I.

Parol Evidence Rule - Rule 130, section 9 - Governs what kinds of evidence parties
to a contract dispute can introduce when trying to determine the specific terms of a
contract. The rule also prevents parties who have reduced their agreement to a final
written document from later introducing other evidence, such as the content of oral
discussions from earlier in the negotiation process, as evidence of a different intent as to
the terms of the contract. The rule provides that "extrinsic evidence is inadmissible to
vary a written contract". The term "parol" derives from parol or parole, meaning "word
of mouth" or "verbal", and in medieval times referred to oral pleadings in a court case.

CONDE vs. CA
Facts:

Margarita, Bernardo and the petitioner Dominga Conde, sold a parcel of land (Leyte)
with right of repurchase, within10 years from said date to Spouses Casimira and Pio Altera, for
P165.00. The agreement provides that, if at the end of 10 years the said land is not repurchased,
a new agreement shall be made between the parties and in no case title and ownership shall be
vested in the hand of the Alteras. Private respondent Paciente Cordero, son-in-law of the
Alteras, signed in behalf of the latter, a Memorandum of Repurchase over the parcel of land sold
with repurchase, which document got lost. On 30 June 1965 Pio Altera sold the disputed lot to
the spouses Ramon and Catalina Conde, whose relationship to petitioner does not appear from
the records. Nor has the document of sale been exhibited. Contending that she had validly
repurchased the lot in question in 1945, Dominga filed a complaint against Paciente and Nicetas
Cordero, Ramon and Catalina Conde, and the Alteras, for quieting of title to real property and
declaration of ownership. Petitioner's evidence is that Paciente Cordero signed the
Memorandum of Repurchase in representation of his father-in-law Pio Altera, who was seriously
sick on that occasion, and of his mother-in-law who was in Manila at the time, and that Cordero
received the repurchase price of P65.00. Private respondents, for their part, adduced evidence
that Paciente Cordero signed the document of repurchase merely to show that he had no
objection to the repurchase; and that he did not receive the amount of P165.00 from petitioner
inasmuch as he had no authority from his parents-in-law who were the vendees-a-retro.
Ruling:
Cordero must be held bound by the clear terms of the Memorandum of Repurchase
that he had signed wherein he acknowledged the receipt of P165.00 and assumed the obligation
to maintain the repurchasers in peaceful possession. It was executed in the Visayan dialect
which he understood. He cannot now be allowed to dispute the same. If the contract is plain
and unequivocal in its terms he is ordinarily bound thereby. It is the duty of every contracting
party to learn and know its contents before he signs and delivers it. There is nothing in the
document of repurchase to show that Paciente Cordero had signed the same merely to indicate
that he had no objection to petitioner's right of repurchase. Besides, he would have had no
personality to object. To uphold his oral testimony on that point, would be a departure from the
parol evidence rule 5 and would defeat the purpose for which the doctrine is intended. The
purpose of the rule is to give stability to written agreements, and to remove the temptation and
possibility of perjury, which would be afforded if parol evidence was admissible. In sum,
although the contending parties were legally wanting in their respective actuations, the
repurchase by petitioner is supported by the admissions at the pre-trial that petitioner has been
in possession since the year 1945, the date of the deed of repurchase, and has been paying land
taxes thereon since then. The imperatives of substantial justice, and the equitable principle of
laches brought about by private respondents' inaction and neglect for 24 years, loom in
petitioner's favor.

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Accordingly, from the execution of the repurchase document in 1945, possession, has been in the
hands of petitioner as stipulated therein. Land taxes have also been paid for by petitioner yearly
from 1947 to 1969 inclusive. However, petitioner had done nothing to formalize her repurchase,
by the same token, neither have the vendees-a-retro done anything to clear their title of the
encumbrance therein regarding petitioner's right to repurchase. No new agreement was entered
into by the parties as stipulated in the deed of pacto de retro, as to any failure to exercise the
right of redemption. Petitioner exerted no effort to procure the signature of Pio after he had
recovered from his illness, neither did the Alteras repudiate the deed that their son-in-law had
signed. An implied agency must be held to have been created from their silence or lack of action,
or their failure to repudiate the agency. (1) The Alteras must be deemed to have incurred in
laches. (2) Ramon and Catalina Conde, cannot be said to be purchasers in good faith. OCT No.
534 in the name of the Alteras specifically contained the condition that it was subject to the right
of repurchase within 10 years from 1938. Although the ten-year period had lapsed in 1965 and
there was no annotation of any repurchase by petitioner, neither had the title been cleared of
that encumbrance. The purchasers were put on notice that some other person could have a right
to or interest in the property. And they also admitted by them at the pre-trial, that the right to
repurchase and possession had been with petitioner since 1945

