1. Seaoil Petroleum Corp. vs.
s. Autocorp Group, 569 SCRA 387 The Vehicle Sales Invoice is the best evidence of the transaction. A sales invoice is a commercial document and are
FACTS: On 1994, Seaoil purchased one unit of ROBEX 200 LC Excavator, Model 1994 from Autocorp. The
original cost of the unit was P2,500,000.00 but was increased to P3,112,519.94 because it was paid in 12 monthly
installments. The sales agreement was embodied in the Vehicle Sales Invoices. Both documents were signed by
Francis Yu, president of Seaoil, on behalf of said corporation. Furthermore, it was agreed that despite delivery of
the excavator, ownership thereof was to remain with Autocorp until the obligation is fully settled. In this light,
Seaoils contractor, Romeo Valera, issued 12 postdated checks. However, Autocorp refused to accept the checks
because they were not under Seaoils name. Hence, Yu, on behalf of Seaoil, signed and issued 12 postdated checks
for P259,376.62 each with Autocorp as payee. The relationship started to turn sour when the first check bounced.
However, it was remedied when Seaoil replaced it with a good check. The second check likewise was also good
when presented for payment. However, the remaining 10 checks were not honored by the bank since Seaoil
requested that payment be stopped. Despite repeated demands, Seaoil refused to pay the remaining balance. Hence,
Autocorp filed a complaint for recovery of personal property with damages and replevin. The trial court ruled
for Autocorp. Hence, this appeal.
Seaoil: It claims that the real transaction is that Uniline, through Rodriguez, owed money to Focus. In lieu of
payment, Uniline instead agreed to convey the excavator to Focus. This was to be paid by checks issued by Seaoil
but which in turn were to be funded by checks issued by Uniline. The excavator in controversy was allegedly one
part of the vehicles conveyed to Focus. Seaoil claims that Rodriguez initially issued 12 postdated checks in favor of
Autocorp as payment for the excavator.
RTC: It ruled that the transaction between Autocorp and Seaoil was a simple contract of sale payable in
installments. It also held that the obligation to pay plaintiff the remainder of the purchase price of the excavator
solely devolves on Seaoil. Paul Rodriguez, not being a party to the sale of the excavator, could not be held liable
therefor.
CA: The CA dismissed the petition and affirmed the RTCs Decision in toto. It held that the transaction between Yu
and Rodriguez was merely verbal. This cannot alter the sales contract between Seaoil and Autocorp as this
will run counter to the parol evidence rule which prohibits the introduction of oral and parol evidence to
modify the terms of the contract. The claim that it falls under the exceptions to the parol evidence rule has not
been sufficiently proven. Seaoil was not able to show that Autocorp was merely an alter ego of Uniline or that both
corporations were utilized to perpetrate a fraud..
ISSUE: Whether or not the Court of Appeals erred in partially applying the parol evidence rule to prove only some
terms contained in one portion of the document but disregarded the rule with respect to another but substantial
portion or entry also contained in the same document which should have proven the true nature of the transaction.
RULING: The Petition lacks merit. Petitioner does not question the validity of the vehicle sales invoice but merely
argues that the same does not reflect the true agreement of the parties. However, petitioner only had its bare
testimony to back up the alleged arrangement with Rodriguez. The Monte de Piedad checks the supposedly clear
and obvious link between the documentary evidence and the true transaction between the parties are equivocal at
best. There is nothing in those checks to establish such link. Rodriguez denies that there is such an agreement.
Unsubstantiated testimony, offered as proof of verbal agreements which tends to vary the terms of a written
agreement, is inadmissible under the parol evidence rule. The parol evidence rule forbids any addition to, or
contradiction of, the terms of a written agreement by testimony or other evidence purporting to show that different
terms were agreed upon by the parties, varying the purport of the written contract. 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. Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or
defeat the operation of a valid contract.
commonly recognized in ordinary commercial transactions as valid between the parties and, at the very least, they
serve as an acknowledgment that a business transaction has in fact transpired. These documents are not mere scraps
of paper bereft of probative value, but vital pieces of evidence of commercial transactions. They are written
memorials of the details of the consummation of contracts. The terms of the subject sales invoice are clear. 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. The exception obtains
only where 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.
2. Edrada vs. Ramos, 468 SCRA 597
FACTS: Respondent spouses Ramos are the owners of two (2) fishing vessels, the Lady Lalaine and the Lady
Theresa. On 1996, respondents and petitioners executed an untitled handwritten document which states that
petitioner acknowledges that the Fishing Vessels owned spouses Ramos are now in her possession and received in
good running and serviceable order. As such, the vessels are now her responsibility. The agreed price for the vessel
is Nine Hundred Thousand Only (P900,000.00). Upon the signing of the document, petitioners delivered to
respondents four (4) postdated checks payable to cash drawn by petitioner Rosella Edrada, in various amounts
totaling One Hundred Forty Thousand Pesos (P140,000.00). The first three (3) checks were honored upon
presentment to the drawee bank while the fourth check for One Hundred Thousand Pesos (P100,000.00) was
dishonored because of a stop payment order.
