ia., 429, 432, quoting 1
Greenleaf on Evidence, par. 300.)
As to Exhibit "4", We agree with the trial court that it could not have been prepared in 1935, as contended by private
respondent, because it makes reference to Tax Declarations issued in 1948, thirteen (13) years later. Common sense
and logic reject such contention. Unfortunately, the respondent Court belabored the explanation that Exhibit "4" must
have been executed on or before 1948 to confirm the prior sale. This is unacceptable as it is purely conjectural.
Absent any evidence that it was signed by Elpidio Borillo, it is not difficult to conclude that this document does not
proceed from any legitimate source. It is one which could easily be fabricated. The trial court did not then err when it
considered Exhibit "4" as "wholly unworthy and undeserving of any credence."
It is not also true, as was held by the respondent Court, that the conclusion of the trial court that Elpidio Borillo was in
possession of the property in concept of owner until his death, is based solely on the tax declarations in his name. As
shown earlier, the court considered the testimonies of the petitioner and one Clemente Llaneza whom the trial court
described as "an uninterested witness." Thus:
. . . The fact that the lands were declared in the name of Elpidio Borillo for twenty-nine (29) years
coupled by his actual possession during his lifetime until his death in 1971 as testified to by
Esperanza Borillo and Clemente Llaneza who is an uninterested witness strongly outweighed the
evidence for the defendants and convincingly indicate that the four parcels of land described in
paragraph 4 of the complaint really belong to Elpidio Borillo. . . .
It is thus clear that the authorities cited by the respondent Court on the probative value of the tax declarations favor
the herein petitioner and not the private respondent. For indeed, while tax declarations and tax receipts do not
constitute evidence of ownership, they are prima facie evidence of possession. Accordingly, since Elpidio Borillo,
during his lifetime, and then the petitioner, after his death, secured and were issued tax declarations for the parcels of
land in question, and were in fact in possession thereof, the excuse offered by private respondent as to her failure to
obtain the tax declarations deserves no consideration at all. The flimsiness or implausibility of the excuse becomes
more apparent when We consider the findings of the trial court that private respondent has other properties declared
in her name for taxation purposes and that neither she nor Marcos objected to the measurement by the assessors of
the four (4) parcels for Elpidio Borillo.
The conclusion then is inevitable that the late Elpidio Borillo did not sell and alienate parcels (a), (c) and (d) to private
respondent.
As to parcels (e) (f), private respondent presented no deed of sale in her favor.
Private respondent can not likewise seek refuge under a claim of ownership by virtue of acquisitive prescription.
Acquisitive prescription of dominion requires that there be public, peaceful and uninterrupted possession in the
concept of owner 28 for a period of ten (10) years, in case of ordinary prescription, 29 and thirty (30) years, in

case of extraordinary prescription. 30

After reviewing the evidence presented before it, the trial court concluded that Elpidio Borillo had actual, peaceful and
continuous possession of the subject parcels of land during his lifetime and until his death in 1970. The respondent
Court reversed this finding and ruled that it was private respondent who had the possession since her purchase
thereof in 1935.
It is a matter of judicial policy to accord the trial court's findings of facts with the highest respect and not to disturb the
same on appeal unless there are strong and impelling reasons to do so. 31 The reason for this is that trial courts

have more opportunity and facilities to examine factual matters than appellate courts. 32 They are in a
better position to assess the credibility of witnesses, not only by the nature of their testimonies, but also
by their demeanor on the
stand. 33
In Shauf vs. Court of Appeals, 34 We ruled:
Elementary is the rule that the conclusions and findings of fact of the trial court are entitled to great
weight on appeal and should not be disturbed unless for strong and cogent reasons. (Vda. de
Alberto, et al. vs. CA, et al., 173 SCRA 436 [1989]) Absent any substantial proof, therefore, that the
trial court's decision was grounded entirely on speculations, surmises or conjectures, the same
must be accorded full consideration and respect. This should be so because the trial court is, after
all, in a much better position to observe and correctly appreciate the respective parties' evidence as
they were presented. (Matabuena vs. CA, et al., 173 SCRA 170 [1989])
We find no impelling, compelling or cogent reason to overturn the findings of fact of the trial court.
WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals is hereby
REVERSED and SET ASIDE and the judgment of the Regional Trial Court of Abra dated 3 June 1978 in Civil Case
No. 1043 is hereby AFFIRMED and REINSTATED.
SO ORDERED.

[G.R. No. 79962 : December 10, 1990.]