ORTANEZ vs CA
Facts:
Private respondents, Oscar, and Asuncion Inocentes, sold 2 parcels of land to
petitioner Rafael Ortanez, whose marriage is under a regime of complete separation of
property. Private respondents received the payments but failed to deliver the titles to
petitioner. Ortanez demanded from the former the delivery of said titles. Private respondents,
however, refused on the ground that the title of the first lot is in the possession of another
person, petitioner’s acquisition of the title of the other lot is subject to certain conditions.
Petitioner sued private respondents for specific performance. However, private respondents
alleged the existence of the some oral conditions which were never reflected in the deeds of
sale. During trial, Oscar Inocentes, a former judge, orally testified that the sale was subject to
the oral conditions, although such conditions were not incorporated in the deeds of sale.
Petitioner timely objected on the ground that the introduction of said oral conditions was barred
by the parol evidence rule.
Issue: WON oral conditions-precedent to a contract of sale, when the deeds of sale are silent on
such conditions, may be admitted as parol evidence.
Ruling:
No. (1) 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 10 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.
2
 (2) private respondents rely on the rule that a condition precedent to a contract may
be established by parol evidence. However, the material facts of this are different. Here, the
deeds of sale made no reference to any pre-conditions or other agreement. In fact, the sale is
denominated as absolute in its own terms.
(3) the parol evidence herein sought to be introduced would vary, contradict or defeat
the operation of a valid instrument. The parol evidence rule forbids any addition to the terms of
a written instrument. 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.
(4) The court disagrees on the 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: (a)
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. 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.
In this case, the deeds of sale are clear, without any ambiguity, mistake or imperfection, much
less obscurity or doubt in the terms thereof.
(5) Record shows that private respondents did not expressly plead that the deeds of
sale were incomplete or that it did not reflect the intention of the buyer and the seller. Such
issue must be "squarely presented. Private respondents merely alleged that the sale was subject
to 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.
(6) Assuming 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.

INCIONG vs CA
Facts:
Baldomero Inciong signed a promisory note with Rene Naybe and Gregorio Pantanosas
holding themselves jointly and severally liable to 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, PBC sent petitioner telegrams demanding payment thereof.
PBC also sent by registered mail a final letter of demand to Rene Naybe. Since both obligors did
not respond to the demands made, PBC filed a complaint for collection of the sum of P50,000.00
against the three obligors. Inciong alleged that he was approached by his friend, Rudy Campos,
who told him that he was a partner of Pio Tio, the branch manager of PBC, in the falcata logs
operation business. Campos told him that Naybe was interested in the business and would
3
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 PBC.
Campos then persuaded Inciong to act as a "co-maker" in the said loan. Inciong allegedly
acceded but with the understanding that he would only be a co-maker for the loan of
P50,000.00. He alleged further that 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. However, accordingly,
annexed to the petition filed by Inciong, is a copy of an affidavit executed on May 3, 1988 which
supports Inciong’s allegation that they were induced to sign the promissory note on the belief
that it was only for P5,000.00, adding that it was Campos who caused the amount of the loan to
be increased to P50,000.00. Petitioner contends that in signing the promissory note, his consent
was vitiated by fraud. However, petitioner lost the chance to fully ventilate his factual claims
below, for he failed to present the affidavit before the lower court, where it would have
strengthened his claim that the promissory note did not reflect the correct amount of the loan.

Ruling:
There is no merit in petitioner's assertion 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 the attesting witnesses, parol evidence may "overcome" the contents of the
promissory note. When the terms of an agreement have been reduced to writing, it is
considered as containing all the terms agreed upon, and there can be no evidence of such terms
other than the contents of the written agreement between the parties and their successors in
interest. Clearly, 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, that it would be unsafe, when parties have expressed the terms of
their contract in writing, to admit weaker evidence to control and vary the stronger and to show
that the
parties intended a different contract from that expressed in the writing signed by them. Thus,
for the 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 fail ed
as it was evidenced only by his own uncorroborated and, expectedly, self-serving testimony.