Respondents filed an action against petitioners for specific performance with damages before the RTC. In
their Complaint, respondents alleged that petitioners contracted to buy the two fishing vessels for the agreed
purchase price of P900,000.00, as evidenced by the above-quoted document, which according to them evinced a
contract to buy. However, despite delivery of said vessels and repeated oral demands, petitioners failed to pay the
balance, so respondents further averred.
In their Answer with Counterclaim, petitioners averred that the document sued upon merely embodies an
agreement brought about by the loans they extended to respondents. According to petitioners, respondents allowed
them to manage or administer the fishing vessels as a business on the understanding that should they find the
business profitable, the vessels would be sold to them for Nine Hundred Thousand Pesos (P900,000.00). But
petitioners decided to call it quits after spending a hefty sum for the repair and maintenance of the vessels which
were already in dilapidated condition.
RTC: It rendered a judgment in favor of the plaintiffs and against the defendants and the latter are ordered to pay to
the former the balance amount. The RTC treated the action as one for collection of a sum of money and for
damages and considered the document as a perfected contract of sale.
ISSUE: Whether the real nature of the subject document is a contract of sale or one of loan.
RULING: Normally, the Court is bound by the factual findings of the lower courts, and accordingly, should affirm
the conclusion that the document in question was a perfected contract of sale. However, we find that both the RTC
and the Court of Appeals gravely misapprehended the nature of the said document.
The parol evidence rule forbids any addition to or contradiction of the terms of a written agreement by testimony or
other evidence purporting to show that different terms were agreed upon by the parties, varying the purport of the
written contract. Whatever is not found in the writing is understood to have been waived and abandoned. We
disagree with the RTC and the Court of Appeals that the document is a perfected contract of sale. A contract of
sale must evince the consent on the part of the seller to transfer and deliver and on the part of the buyer to
pay. An examination of the document reveals that there is no perfected contract of sale. The agreement may
confirm the receipt by respondents of the two vessels and their purchase price.
However, there is no equivocal agreement to transfer ownership of the vessel, but a mere commitment that
documents pertaining to the sale and agreement of payments are to follow.
Evidently, the document or documents which would formalize the transfer of ownership and contain the terms of
payment of the purchase price, or the period when such would become due and demandable, have yet to be
executed. But no such document was executed and no such terms were stipulated upon. The fact that there is a
stated total purchase price should not lead to the conclusion that a contract of sale had been perfected. Before a
valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established,
as such stands as essential to the validity of the sale. Assuming arguendo that the document evinces a perfected
contract of sale, the absence of definite terms of payment therein would preclude its enforcement by the respondents
through the instant Complaint. A requisite for the judicial enforcement of an obligation is that the same is due and
demandable. The absence of a stipulated period by which the purchase price should be paid indicates that at the
time of the filing of the complaint, the obligation to pay was not yet due and demandable.
3. Ortanez vs. Court of Appeals, 266 SCRA 561
FACTS: On 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 in favor of petitioner. 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 in favor of petitioner.
Private respondents received the payments for the above-mentioned lots, but failed to deliver the titles to petitioner.
On 1990 the latter 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. 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: "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.
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.
RTC: 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.
ISSUE: Whether the alleged oral conditions-precedent to a contract of sale shall be admissible, when the deeds of
sale are silent on such conditions.
RULING: 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.
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. 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 the parol evidence rule
forbids any addition to 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. 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.
Allegation in the pleading: In this case, the deeds of sale are clear, without any ambiguity, mistake or imperfection,
much less obscurity or doubt in the terms thereof. 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.
4. Sps. Paras vs. Kimwa Construction and Development Corp., G.R. No. 171601
FACTS: On 1994, Lucia and Kimwa entered into a contract denominated "Agreement for Supply of Aggregates"
where 40,000 cubic meters of aggregates were "allotted" by Lucia as supplier to Kimwa. Kimwa was to pick up the
allotted aggregates at Lucia’s permitted area in Toledo City at ₱240.00 per truckload. The entirety of this
Agreement states that the SUPPLIER (Lucia) is Special Permittee of (Rechanelling Block # VI of Sapang Daco
River along Barangay Ilihan) located at Toledo City under the terms and conditions:
1. That the aggregates is to be picked-up by the CONTRACTOR at the SUPPLIER permitted area at the rate of
TWO HUNDRED FORTY (P 240.00) PESOS per truck load;
2. That the volume allotted by the SUPPLIER to the CONTRACTOR is limited to 40,000 cu.m.;
3. That the said Aggregates is for the exclusive use of the Contractor;
4. That the terms of payment is Fifteen (15) days after the receipt of billing;
5. That there is no modification, amendment, assignment or transfer of this Agreement after acceptance shall be
binding upon the SUPPLIER unless agreed to in writing by and between the CONTRACTOR and SUPPLIER.