192 SCRA 209
LUCIO R. CRUZ, Petitioner, vs. COURT OF APPEALS AND CONRADO Q. SALONGA,
Respondents.
DECISION
CRUZ, J.:
The private respondent Conrado Salonga filed a complaint for collection and damages
against petitioner Lucio Cruz ** in the Regional Trial Court of Lucena City 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 dated May 4, 1982, marked as Exhibit
D, reading as follows:
5/4/82
Received the amount of Thirty Five Thousand Cash from Rodrigo Quiambao and Conrado
Salonga on the day of May 4, 1982.
Sgd. Lucio Cruz
The plaintiff claimed that of this amount, only P20,000.00 had been paid, leaving a balance
of P10,000.00; that in August 1982, he and the defendant 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; 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; and 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
sometime in May 1982, he entered into an agreement with Salonga whereby the latter
would purchase (pakyaw) fish in certain areas of the fishpond from May 1982 to August 15,
1982. They also agreed that immediately thereafter, Salonga would sublease (bubuwisan)
the same fishpond for a period of one year. Cruz admitted having received on May 4, 1982,
the amount of P35,000.00 and on several occasions from August 15, 1982, to September
30, 1982, an aggregate amount of P15,250.00. He contended however, 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. He added that it was the private respondent who
owed him money since Salonga still had unpaid rentals for the 10-month period that he
actually occupied the fishpond. Cruz also claimed that Salonga owed him an additional
P4,000.00 arising from another purchase of fish from other areas of his leased fishpond.
In a pre-trial conference held on August 24, 1984, petitioner and private respondent
entered into the following partial stipulation of facts.
COURT:
Plaintiff and defendant, through their respective counsel, during the pre-trial conference,
agreed on the following stipulation of facts:
1) That plaintiff Conrado Salonga entered into a contract of what is commonly called
as 'pakyawan' with defendant Lucio Cruz on the fishes contained in a fishpond which
defendant Lucio Cruz was taking care of as lessee from the owner Mr. Nemesio
Yabut, with a verbal contract for the sum of P28,000.00 sometime in May 1982.
2) That because of the necessity, defendant Lucio Cruz at that time needed money,
he requested plaintiff Conrado Salonga to advance the money of not only P28,000.00
but P35,000.00 in order that Lucio Cruz could meet his obligation with the owner of
the fishpond in question, Mr. Nemesio Yabut;
3) That the amount of P35,000.00 as requested by defendant Lucio Cruz was in fact
delivered by plaintiff Conrado Salonga duly received by the defendant Lucio Cruz, as
evidenced by a receipt dated May 4, 1982, duly signed by defendant Lucio Cruz
4) That pursuant to said contract of "pakyaw," plaintiff Conrado Salonga was able to
harvest the fishes contained in the fishpond administered by Lucio Cruz in August
1982.
5) Immediately thereafter the aforesaid harvest thereon, they entered again on a
verbal agreement whereby plaintiff Conrado Salonga and defendant Lucio Cruz had
agreed that defendant Lucio Cruz will sublease and had in fact subleased the
fishpond of Nemesio Yabut to the herein plaintiff for the amount of P28,000.00 for a
period of one year beginning August 15, 1982.
6) That sometime on June 15, 1983, Mayor Nemesio Yabut, who is the owner of the
fishpond, took back the subject matter of this case from the defendant Lucio Cruz.
7) That defendant Lucio Cruz in compliance with their verbal sublease agreement had
received from the plaintiff Conrado Salonga the following sums of money:
a) P8,000.00 on August 15, 1982 as evidenced by Annex "B" of the
Complaint. (Exh. E);