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 LUCIO CRUZ vs CA
Facts:
Conrado Salonga entered into a contract of what is commonly called as 'pakyawan'
with Lucio Cruz on the fishes contained in a fishpond which Cruz was taking care of as lessee
from the owner Mr. Nemesio Yabut, with a verbal contract for the sum of P28,000.00. Because
of the necessity, Cruz at that time needed money, he requested Salonga to advance the money
of not only P28,000.00 but P35,000.00 in order that Cruz could meet his obligation with Mr.
Yabut. The amount of P35,000.00 as requested by defendant Lucio Cruz was in fact delivered by
plaintiff Salonga, received by Cruz, as evidenced by a receipt. Pursuant to said contract of
"pakyaw," Salonga was able to harvest the fishes contained in the fishpond administered by
Cruz. Immediately thereafter, they entered again on a verbal agreement whereby Salonga and
Cruz had agreed that Cruz will sublease and had in fact subleased the fishpond of Yabut to
Salonga for the amount of P28,000.00 for a period of one year beginning August 15, 1982.
Mayor Yabut, took back the subject matter of this case from Cruz. Cruz in compliance with their
verbal sublease agreement had received from Salonga the following sums of money: a)
P8,000.00; b) The sum of P500.00; c) The sum of P3,000.00; and d) The sum of P3,750.00.
Salonga claimed that aside from the amounts he paid, he also delivered to the Cruz P28,000.00,
which constituted the consideration for their "pakyaw" agreement, which was also evidenced by
a receipt. 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. However, Cruz testified that he entered into a "pakyaw" and
sublease agreement with Salonga for a consideration of P28,000 for each transaction. Out of the
P35,000 he received P28,000 which 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. He contended that
the instrument dated May 14, 1982 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.

Issue: WON CA gravely erred in (1) disregarding parol evidence on the receipts present, despite
the fact that these documents fall under the exceptions provided for in Sec. 9, Rule 130 of the
Rules of Court.
Ruling:
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. Section 9 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 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 such, with respect to the
petitioner's receipt of the amount of P28,000.00 and of the date when the said amount was
received.

5
 Even if it were assumed that said receipts 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. 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. 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. Salonga shall
therefore, pay Cruz the sum of P3,084.00 instead of P3,054.00, plus costs.

LECHUGAS vs CA
Facts:
Victoria Lechugas alleged that she bought the land now subject of this litigation from
Leoncia Lasangue as evidenced by a public "Deed of Absolute Sale" which plaintiff had caused to
be registered in the Office of the Register of Deeds; preparatory to the execution of the deed,
Victoria, had the land segregated from the bigger portion of 12 hectares owned by Leoncia by
contracting a private land surveyor, the Sirilan Surveying Office, to survey the land. She also
states that she caused the declaration of the said portion of 6 hectares in her name, paid taxes
on the same land, and has taken possession of the land through her tenants Jesus Leoncio,
Roberta Losarita and Simeon Guinta, who shared one-half of the produce of the riceland with
her, while she shouldered some of the expenses in cultivation and seeds, and 1/3 share in other
crops. Simeon testified that the defendants took over the two portions of the said land, against
the will of Victoria and the tenants of Lot A and B. Defendants, not contented with just
occupying the middle, grabbed the whole parcel containing 6 hectares to the damage and
prejudice of Victoria Lechugas, so that latter was left with no other recourse but to file Civil Case
No. 5303 for ownership, recovery of possession and damages. Defendants, on the other hand,
maintain that the land which plaintiff bought from Leoncia is different from the land now subject
of this action. Defendant's evidence in chief, as testified to by Carmelita shows that Hugo father
of Carmelita and predecessor-in-interest of the rest of the heirs of defendants, purchased a
parcel of land from one Victorina Limor as evidenced by the deed "Venta Definitiva"; that
immediately after the sale, Hugo took possession of the said parcel of land and declared the
same in his name. Hugo then bought from Emeterio Lasangue a parcel of land with an area of
four hectares more or less, adjoining the land he had earlier bought from Victoria , and which
sale was duly evidenced by a public instrument. Defendants claim that the lot bought by Victoria
from Leoncia as evidenced by the deed of sale, is situated south of the land now subject of this
6
action. The testimony of Leoncia, who although illiterate was able to specifically point out the
land which she sold to the petitioner, the appellate court upheld the trial court's decision except
that the deed of sale was declared as not null and void ab initio insofar as Leoncia was
concerned because it could pass ownership of the lot which Leoncia intended to sell and actually
sold to Victoria.
Issue: WON the Parol Evidence Rule may be applied.
Ruling:
In her first assignment of error, the petitioner contends that the respondent Court had
no legal justification when it subjected the true intent and agreement to parol evidence over the
objection of petitioner and that to impugn a written agreement, the evidence must be
conclusive. Petitioner maintains, moreover, that the respondent Court relied so much on the
testimony of the vendor who did not even file a case for the reformation of the deed of sale. The
contentions are without merit. The appellate court acted correctly in upholding the trial court's
action in admitting the testimony of Leoncia. The Victoria claims that Leoncia was the vendor of
the disputed land. She denies that Leoncia sold the lot referred to, to her. She alleges that this
lot was sold to her by one Leonora Lasangue, who, however, was never presented as witness in
any of the proceedings below by herein petitioner. However, as explained by a leading
commentator on our Rules of Court, the parol evidence rule does not apply, and may not
properly be invoked by either party to the litigation against the other, where at least one of the
parties to the suit is not party or a privy of a party to the written instrument in question and
does not base a claim on the instrument or assert a right originating in the instrument or the
relation established thereby. As between parties to a written agreement, or their privies, parol
evidence cannot be received to contradict or vary its terms. Strangers to a contract are, of
course, not bound by it, and the rule excluding extrinsic evidence in the construction of writings
is inapplicable in such cases; and it is relaxed where either one of the parties between whom the
question arises is a stranger to the written agreement, and does not claim under or through one
who is party to it. In such case the rule is binding upon neither. The petitioner's reliance on the
parol evidence rule is misplaced. The rule is not applicable where the controversy is between
one of the parties to the document and third persons. The deed of sale was executed by Leoncia
Lasangue in favor of Victoria Lechugas. The dispute over what was actually sold is between
petitioner and the private respondents. In the case at bar, through the testimony of Leoncia
Lasangue, it was shown that what she really intended to sell and to be the subject of Exhibit A
was Lot No. 5522 but not being able to read and write and fully relying on the good faith of her
first cousin, the petitioner, she just placed her thumbmark on a piece of paper which petitioner
told her was the document evidencing the sale of land. there can be no other conclusion but
that Lasangue did not intend to sell as she could not have sold, a piece of land already sold by
her father to the predecessor-in-interest of the respondents.