Pursuant to the Agreement, Kimwa hauled 10,000 cubic meters of aggregates. Sometime after this, however,
Kimwa stopped hauling aggregates. Claiming that in so doing, Kimwa violated the Agreement, Lucia, joined by her
husband, Bonifacio, filed the Complaint for breach of contract with damages.
Complaint: In their Complaint, Spouses Paras alleged that sometime in December 1994, Lucia was approached by
Kimwa expressing its interest to purchase gravel and sand from her. Kimwa allegedly asked that it be "assured" of
40,000 cubic meters worth of aggregates. Lucia countered that her concession area was due to be rechanneled on
May 15, 1995, when her Special Permit expires. Thus, she emphasized that she would be willing to enter into a
contract with Kimwa "provided the forty thousand cubic meters would be withdrawn or completely extracted and
hauled before such date. Kimwa then assured Lucia that it would take only two to three months for it to completely
haul the 40,000 cubic meters of aggregates. Convinced of Kimwa’s assurances, Lucia and Kimwa entered into the
Agreement. However, after extracting and hauling this 10,000 cubic meters, Kimwa allegedly transferred to the
concession area of a certain Mrs. Remedios dela Torre in violation of their Agreement.
Answer: In its Answer, Kimwa alleged that it never committed to obtain 40,000 cubic meters of aggregates from
Lucia. It argued that the controversial quantity of 40,000 cubic meters represented only an upper limit or the
maximum quantity that it could haul. It likewise claimed that it neither made any commitment to haul 40,000 cubic
meters of aggregates before May 15, 1995 nor represented that the hauling of this quantity could be completed in
two to three months.
Kimwa asserted that the Agreement articulated the parties’ true intent that 40,000 cubic meters was a maximum
limit and that May 15, 1995 was never set as a deadline. Invoking the Parol Evidence Rule, it insisted that
Spouses Paras were barred from introducing evidence which would show that the parties had agreed differently.
RTC: It rendered the Decision in favor of Spouses Paras. The trial court noted that the Agreement stipulated that
the allotted aggregates were set aside exclusively for Kimwa. It reasoned that it was contrary to human experience
for Kimwa to have entered into an Agreement with Lucia without verifying the latter’s authority as a
concessionaire. Considering that the Special Permit granted to Lucia before the trial court clearly indicated that her
authority was good for only six (6) months. The trial court noted that Kimwa must have been aware that the 40,000
cubic meters of aggregates allotted to it must necessarily be hauled.
CA: On appeal, the Court of Appeals reversed the Regional Trial Court’s Decision. It faulted the trial court for
basing its findings on evidence presented which were supposedly in violation of the Parol Evidence Rule. It noted
that the Agreement was clear that Kimwa was under no obligation to haul 40,000 cubic meters of aggregates by
May 15, 1995. Hence, this Petition was filed.
ISSUE: Whether petitioners Spouses Paras were able to establish that respondent Kimwa was obliged to haul a total
of 40,000 cubic meters of aggregates on or before May 15, 1995.
RULING: Respondent Kimwa is liable for failing to haul the remainder of the quantity which it was obliged to
acquire from petitioner Lucia Paras. The Court of Appeals is in serious error. Contrary to the Court of Appeal’s
conclusion, petitioners Spouses Paras pleaded in the Complaint they filed before the trial court a mistake or
imperfection in the Agreement, as well as the Agreement’s failure to express the true intent of the parties.
Further, respondent Kimwa, through its Answer, also responded to petitioners Spouses Paras’ pleading of these
issues. This is, thus, an exceptional case allowing admission of parol evidence. It is true that petitioners Spouses
Paras’ Complaint does not specifically state words and phrases such as "mistake," "imperfection," or "failure to
express the true intent of the parties." Nevertheless, it is evident that the crux of petitioners Spouses Paras’
Complaint is their assertion that the Agreement "entered into . . . on 6 December 1994 or thereabouts" was founded
on the parties’ supposed understanding that the quantity of aggregates allotted in favor of respondent
Kimwa must be hauled by May 15, 1995, lest such hauling be rendered impossible by the rechanneling of
petitioner Lucia Paras permitted area. This assertion is the very foundation of petitioners’ having come to court
for relief.
Special Permit only: Prior to or during the execution of the contract, the Plaintiffs furnished the Defendant all the
documents and requisite papers in connection with the contract, one of which was a copy of the Plaintiff’s special
permit indicating that the Plaintiff’s authority was only good for (6) months from November 14, 1994. This Special
Permit was, in turn, introduced by petitioners in evidence with its date of issuance and effectivity being specifically
identified. Having been admittedly furnished a copy of this Special Permit, respondent Kimwa was well aware that
a total of only about 40,000 cubic meters of aggregates may be extracted by petitioner Lucia from the
permitted area, and that petitioner Lucia Paras’ operations cannot extend beyond May 15, 1995, when the
Special Permit expires. By allotting the entire 40,000 cubic meters, petitioner Lucia Paras bound her entire
business to respondent Kimwa.