b) The sum of P500.00 on September 4, 1982, as evidenced by Annex "C" of

the complaint (Exh. F);
c) The sum of P3,000.00 on September 19, 1982 as evidenced by Annex "D"
of the complaint (Exh. G); and
d) The sum of P3,750.00 on September 30, 1982 as Annex "E" of the
complaint (Exh. H).
At the trial, the private respondent claimed that aside from the amounts of P35,000.00
(Exh. D), P8,000.00 (Exh. E), P500.00 (Exh. F), P3,000.00 (Exh. G) and P3,750.00 (Exh. H)
mentioned in the partial stipulation of facts, he also delivered to the petitioner P28,000.00,
which constituted the consideration for their "pakyaw" agreement. This was evidenced by a
receipt dated May 14, 1982 marked as Exhibit I and reading as follows:
May 14, 1982
Tinatanggap ko ang halagang dalawampu't walong libong piso (P28,000.00) bilang
halaga sa pakyaw nila sa akin sa sangla sa kahong bilang #8 maliit at sa kaputol na
sapa sa gawing may bomba. Ito ay tatagal hanggang Agosto 1982.
SGD. LUCIO CRUZ
Salonga also claimed that he had paid Cruz the amount of P4,000 but the receipt of which
had been lost and denied being indebted to the petitioner for P4,000 for the lease of other
portions of the fishpond.
For his part, the petitioner testified that he entered into a "pakyaw" and sublease agreement
with the private respondent for a consideration of P28,000 for each transaction. Out of the
P35,000 he received from the private respondent on May 4, 1982, P28,000 covered full
payment of their "pakyaw" agreement while the remaining P7,000 constituted the advance
payment for their sublease agreement. The petitioner denied having received another
amount of P28,000 from Salonga on May 14, 1982. He contended that the instrument dated
May 14, 1982 (Exh. I) was executed to evidence their "pakyaw" agreement and to fix its
duration. He was corroborated by Sonny Viray, who testified that it was he who prepared
the May 4, 1982, receipt of P35,000.00, P28,000 of which was payment for the "pakyaw"
and the excess of P7,000.00 as advance for the sublease.
The trial court ruled in favor of the petitioner and ordered the private respondent to pay the
former the sum of P3,054.00 plus P1,000.00 as litigation expenses and attorney's fees, and
the costs. Judge Eriberto U. Rosario, Jr. found that the transactions between the petitioner
and the private respondent were indeed "pakyaw" and sublease agreements, each having a
consideration of P28,000.00, for a total of P56,000.00. Pursuant to these agreements,
Salonga paid Cruz P35,000.00 on May 4, 1982 (Exh. D); P8,000.00 on August 15, 1982
(Exh. E); P500.00 on September 4, 1982 (Exh. F); P3,000 on September 19, 1982; P3,750
on September 30, 1982 (Exh. H) and P4,000.00 on an unspecified date. The trial court
noted an earlier admission of the private respondent that on an unspecified date he received
the sum of P6,000.00 from the petitioner. This amount was credited to the petitioner and
deducted from the total amount paid by the private respondent. As the one-year contract of
sublease was pre-terminated two months short of the stipulated period, the rentals were
correspondingly reduced.
On appeal, the decision of the trial court was reversed. The respondent court instead
ordered the petitioner to pay the private respondent the sum of P24,916.00 plus P1,500.00
as litigation expenses and attorney's fees, on the following justification:
Exhibit "I" is very clear in its non-reference to the transaction behind Exhibit "D." What only
gives the semblance that Exhibit "I" is an explanation of the transaction behind Exhibit "D"