REMOLANTE vs TIBE
Facts:
Cornelia Tibe alleged that, Remolante, through fraud, deceit, abuse of confidence and
misrepresentation, induced her to sign 3 affidavits of transfer (Exhibits I-3, K and M), purported
7
to be bail bonds, that transferred 3 parcels of land to petitioner. Furthermore, Tibe claimed that
Remolante forged her signature in a deed of absolute sale whereby her other three parcels of
land were transferred to Remolante’s name. Remolante denied these allegations and claimed
that he is the absolute owner of the 6 parcels of land described in the complaint. He further
claimed that the first 3 parcels of land mentioned were bought by him from Silvino Alminario
and that it was Tibe, who, by means of fraud and misrepresentation caused the transfer of the 3
parcels of land to her name, so that she can use the land as collateral to secure a loan from a
bank in Leyte. Remolante also claimed that he bought the 3 parcels of land described under Tax
Declaration Nos. 13959, 17388 and 16999 from private respondent, as evidenced by a deed of
absolute sale. Tibe’s evidence shows that Remolante came to her house and requested her to
sign papers purported to be bail bonds for his provisional liberty in connection with a
concubinage case filed against him by his wife. However, Tibe discovered later that the papers
she was made to sign were actually: (1) affidavits of transfer of her three parcels of land under
Tax Declaration Nos. 20280, 20273 and 20274 which she purportedly donated to Remolante;
and (2) a deed of absolute sale in favor of Remolante of her other three parcels of land under
Tax Declaration Nos. 13959, 17388 and 16999. Remolante on the other hand claimed that, he
agreed to have the 3 parcels of land transferred to the name of Tibe to accomodate her request
to use the properties as collateral in securing a loan from a bank. However, he found out later
that private respondent did not apply for any loan. Remolante reported the case to the
Municipal Mayor of Dagami, Leyte and Tibe was summoned before the mayor and was made to
sign affidavits of transfer (Exhibits I-3, K and M) in favor of petitioner. petitioner claimed that
the properties were voluntarily sold to him by private respondent, as evidenced by a deed of
absolute sale.
Issue:
Ruling:
Petitioner cannot invoke the parol evidence rule (which petitioner erroneously
referred to as the "best evidence rule") to argue that the affidavits of transfer (Exhibits I-3, K and
M) constitute conclusive evidence that petitioner is the absolute owner of the three parcels of
land covered by Tax Declaration Nos. 20323, 20324 and 20325 and that the fact that Silvino
Alminario testified that he did not sell said parcels of land to petitioner will not vary the terms of
said affidavits. As stated in Rule 130 of the Revised Rules of Court: 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) Where a mistake or imperfection of the writing,
of its failure to express the true intent and agreement of the parties, or the validity of the
agreement is put in issue of the pleadings; (b) When there is an intrinsic ambiguity in the
writing. The term "agreement" includes wills. (Italics supplied.).
In the case at bar, the parol evidence rule finds no application because, precisely, the
validity of the affidavits of transfer (Exhibits I-3, K and M) is the very fact in dispute, the action
instituted in the court below being one for the annulment of the documents of transfer. To
adopt petitioner’s theory would render nugatory the remedy founded on the basic rule in the
law on contracts that "a contract where consent is given through mistake, violence, intimidation,
undue influence, or fraud is voidable" (Art. 1330, Civil Code).