5. Inciong, Jr. Court of Appeals, G.R. No. 96405
FACTS: Petitioner's liability resulted from the promissory note in the amount of P50,000.00 which he signed with
Naybe and Pantanosas on February 3, 1983, holding themselves jointly and severally liable to private respondent
Philippine Bank of Communications. The promissory note was due on May 5, 1983. Said due date expired without
the promissors having paid their obligation. Consequently, private respondent sent petitioner telegrams demanding
payment thereof and thru registered mail a final letter of demand to Naybe. Since both obligors did not respond to
the demands made, private respondent filed a complaint for collection of the sum of P50,000.00 against the three
obligors.
Answer: Petitioner alleged that sometime in January 1983, he was approached by his friend, Rudy Campos, who
told him that he was a business partner of Pio Tio, the branch manager of private respondent in Cagayan de Oro
City. Campos also intimated to him that Naybe was interested in the business and would contribute a chainsaw to
the venture.
He added that, although Naybe had no money to buy the equipment, Pio Tio had assured Naybe of the approval of a
loan he would make with private respondent. Campos then persuaded petitioner to act as a "co-maker" in the said
loan. Petitioner allegedly acceded but with the understanding that he would only be a co-maker for the loan of
P50,000.00. Petitioner alleged further that five (5) copies of a blank promissory note were brought to him by
Campos at his office. 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.
ISSUE: Whether for the parol evidence rule to apply, a written contract must be in a particular form, or be signed
by both parties.
RULING: The Court finds the petition unmeritorious. It is the contention of the petitioner 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," parol evidence may "overcome" the contents of the promissory note. The rule
does not specify that the written agreement be a public document. What is required is that the agreement be in
writing as the rule is in fact founded on "long experience that written evidence is so much more certain and accurate
than that which rests in fleeting memory only. Thus, for the parol 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.
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 parol contemporaneous agreement was the
inducing and moving cause of the written contract, it may be shown by parol 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.
6. Eagleridge vs. Cameron Granville, 741 SCRA 557
FACTS: Petitioners Eagleridge Development Corporation (EDC), and sureties Marcelo N. Naval (Naval) and
Crispin I. Oben (Oben) are the defendants in a collection suit initiated by Export and Industry Bank (EIB) through
a Complaint and currently pending proceedings before the Regional Trial Court (RTC). By virtue of a Deed of
Assignment, EIB transferred EDC's outstanding loan obligations to respondent Cameron Granville. Thereafter,
Cameron filed its Motion to Substitute/Join EIB which was granted by the trial court. Petitioners filed a Motion for
Production/Inspection of the Loan Sale and Purchase Agreement (LSPA) referred to in the Deed of Assignment.
Respondent Cameron filed its Comment alleging that petitioners have not shown "good cause" for the production of
the LSPA and that the same is allegedly irrelevant to the case a quo. Petitioners explained that the production of the
LSPA was for "good cause". They pointed out that the claim of Cameron is based on an obligation purchased
after litigation had already been instituted in relation to it. That pursuant to Article 1634 of the New Civil
Code[13] on assignment of credit, the obligation subject of the case a quo is a credit in litigation, which may be
extinguished by reimbursing the assignee of the price paid therefor, the judicial costs incurred and the interest of the
price from the day on which the same was paid.
RTC: The trial court denied petitioners' motion for production for being utterly devoid of merit. It ruled that there
was failure to show "good cause" for the production of the LSPA and failure to show that the LSPA is material or
contains evidence relevant to an issue involved in the action.
Aggrieved, petitioners filed their Petition for Certiorari with the Court of Appeals (CA), to nullify and/or set aside
the RTC's Resolutions. The CA dismissed the petition and subsequent motion for reconsideration was likewise
denied. Petitioners argue that the parol evidence rule is not applicable to them because they were not parties to
the deed of assignment, and they cannot be prevented from seeking evidence to determine the complete terms of
the Deed of Assignment. And the deed of assignment made express reference to the LSPA, hence, the latter cannot
be considered as extrinsic to it. For resolution is respondent Cameron Granville 3 Asset Management, Inc. 's motion
for reconsideration1 of the Supreme Court’s decision, which reversed and set aside the Court of Appeals'
resolutions, and ordered respondent to produce the Loan Sale and Purchase Agreement (LSPA).
ISSUE: Whether non-parties in an agreement are barred from seeking evidence to determine its terms.
FACTS: We deny the motion for reconsideration. Discovery mode of production/inspection of document may be
availed of even beyond pre-trial upon a showing of good cause. The Court have determined that the LSPA is
relevant and material to the issue on the validity of the deed of assignment raised by petitioners in the court a
quo, and allowing its production and inspection by petitioners would be more in keeping with the objectives of the
discovery rules.
The parol evidence rule does notapply to petitioners who are not parties to the deed of assignment and do not base a
claim on it. Hence, they cannot be prevented from seeking evidence to determine the complete terms of the deed of
assignment. Even assuming that Rule 130, Section 9 is applicable, an exception to the rule under the second
paragraph is when the party puts in issue the validity of the written agreement, as in the case a quo. Besides, what is
forbidden under the parol evidence rule is the presentation of oral or extrinsic evidence, not those expressly
referred to in the written agreement. Documents can be read together when one refers to the other. By the
express terms of the deed of assignment, it is clear that the deed of assignment was meant to be read in conjunction
with the LSPA.