are the oral testimonies given by the defendant and his two witnesses. On the other hand,
Exhibit "I" is very clear in its language. Thus, its tenor must not be clouded by any parol
evidence introduced by the defendant. And with the tenor of Exhibit "I" remaining
unembellished, the conclusion that Exhibit "D" is a mere tentative receipt becomes
untenable.
The trial court erred when it relied on the self-serving testimonies of the defendant and his
witness as against the receipts both parties presented and adopted as their own exhibits. As
said before, Exhibit "I" is very clear in its tenor. And if it is really the intention of Exhibit "I"
to explain the contents of Exhibit "D", such manifestation or intention is not found in the
four corners of the former document.
The respondent court also found that the amounts of P35,000.00, P8,000.00, P500.00,
P3,000.00, P3,750.00 and P4,000.00 were not payments for the "pakyaw" and sublease
agreement but for loans extended by Salonga to Cruz. It also accepted Salonga's claim that
the amount of P28,000.00 was delivered to the petitioner on May 14, 1982, as payment on
the "pakyaw" agreement apart from the P35,000.00 (Exh. D) that was paid on May 4, 1982.
However, it agreed that the amount of P6,000.00 received by the private respondent from
the petitioner should be credited in favor of the latter.
The petitioner is now before this Court, raising the following issues:
1. The public respondent Court of Appeals gravely erred in (1) disregarding parol
evidence to Exhibits "D" and "I" despite the fact that these documents fall under the
exceptions provided for in Sec. 7, Rule 130 of the Rules of Court and thereby in (2)
making a sweeping conclusion that the transaction effected between the private
respondent and petitioner is one of contract of loan and not a contract of lease.
2. Assuming for the sake of argument that exhibits "D" and "I" evidence separate
transactions, the latter document should be disregarded, the same not having been
pleaded as a cause of action.
3. Whether or not the Stipulation of Facts entered into by the parties herein relative
to their executed transactions during the hearing of their case a quo, are binding
upon them and as well as, upon the public respondent?
Our ruling follows:
Rule 130, Sec. 7, of the Revised Rules of Court provides: 1
Sec. 7. Evidence of Written Agreements. When the terms of an agreement have been
reduced to writing, it is to be considered as containing all such terms, and therefore, there
can be, between the parties and their successors in interest, no evidence of the terms of the
agreement other than the contents of the writing, except in the following cases:
a) When a mistake or imperfection of the writing or its failure to express the true intent and
agreement of the parties, or the validity of the agreement is put in issue by the pleadings;
b) When there is an intrinsic ambiguity in the writing. The term "agreement" includes wills.
The reason for the rule is the presumption that when the parties have reduced their
agreement to writing they have made such writing the only repository and memorial of the
truth, and whatever is not found in the writing must be understood to have been waived or
abandoned. 2
The rule, however, 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. It is only a receipt attesting to the fact that on May 4, 1982,
the 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. A writing of this nature, as Wigmore
observed is not covered by the parol evidence rule.
A receipt i.e. a written acknowledgment, handed by one party to the other, of the manual
custody of money or other personality will in general fall without the line of the rule; i.e.
it is not intended to be an exclusive memorial, and the facts may be shown irrespective of
the terms of the receipt. This is because usually a receipt is merely a written admission of a
transaction independently existing, and, like other admissions, is not conclusive. 3
The "pakyaw" was mentioned only in Exhibit I, which also declared the petitioner's receipt of
the amount of P28,000.00 as consideration for the agreement. The petitioner and his
witnesses testified to show when and under what circumstances the amount of P28,000.00
was received. Their testimonies do not in any way vary or contradict the terms of Exhibit I.
While Exhibit I is dated May 14, 1982, it does not make any categorical declaration that the
amount of P28,000.00 stated therein was received by the petitioner on that same date. That
date may not therefore be considered conclusive as to when the amount of P28,000.00 was
actually received.
A deed is not conclusive evidence of everything it may contain. For instance, it is not the
only evidence of the date of its execution, nor its omission of a consideration conclusive
evidence that none passed, nor is its acknowledgment of a particular consideration an
objection to other proof of other and consistent considerations; and, by analogy, the
acknowledgment in a deed is not conclusive of the fact. 4
A distinction should be made between a statement of fact expressed in the instrument and
the terms of the contractual act. The former may be varied by parol evidence but not the
latter. 5 Section 7 of Rule 130 clearly refers to the terms of an agreement and provides that
"there can be, between the parties and their successors in interest, no evidence of the
terms of the agreement other than the contents of the writing."
The statement in Exhibit I of the petitioner's receipt of the P28,000.00 is just a statement of
fact. It is a mere acknowledgment of the distinct act of payment made by the private
respondent. Its reference to the amount of P28,000.00 as consideration of the "pakyaw"
contract does not make it part of the terms of their agreement. Parol evidence may
therefore be introduced to explain Exhibit I, particularly with respect to the petitioner's
receipt of the amount of P28,000.00 and of the date when the said amount was received.
Even if it were assumed that Exhibits D and I are covered by the parol evidence rule, its
application by the Court of Appeals 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. The rule is that
objections to evidence must be made as soon as the grounds therefor become reasonably
apparent. 6 In the case of testimonial evidence, the objection must be made when the
objectionable question is asked or after the answer is given if the objectionable features
become apparent only by reason of such answer. 7
For failure of the private respondent to object to the evidence introduced by the petitioner,
he is deemed to have waived the benefit of the parol evidence rule. Thus, in Abrenica v.
Gonda, 8 this Court held:
. . . it has been repeatedly laid down as a rule of evidence that a protest or objection
against the admission of any evidence must be made at the proper time, and that if not so
made it will be understood to have been waived. The proper time to make a protest or