8
 ROBLES vs LIZARRAGA HERMANOS
Facts:
Zacarias, leased his parents’ hacienda, for the period of 6 years under the condition
that any permanent improvements necessary to the cultivation and exploitation of the hacienda
should be made at the expense of the lessee without right to indemnity at the end of the term.
In order to put the farm in good condition, he found it necessary to make various improvements
and additions to the plant, in his own expense. Before the lease was to expire, Anastacia, his
mother, died, leaving as heirs Zacarias, Jose, Evarista, Magdalena, Felix Robles. Jose and Evarista
acquired by purchase the shares of their coheirs in the entire inheritance. At this point Lizarraga
Hermanos, knowing the nature and extent of the improvements made, came forward with a
proposal to buy all of the other properties belonging to the Robles estate. Zacarias still has over
2 years left as lessee. However, it was proposed that he should surrender the last 2 years of his
lease and permit Lizarraga Hermanos to take possession as purchaser and that if he would
shorten the term of his lease to the extent stated, the defendant agreed to pay him the value of
all betterments that he had made on the hacienda and furthermore to purchase from him all
that belonged to him personally on the hacienda. The plaintiff agreed to this; and the
instrument of conveyance was accordingly executed. It is claimed that the agreement with
respect to compensating the plaintiff for improvements and other things was never in fact
made. The plaintiff introduced in evidence a letter (Exhibit D), written by Severiano Lizarraga to
the plaintiff, to which he relied upon as constituting written evidence of the agreement; but it
seems to be so vague that, if it stood alone, and a written contract were really necessary, it
could not be taken as sufficient proof of the agreement in question. But accordingly, the
contract is otherwise proved by oral testimony. When testifying as a witness of the defense
Carmelo Lizarraga himself admitted — contrary to the statement of defendant's

Ruling:
The Supreme Court ruled that, it is insisted that the written contract must be taken as
expressing all of the pacts, agreements and stipulations entered into between the parties with
respect to the acquisition of the hacienda. In this connection stress is placed upon the fact that
there is no allegation in the complaint that the written contract fails to express the agreement of
the parties. This criticism is not well directed. The case is not one for the reformation of a
document on the ground of mistake or fraud in its execution, as is permitted under section 285
of the Code of Civil Procedure. The purpose is to enforce an independent or collateral
agreement which constituted an inducement to the making of the sale, or part of the
consideration therefor. There is no rule of evidence of wider application than that which
declares extrinsic evidence inadmissible either to contradict or vary the terms of a written
contract. The execution of a contract in writing is deemed to supersede all oral negotiations or
stipulations concerning its terms and the subject-matter which preceded the execution of the
instrument, in the absence of accident, fraud or mistake of fact. But it is recognized that this rule
is to be taken with proper qualifications; and all the authorities are agreed that proof is
admissible of any collateral, parol agreement that is not inconsistent with the terms of the
written contract, though it may relate to the same subject-matter. As expressed in a standard
legal encyclopedia, the doctrine here referred to is as follows: "The rule excluding parol evidence
to vary or contradict a writing does not extend so far as to preclude the admission of extrinsic
evidence to show prior or contemporaneous collateral parol agreements between the parties,
but such evidence may be received, regardless of whether or not the written agreement contains