The LSPA is not privileged and confidential in nature: Privileged communications under the rules of evidence is
premised on an accepted need to protect a trust relationship. It has not been shown that the parties to the deed of
assignment fall under any of the foregoing categories. Moreover, the privilege is not absolute, and the court may
compel disclosure where it is indispensable for doing justice. At any rate, respondent failed to discharge the burden
of showing that the LSPA is a privileged document. Respondent did not present any law or regulation that considers
bank documents such as the LSPA as classified information.
7. Carganillo vs. People, G.R. No. 182424
FACTS: Teresita Lazaro, a rice trader in Rizal, Nueva Ecija, gave the petitioner the amount of ₱132,000.00 for the
purpose of buying palay. The petitioner, who was alleged to be an "ahente" or agent in the buy-and-sell of palay,
agreed to deliver the palay to the Lazaro Palay Buying Station on or before November 28, 1998. According to the
"Kasunduan" signed by the petitioner, the parties agreed that for every kilo of palay bought the petitioner shall
earn a commission of twenty centavos (P0.20). But if no palay is purchased and delivered on November 28, the
petitioner must return the ₱132,000.00 to Teresita within one (1) week after November 28. After failing to receive
any palay or the ₱132,000.00 on November 28 and one (1) week thereafter, respectively, Teresita made oral and
written demands to the petitioner for the return of the ₱132,000.00 but her demands were simply ignored. She thus
filed an affidavit-complaint for estafa against the petitioner before the Fiscal’s Office. Thereafter, an
Information for the crime of estafa was filed in court.
Answer: The petitioner alleged that she owed Teresita a balance of ₱13,704.32 for the fertilizers and rice that she
purchased from the latter in 1995 and 1996, and that, in November 1996, she was made to sign a blank
"Kasunduan" that reflected no written date and amount. RTC convicted the petitioner of the crime of estafa. On
appeal, the CA affirmed the petitioner’s conviction.
CA: The CA held that the prosecution properly established the elements of the crime of estafa. In debunking
petitioner’s claim that her agreement with Teresita was merely a money loan, the CA stated that: In this case, the
Kasunduan which accused admittedly signed, is clear in its tenor and the failure to comply therewith makes out a
case for estafa.
Accused’s insistence that she signed the said Kasunduan in blank is belied by her admission of "the existence or
authenticity of the documentary exhibits" during the prosecution’s formal offer of evidence and her own testimony.
The petitioner elevated her judgment of conviction to the Court by filing a petition for review on certiorari under
Rule 45.
Petition: The petitioner maintains that she is not engaged in the business of buying and selling palay and that the
"Kasunduan" between her and Teresita does not contain their real agreement of a simple money loan. She argues
that the prosecution failed to establish all the elements of estafa because she never received the ₱132,000.00 from
Teresita.
ISSUE: Whether the parol evidence rule applies in this case.
RULING: The Court denies the present petition. It finds that all the elements of estafa are present in this case: that
the petitioner received in trust the amount of ₱132,000.00 from Teresita for the purpose of buying palay and
misappropriated it when she failed to return the said amount to Teresita upon demand. As the CA and the RTC did,
we find worthy of credit and belief the "Kasunduan" presented in evidence by the prosecution that was admittedly
signed by the petitioner and which contained the terms of agreement between her and Teresita. It is settled that the
agreement or contract between the parties is the formal expression of the parties’ rights, duties, and obligations and
is the best evidence of the parties’ intention. Thus, when the terms of an agreement have been reduced into writing,
it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in
interest, no evidence of such terms other than the contents of the written agreement.
In this case, the petitioner alleges that the subject "Kasunduan" failed to express the real agreement between her and
Teresita; that theirs was a plain and simple loan agreement and not that of a principal-agent relationship in the buy-
and-sell of palay. The documentary and testimonial evidence presented by the petitioner, however, fail to support
her claims. The RTC found that the receipts presented by the petitioner to prove her loan obligation with Teresita
were vague, undated and unsigned. Also, we cannot sustain the petitioner’s claim that she had been the victim of a
fraud because Teresita deceived her into signing a blank document; that she signed the "Kasunduan," even if it had
no date and amount written on it, because Teresita led her to believe that the document would be used merely for
show purposes with the bank. For fraud to vitiate consent, the deception employed must be the causal inducement
to the making of the contract, and must be serious in character. It must be sufficient to impress or lead an
ordinarily prudent person into error, taking into account the circumstances of each case. In this case, the Court finds
no vitiated consent on the part of the petitioner.