objection is when, from the question addressed to the witness, or from the answer thereto,
or from the presentation of proof, the inadmissibility of evidence is, or may be inferred.
It is also settled that the court cannot disregard evidence which would ordinarily be
incompetent under the rules but has been rendered admissible by the failure of a party to
object thereto. Thus:
. . . The acceptance of an incompetent witness to testify in a civil suit, as well as the
allowance of improper questions that may be put to him while on the stand is a matter
resting in the discretion of the litigant. He may assert his right by timely objection or he
may waive it, expressly or by silence. In any case the option rests with him. Once admitted,
the testimony is in the case for what it is worth and the judge has no power to disregard it
for the sole reason that it could have been excluded, if it had been objected to, nor to strike
it out on its own motion. (Emphasis supplied.) 9
We find that it was error for the Court of Appeals to disregard the parol evidence introduced
by the petitioner and to conclude that the amount of P35,000.00 received on May 4, 1982
by the petitioner was in the nature of a loan accommodation. The Court of Appeals should
have considered the partial stipulation of facts and the testimonies of the witnesses which
sought to explain the circumstances surrounding the execution of Exhibits D and I and their
relation to one another.
We are satisfied that the amount of P35,000.00 was received by the petitioner as full
payment of their "pakyaw" agreement for P28,000.00 and the remaining P7,000.00 as
advance rentals for their sublease agreement. The claim that the excess of P7,000.00 was
advance payment of the sublease agreement is bolstered by the testimony of the private
respondent himself when during the cross examination he testified that:
ATTY. CRUZ:
Q And during the time you were leasing the fishpond, is it not a fact that you pay lease
rental to the defendant?
SALONGA:
A No sir, because I have already advanced him money.
Q What advance money are you referring to?
A Thirty-Five Thousand Pesos (P35,000.00), sir. 10
It was also error to treat the amounts received by the petitioner from August 15, 1982, to
September 30, 1982, from the private respondent as loan accommodations when the partial
stipulation of facts clearly stated that these were payments for the sublease agreement. The
pertinent portions read:
7) That defendant Lucio Cruz in compliance with their verbal sublease agreement had
received from the plaintiff Conrado Salonga the following sums of money: (Emphasis
Supplied.)
(a) P8,000.00 on August 15, 1982, as evidenced by Annex "B" of the complaint;
(b) the sum of P500.00 on September 4, 1982, as evidenced by Annex "C" of the complaint;
(c) the sum of P3,000.00 on September 19, 1982, as evidenced by Annex "D" of the
complaint;
(d) the sum of P3,750.00 on September 30, 1982, as Annex "E" of the complaint; 11
These admissions bind not only the parties but also the court, unless modified upon request
before the trial to prevent manifest injustice.

We find, however, that the Court of Appeals did not act in excess of its jurisdiction when it
appreciated Exhibit I despite the fact that it was not pleaded as a cause of action and was
objected to by the petitioner. According to Rule 10 of the Rules of Court:
Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not
raised by the pleadings are tried by express or implied consent of the parties, they shall be
treated in all respects, as if they had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform to the evidence and to raise these
issues may be made upon motion of any party at any time, even after judgment; but failure
to amend does not affect the result of the trial of these issues. If evidence is objected to at
the trial on the ground that it is not within the issues made by the pleadings, the court may
allow the pleadings to be amended and shall do so freely when the presentation of the
merits of the action will be subserved thereby and the objecting party fails to satisfy the
court that the admission of such evidence would prejudice him in maintaining his action or
defense upon the merits. The court may grant a continuance to enable the objecting party
to meet such evidence.
In Co Tiamco v. Diaz, 12 the Supreme Court held:
. . . When evidence is offered on a matter not alleged in the pleadings, the court may admit
it even against the objection of the adverse party, when the latter fails to satisfy the court
that the admission of the evidence would prejudice him in maintaining his defense upon the
merits, and the court may grant him continuance to enable him to meet the situation
created by the evidence . . .
While it is true that the private respondent did not even file a motion to amend his
complaint in order that it could conform to the evidence presented, this did not prevent the
court from rendering a valid judgment on the issues proved. As we held in the Co Tiamco
case:
. . . where the failure to order an amendment does not appear to have caused a surprise or
prejudice to the objecting party, it may be allowed as a harmless error. Well-known is the
rule that departures from procedure may be forgiven when they do not appear to have
impaired the substantial rights of the parties.
The following computation indicates the accountability of the private respondent to the
petitioner:
Exh. D, May 4, 1982 P35,000.00
Exh. E, Aug. 15, 1982 8,000.00
Exh. F, Sept. 4, 1982 500.00
Exh. G, Sept. 19, 1982 3,000.00
Exh. H, Sept. 30, 1982 3,750.00
Lost receipt

4,000.00

P54,250.00
Less: (amount received by the
private respondent from the
petitioner)

(6,000.00)

Total amount paid by the

private respondent to
the petitioner

48,250.00

Amount to be paid by the private respondent to the petitioner:

1. Pakyaw P28,000.00
2. Sublease

28,000 per annum

Less: 2 months: 4,666 23,334.00

Total amount to be paid by

the private respondent to
the petitioner P51,334.00
Total amount to be paid
by the private respondent P51,334.00
Total amount paid by
the private respondent 48,250.00

Deficiency in the amount

paid by the private respondent P3,084.00
ACCORDINGLY, the decision of the respondent Court of Appeals is REVERSED and that of the
Regional Trial Court of Laguna AFFIRMED, with the modification that the private respondent
shall pay the petitioner the sum of P3,084.00 instead of P3,054.00, plus costs. It is so
ordered.