9
any reference to such collateral agreement, and whether the action is at law or in equity." It has
accordingly been held that, in case of a written contract of lease, the lessee may prove an
independent verbal agreement on the part of the landlord to put the leased premises in a safe
condition; and a vendor of realty may show by parol evidence that crops growing on the land
were reserved, though no such reservation was made in the deed of conveyance. In the case
before us the deed of conveyance purports to transfer to the defendant only such interests in
certain properties as had come to the conveyors by inheritance. Nothing is said concerning the
rights in the hacienda which the plaintiff had acquired by lease or concerning the things that he
had placed thereon by way of improvement or had acquired by purchase. The verbal contract
which the plaintiff has established in this case is therefore clearly independent of the main
contract of conveyance, and evidence of such verbal contract is admissible under the doctrine
above stated. The rule that a preliminary or contemporaneous oral agreement is not admissible
to vary a written contract appears to have more particular reference to the obligation expressed
in the written agreement, and the rule had never been interpreted as being applicable to
matters of consideration or inducement. In the case before us the written contract is complete
in itself; the oral agreement is also complete in itself, and it is a collateral to the written
contract, notwithstanding the fact that it deals with related matters.

YACAPIN vs NERI
Facts:
Plaintiffs Martina Ycapin and Ramon Neri Linan were the owners of various parcels of
land. which they sold with the right of repurchase within six years from the 10th of August,
1911, to Faustino Neri, for P5,500, agreeing to pay quarterly an enormous "rental" for the
property. However, rental was not paid in full, so the parties made a second document covering
the same property but increasing the amount of the loan to P9,000. Martina and Ramon
received P2,650 in money at this time with which they bought other lands. They still paid what
they could on this last sum of P9,000, but as the rental was equivalent to an interest charge of
about 50% per annum, they were soon behind P5,000, and so they made a third document,
recognizing the debt due as P14,000. Plaintiffs again paid part of the rent which grew faster than
the crops on the land, and soon, plaintiffs found their debt to be P19,000, whereupon they
executed Exhibit 4, which on its face is an absolute sale of the property to defendant for a sale
price of P19,000, represented however, as the evidence shows, by P8,150 of principal and
P10,850 in rent or interest. When the parties executed Exhibit 4 on the 13th of July, 1914,
defendant agreed that he would execute another document stating that the absolute sale was
"simulated," and that plaintiffs still had the right to redeem the property. However, the
defendant delayed and finally refused to make the document, giving plaintiffs the right to
redeem and, because of his refusal, Ramon Neri was put off the land, which allegations were
denied by the defendant. Plaintiffs then brought this action. In their petition they prayed the
court to declare null and void the absolute sale of the property, and that the right to redeem still
existed in favor of plaintiffs, and for damages in the sum of P50,000."
Issue:
Ruling:
Parol evidence is not admissible to vary or contradict the terms of a written contract. A
reservation of exception cannot be introduced into a written conveyance of real estate by parol
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evidence. In Lain v. McKee (13 Mich., 124; 87 Am. Dec., 738), Justice Cooley said:j "It is objected
on the part of defendant that the agreement of his part was a parol contract in relation to lands,
and therefore void under the statute of frauds, and that there has been no such part
performance of it as will entitle complainant to have it specifically performed. We do not think
this case is to be put on the ground of specific performance solely. The facts charged an
established show that complainant, relying upon the promise of defendant to assign, neglected
to exercise his legal right to redeem, and defendant was thereby enabled to obtain a deed of the
lands. It sufficiently appears that complainant would have made the redemption but for the
assurances thus made to him, and a fraud has thus been perpetrated upon him, against which
he is entitled to relief. It is a matter of no moment whether the fraud was perpetrated by means
of a promise upon which he relied, and which the defendant did not intend to keep, or by untrue
statements as to existing facts.” It is well settled that courts of equity will reform a written
contract, where owing to mutual mistake, the language used therein did not fully or accurately
express the agreement and intention of the parties. The fact that interpretation or construction
of a contract presents a question of law and that therefore the mistake was one of law is not a
bar to granting relief. Also, it is settled that relief by way of reformation will not be granted,
unless the proof of mutual mistake be of the clearest and most satisfactory character. The case
we are considering is much stronger than any of the foregoing. It is not a question of mutual
mistake, but of a clearly established promise on the part of the defendant to give a counter
contract expressing the plaintiffs’ right to redeem, and that this promise was part of the
consideration, inducing the plaintiffs to execute Exhibit 4, which is an absolute sale of the
property to defendant. The defendant was guilty of a fraud in procuring the absolute deed to
the property, and he should be compelled to perform the full terms of his contract. The time
within which plaintiffs could redeem the property was not fixed. In the absence of such
agreement the trial court should have fixed the time in accordance with article 1128 of the Civil
Code. All such subsequent orders and decrees of the trial court are set aside and annulled, and
the original decision is modified, and the defendant herein is ordered to immediately execute an
agreement setting out plaintiff’s right to redeem the property with all its improvements at any
time within twelve months from the date of this judgment, and upon the previous payment to
defendant of the sum of nineteen thousand pesos.