8. Pilipinas Bank vs. Court of Appeals, 341 SCRA 527
FACTS: Petitioner obtained from private respondent Meridian Assurance Corporation a Money Securities and
Payroll Comprehensive Policy which was effective from January 13, 1985 to January 13, 1986.On November 25,
1985, at about 9:15 a.m., while the policy was in full force and effect, petitioner's armored vehicle which was on its
way to deliver the payroll withdrawal of its client Luzon Development Bank ACLEM Paper Mills, was robbed by
two armed men wearing police uniforms. Petitioner's driver, authorized teller and two private armed guards were on
board the armored vehicle when the same was robbed. The loss suffered by petitioner as a result of the heist
amounted to P545,301.40. Petitioner filed a formal notice of claim under its insurance policy with private
respondent invoking Section II of the Policy which states that the Company will subject to the Limits of this Section
as hereinafter provided indemnify the insured against loss by any cause whatsoever occuring outside the premises
of Money and Securities in the personal charge of a Messenger in transit on a Money Route; and
The warranty/rider attached to the Policy which provides that- WARRANTED that in respect of PILIPINAS BANK
Head Office and all its branches, pick-up and/or deposits and withdrawals without the use of armored car, company
car, or official's car shall be covered by this policy.
Private respondent denied petitioner's claim and averred that the insurance does not cover the deliveries of the
withdrawals to petitioner's clients. Petitioner thereafter filed a complaint against private respondent with the
Regional Trial Court of Manila. Private respondent filed a motion to dismiss which was later granted by the
RTC. Petitioner then moved to reconsider the trial court's order, but the same was denied. Aggrieved, petitioner
filed a petition for certiorari with the Court of Appeals assailing the RTC's order dismissing the complaint. The
appellate court granted the petition and remanded the case to the RTC.
After the case was remanded to the RTC and the latter set the case for pre-trial, petitioner filed its Pre-Trial Brief,
stating among others, that it would present as one of its witnesses Mr. Cesar R. Tubianosa to testify on the
existence and due execution of the insurance policy, particularly on the negotiations that were held prior to the
execution thereof, including negotiations that led to the attachment warranties, to prove that the loss subject of
petitioners’ claim is covered by the Policy. When petitioner was about to present Mr. Tubianosa to testify, private
respondent objected and argued that said witness testimony regarding the negotiations on the terms and
conditions of the policy would be violative of the best evidence rule. However, private respondent’s objection was
overruled. The testimony was completed. Petitioner filed a Motion to Recall Witness, praying that it be allowed to
recall Tubianosa to testify on the negotiations pertaining to the terms and conditions of the policy before its
issuance to determine the intention of the parties regarding the said terms and conditions. Private respondent
objected thereto, on the ground that the same would violate the parol evidence rule.
RTC: It denies petitioner’s motion to recall Tubianosa to the witness stand, ruling that the same would violate the
parol evidence rule. Petitioner filed a petition for certiorari with the Court of Appeals assailing the aforementioned
Orders of the RTC which was dismissed.
CA: It held that there is no ambiguity in the provisions of the Policy which would necessitate the presentation of
extrinsic evidence to clarify the meaning thereof. The Court of Appeals also stated that petitioner failed to set forth
in its Complaint a specific allegation that there is an intrinsic ambiguity in the insurance policy which would
warrant the presentation of further evidence to clarify the intent of the contracting parties.
ISSUE: Whether there is an intrinsic ambiguity in the insurance policy which would call for the exception under
the parol evidence rule.
RULING: Petitioners Complaint merely alleged that under the provisions of the Policy, it was entitled to recover
from private respondent the amount it lost during the heist. It did not allege therein that the Policy’s terms were
ambiguous or failed to express the true agreement between itself and private respondent. Such being the case,
petitioner has no right to insist that it be allowed to present Tubianosas testimony to shed light on the alleged true
agreement of the parties, notwithstanding its statement in its Pre-Trial Brief that it was presenting said witness for
that purpose. Section 9, Rule 130 of the Revised Rules of Court expressly requires that for parol evidence to be
admissible to vary the terms of the written agreement, the mistake or imperfection thereof or its failure to express
the true agreement of the parties should be put in issue by the pleadings. As correctly noted by the appellate court,
petitioner failed to raise the issue of an intrinsic ambiguity, mistake or imperfection in the terms of the Policy, or of
the failure of said contract to express the true intent and agreement of the parties thereto in its Complaint.
9. Madrigal vs. Court of Appeals, 456 SCRA 247
FACTS: Private respondent Jose Mallari and his wife Fermina Mallari are the owners of a 340-square meter
residential lot with a 2-storey residential house erected thereon. In need of money for his wife’s planned travel to
the United States, Jose thought of mortgaging the above property with a bank.
However, his son Virgilio Mallari who is residing with his own family somewhere in San Ildefonso, Bulacan
convinced Jose not to proceed with the intended mortgage and to instead assign to him a portion of the same
property, assuring his father that the latter could continue in occupancy of the property and that he will allow his
sister Elizabeth who operates a store thereat to continue with the same. Virgilio told his father, however, that he will
occupy one of the rooms in the house in case he goes to Olongapo City on vacation and that he will renovate the
other room and reserve it for his mother when she comes back from the States.