DE LA RAMA vs LEDESMA
Facts:
Inocentes de la Rama Inc. suffered damages during the last war and had an approved
war damage claim with the Philippine War Damage Commission in the sum of P106,000.00. The
first payment on said claim, in the sum of P56,000.00 which was paid by the Commission while
De la Rama was still a stockholder, was, upon resolution of the majority of its stockholders, used
for the reconstruction of the Iris Theater Building. Before the additional liquidation of said claim,
De la Rama sold to Ledesma at par value his 140 shares in the corporation by endorsing his
certificates of stock in favor of the latter with an alleged understanding that De la Rama reserved
to himself his proportionate equity in the war damage benefits due on his 140 shares which
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Ledesma promised to deliver to him upon payment by the Foreign Claim Settlement Commission
of the United States. Upon presentation of the endorsed shares of stock, new certificates of
stock were issued in the name of Ledesma. When the corporation received a final payment of its
war damage claim in the sum of P46,696.33, the Board of Directors passed a resolution
distributing the final payment received by said corporation among its stockholders at P29.59 per
share. When Ledesma received the dividends pertaining to his total shareholding including the
140 shares he had purchased from De la Rama, the latter demanded from the former the return
and delivery to him of his corresponding share in the claim in question. Ledesma refused and De
la Rama filed subject complaint. Ledesma claimed that the indorsement by De la Rama of the
Stock Certificate in question without qualification or condition constituted the sole and exclusive
contract between the parties and to allow De la Rama to prove any alleged simultaneous oral
agreement would run counter to the Parol Evidence Rule and the Statute of Frauds.
Furthermore, the unpaid balance on the said corporation's war damage claim at the time De la
Rama sold his shareholdings belonged to the corporation itself and not to its stockholders and
so was the final payment which was paid to the corporation itself, for its Board of Directors to
do what it deemed best. In response, petitioner averred the instant case is exempted from the
Parol Evidence Rule since the writing fails to express the true intent and agreement of the
parties, and this fact is pleaded. He further stated that the war damage benefits while due to the
corporation redounds to the benefit of the stockholders who actually suffered the damage,
which means the stockholders of record at the time the damage was inflicted; that in the
disposition of such benefits the Board of Directors should be guided by the spirit and letter of
the Philippine Rehabilitation Act of 1946 and that the oral agreement of the parties is consistent
with the trust and confidence of the parties at the time in view of their close blood relationship.
Issue: WON the alleged verbal agreement of the parties concerning plaintiff's reservation of his
right to the balance of the war damage claim at the time of the sale of his shares to the
defendant, can be proven by parol evidence under the Parol Evidence Rule and the Statute of
Frauds.
Ruling:
There is merit in appellee's contention that the alleged oral reservation and the sale of the
shares of stock were made simultaneously and contemporaneously, so that to allow De la Rama
to prove the same would run counter to the Parol Evidence Rule. It is a well accepted principle
of law that evidence of a prior or contemporaneous verbal agreement is generally not
admissible to vary, contradict or defeat the operation of a valid instrument. While parol
evidence is admissible in a variety of ways to explain the meaning of written contracts, it cannot
serve the purpose of incorporating into the contract additional contemporaneous conditions
which are not mentioned at all in the writing, unless there has been fraud or mistake. Indeed,
the exceptions to the rule do not apply in the instant case, there being no intrinsic ambiguity or
fraud, mistake, or failure to express the true agreement of the parties. If indeed the alleged
reservation had been intended, businessmen like the parties would have placed in writing such
an important reservation. The court ruled, “The alleged reservation not being admissible under
the Parol Evidence Rule, WE do not find it necessary to discuss the applicability or non-
applicability to the present case of the Statute of Frauds. For the same reason We see no reason
for resolving whether the war damage award in favor of the corporation should be regarded as
capital stock or profit. Whether the award be part of one or the other the fact is that appellant is
not entitled to share in the same, having already disposed of his equity in favor of the appellee.”

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 PHILIPPINE NATIONAL RAILWAYS vs. CFI
Facts:
Private respondents, Carmen Myrick, Salvacion Myrick, and Celso, Josefina and Celerina, all
surnamed Millabas, allegedly made a donation of two parcels of land to PNR under 5 conditions.
However, no deed of donation or actionable document was annexed to the complaint. PNR
denied the donation for lack of sufficient knowledge thereof but it contradicted 'that denial by
stating in its affirmative defenses that the donation was unconditionally made by the late
Antonio, private respondents’ brother, and that the plaijtiffs are guilty of laches. Still, no deed of
donation was attached to the answer to sustain the defense that the donation was pure and
unconditional. During the trial, the counsel ask Salvacion “Will you tell this Court the promise of
the PNR with respect to the execution of this Deed of Donation?” It was objected since
accordingly, Counsel is trying to elicit oral evidence which is violative of the parol evidence rule.
The Deed of Donation is very clear. It has no condition whatsoever. If the condition now is place
on the record that will alter the condition of the donation. However, the lower court held that
the question should be allowed the objection should be overruled because to allow the witness
answer the question would not be a transgression of tilt parol evidence rule.
Ruling:
Rule 130 of the Rules of Court which provides: SEC. 9. 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 The agreement other than the contents of the writing, except in the
following case: (a) Where a mistake or imperfection of the writing, or it failure to express The
true intent and agreement of the parties, or the 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. In the instant case, the plaintiffs did not expressly plead that the deed of donation was
incomplete or that its execution was vitiated by mistake or that it did not reflect the intention of
the donor and the donee. The plaintiffs merely alleged that the donation was subject to five
conditions. Then, they prayed that the donation should be annulled or rescinded for
noncompliance with those conditions. At the trial they tried to prove those conditions by parol
evidence. Obviously, they could not introduce parol evidence to vary the terms of the
agreement 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 constitute the sole
repository of the terms of the agreement between the parties. Where there is no allegation in
the complaint that there was any mistake or imperfection in the written agreement or that it
failed to express the true intent of the parties, parol evidence is inadmissible to vary the terms
of the agreement. On the other hand, if the defendant set up the affirmative defense that the
contract mentioned in the complaint does not express the true agreement of the parties, then
parol evidence is admissible to prove the true agreement of the parties. Costs against the
private respondents.
RAMIREZ vs. ORIENTALIST CO. and FERNANDEZ
Facts:
Issue:
Ruling:
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 BANK OF PI vs FIDELITY and SURETY Co.
Facts:
Issue:
Ruling:

JOSE SORIANO vs GENERAL DE TOBACOS

Facts:
Issue:
Ruling:

JULIO vs DALANDAN
Facts:
Victoriana Dalandan owns a four-hectare piece of rice land which was posted as security for an
obligation which Clemente Dalandan assumed but, however, failed to fulfill. As a result,
Victoriana’s land was foreclosed. The document which written in Filipino, herein translated,
provides; that this rice land owned by VICTORIANA DALANDAN whose sole heir is VICTORIA
JULIO was posted as security for an obligation assumed by me even before the outbreak of the
last war and because I failed to fulfill the obligation secured by her said farm the same was
foreclosed; That because of this, and as agreed upon between us, I accordingly held myself liable
to Victoria Julio for the foreclosure of her said land, and I promised her that I would replace her
aforesaid land which was foreclosed because of my obligation with another farm of more than 4
hectares, that is, one planted to four cavanes of seedlings, more or less; That Dalandan’s
children (EMILIANO AND MARIA) may not be forced to give up the harvest of the farm herein
above mentioned; That neither may the land — which was exchanged for the farm with 4
cavanes of seedlings — be demanded immediately.
Plaintiff went on to aver that the land of Clemente set forth in the document, referred to 6 small
parcels described in paragraph 4 thereof with a total area of barely 2 hectares; that after the
death of Clemente Dalandan, plaintiff requested from defendants, Clemente's legitimate and
surviving heirs who succeeded in the possession of the land thus conveyed, to deliver the same
to her; that defendants "insisted that according to the agreement", neither delivery of the land
nor the fruits thereof could immediately be demanded, and that "plaintiff acceded to this
contention of defendants and allowed them to continue to remain in possession" thereof; that
demands have "been made upon defendants to fix the period within which they would deliver
to the herein plaintiff the above-described parcels of land but defendants have refused and until
now still refuse to fix a specific time within which they would deliver to plaintiff the
aforementioned parcels of land."

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