Virgilio assured his father that he will not dispose of the property without his father’s consent and that the latter
could redeem the said property any time he acquires money. And so, finding no reason to doubt Virgilios words,
Jose did not anymore proceed with his original idea of mortgaging the property with a bank. Instead, he and his
wife Fermina executed a document denominated as Deed of Absolute Sale, whereunder the couple appeared to
have conveyed to their son Virgilio Mallari the house and lot in question for a consideration of P50,000.00. Things
turned for the worse to the unsuspecting Jose Mallari when, without his knowledge, his son Virgilio, via a document
entitled Kasulatan ng Bilihang Tuluyan, sold the same property for the same amount of P50,000.00 to Edenbert
Madrigal, a longtime neighbor of the Mallaris in the area.
True enough, sometime thereafter, to Joses great shock, he was demanded by Edenbert Madrigal to vacate the
subject property. It was then that Jose came to know for the first time of the sale of his property by his son Virgilio
in favor of Edenbert Madrigal thru the aforementioned Kasulatan ng Bilihang Tuluyan. Jose Mallari filed against
his son Virgilio Mallari and Edenbert Madrigal the complaint for annulment, redemption and damages with
prayer for preliminary injunction/temporary restraining order in this case. In his complaint, plaintiff Jose
Mallari prayed that the Deed of Absolute Sale executed by him and his wife Fermina in favor of their son Virgilio
Mallari be declared null and void, or, in the alternative, that he be allowed to redeem the subject property at a
reasonable price.
RTC: The trial court rendered judgment for plaintiff Jose Mallari by ordering defendant Edenbert Madrigal to
allow the former to redeem the subject property based on the same amount it was sold to him by his co-defendant
Virgilio Mallari, and for the two (2) defendants jointly and severally to pay plaintiff Jose Mallari moral and
exemplary damages, attorneys fees and the cost of suit. In time, appellants Virgilio Mallari and Edenbert Madrigal
moved for a reconsideration but their motion was denied by the appellate court.
Petitioners fault the trial court for receiving parol evidence to establish that the instrument in question is actually
one of equitable mortgage. Indirectly, petitioners also put the Court of Appeals to task for giving weight to those
evidence instead of rejecting them, conformably with the Parol Evidence Rule under Section 9, Rule 130 of the
Rules of Court.
ISSUE: Whether the trial court and the appellate court erred in treating the Deed of Absolute Sale as an equitable
mortgage and not as an outright sale as the document itself proclaims.
RULING: The Court rule and so hold that both courts correctly construed the aforementioned Deed of Absolute
Sale as an equitable mortgage and not a sale, as it purports to be. Evidence clearly shows that there was indeed no
intent to sell the subject property. Rather, what transpired between the parties, who were father and son, was only
a mortgage involving P50,000.00 over a portion of a lot with a house. The Court cannot view the Deed of Absolute
Sale in question in isolation of the circumstances under which the same was executed by Virgilio’s parents, more so
in the light of his father’s disavowal of what the document, on its face, purports to state. If the document appears to
be a sale, parol evidence may be resorted to if the same does not express the true intent of the parties. Even when a
document appears on its face to be a sale, the owner of the property may prove that the contract is really a loan
with mortgage by raising as an issue the fact that the document does not express the true intent of the parties.
In this case, parol evidence then becomes competent and admissible to prove that the instrument was in truth and in
fact given merely as a security for the repayment of a loan. And upon proof of the truth of such allegations, the
court will enforce the agreement or understanding in consonance with the true intent of the parties at the time of the
execution of the contract.
 10. Santiago vs. Court of Appeals, 278 SCRA 98
FACTS: Paula Arcega was the registered owner of a certain parcel of land. Her residential house stood there until
1970 when it was destroyed by a strong typhoon. On December 9, 1970, Paula Arcega executed what purported to
be a deed of conditional sale over the land in favor of Josefina Arcega and the spouses Regalado Santiago and
Rosita Palabyab, the petitioners herein, for and in consideration of P20,000.00. The vendees were supposed to
pay P7,000.00 as downpayment. It was expressly provided that the vendor would execute and deliver to the vendees
an absolute deed of sale upon full payment by the vendees of the unpaid balance of the purchase price
of P13,000.00.
Subsequently, supposedly upon payment of the remaining balance, Paula Arcega executed a deed of absolute sale of
the same parcel of land in favor of petitioners. On 1985, Paula Arcega died single and without issue, leaving as
heirs her two brothers, Narciso Arcega and private respondent Quirico Arcega. Incidentally, before Paula Arcega
died, a house of four bedrooms with a total floor area of 225 square meters was built over the parcel of land in
question. Significantly, the master's bedroom, with toilet and bath, was occupied by Paula Arcega until her death
despite the execution of the alleged deed of absolute sale. The three other bedrooms, smaller than the master's
bedroom, were occupied by the petitioners who were the supposed vendees.
Private respondent Quirico Arcega, as heir of his deceased sister, filed a civil case seeking to declare null and void
the deed of sale executed by his sister during her lifetime in favor of the petitioners on the ground that said deed
was fictitious since the purported consideration therefor of P20,000.00 was not actually paid by the vendees to his
sister.
Answer: Petitioner spouses averred that private respondent's cause of action was already barred by the statute of
limitations considering that the disputed deed of absolute sale was executed in their favor on July 18, 1971, while
private respondent's complaint was filed in court only on October 24, 1985 or more than fourteen (14) years from
the time the cause of action accrued. Petitioners also deny that the sale was fictitious. They maintain that the
purchase price was actually paid to Paula Arcega and that said amount was spent by the deceased in the
construction of her three-door apartment on the parcel of land in question. The RTC rendered judgment in favor of
private respondent Quirico Arcega.
In ruling for private respondent, the trial court, as affirmed in toto by the public respondent Court of
Appeals, found that: All the defendants being members of the SSS, Paula deemed it wise to lend her title to them
for purposes of loan with the SSS. She executed a deed of sale to effect the transfer of the property in the name of
the defendants and thereafter the latter mortgaged the same. A big master's bedroom complete with a bath and toilet
was occupied by Paula Arcega up to the time of her death on April 10, 1985 and the other three smaller bedrooms
are occupied by spouses, defendants Regalado Santiago and Rosita Palabyab, and Josefina Arcega. After the death
of Paula Arcega defendant Josefina Arcega and Narciso Arcega constructed their own house at back portion of the
lot in question. There is clear indication that the deed of sale, which is unconscionably low for 937 square meters in
favor of the defendants sometime on July 18, 1971 who are all members of SSS, is merely designed as an
accommodation for purposes of loan with the SSS. As a matter of fact defendant Josefina Arcega in her unguarded
moment unwittingly told the truth that couple (Regalado Santiago and Rosita Palabyab) had indeed borrowed the
title and then mortgaged the same with the SSS as shown in her direct testimony which reads:
Atty Villanueva:
Q- Why did you say that the house is owned by spouses Santiago but the lot is bought by you and Rosita?
A- Because at that time, the couple borrowed the title and then mortgaged the property with the SSS. There is only
one title but both of us owned it.
On appeal, the public respondent Court of Appeals dismissed the same, affirming in all respects the RTC judgment.
Hence, this petition.
Petitioners, nevertheless, insist that both the trial court and the respondent court should have followed the Parole
Evidence Rule and prevented evidence, like the testimony of Notary Public, Atty. Luis Cuvin, private respondent
Quirico Arcega, among others, which impugned the two notarized deeds of sale.
ISSUE: Whether the parol evidence rule is applicable in this case.
RULING: The petition is unmeritorious.
In this case, private respondent Quirico Arcega was able to put in issue in his complaint before the Regional Trial
Court the validity of the subject deeds of sale for being a simulated transaction:
That in conformity with the above plans and schemes of the defendants, they made PAULA ARCEGA execute and
sign a fictitious, hence null and void KASULATAN NG BILIHANG TULUYAN NG LUPA on July 18, 1971, before
Notary Public LUIS CUVIN, of Bulacan and entered in his register as Doc. No. 253, Page No. 52, Book No. XIX,
Series of 1971, by which PAULA ARCEGA purportedly convyed(sic) in favor of the defendants JOSEFINA
ARCEGA and the spouses REGALADO SANTIAGO and ROSITA PALABYAB, the whole parcel of land above
described for the sum of TWENTY THOUSAND (P20,000.00), as consideration which was not actually, then or
thereafter paid either wholly or partially. A copy of said document is hereto attached as Annex B and made integral
part hereof.
10. That defendants pursuing their unlawful scheme registered the said void and inexistent KASULATAN NG
BILIHANG TULUYAN NG LUPA with the office of the Register of Deeds of Bulacan, procured the cancellation of
Transfer Certificate of Title No. 115510, in the name of PAULA ARCEGA and the issuance of Transfer Certificate
of Title No. 148989, in their names, a xeroxed copy of which is hereto attached as Annex C and made integral part
hereof.
11. That still in furtherance of their unjust and unlawful schemes, defendants secured a loan from Social Security
System in the amount of P30,000.00, securing the payment thereof with a Real Estate Mortgage on the above-
described property then already titled in their names as aforestated.
Moreover, the parol evidence rule may be waived by failure to invoke it, as by failure to object to the introduction
of parol evidence. And, where a party who is entitled to the benefit of the rule waives the benefit thereof by
allowing such evidence to be received without objection and without any effort to have it stricken from the minutes
or disregarded by the trial court, he cannot, after the trial has closed and the case has been decided against him,
invoke the rule in order to secure a reversal of the judgment by an appellate court.
Here, the records are devoid of any indication that petitioners ever objected to the admissibility of parole evidence
introduced by private respondent in open court. The court cannot disregard evidence which would ordinarily be
incompetent under the rules but has been rendered admissible by the failure of party to object thereto. Petitioners
have no one to blame but themselves in this regard.