RULE 130

Section 9:

PAROL
EVIDENCE

PAROL
EVIDENCE
SECTION 9: EVIDENCE OF WRITTEN AGREEMENTS- When the
terms of an agreement have been reduced to writing, it is considered
as containing all the terms agreed upon and there can be, between
the parties and their successors in interest, no evidence of such
terms other than the contents of the written agreement.
However, a party may present evidence to modify, explain or add to
the terms of the written agreement if he puts in issue in his pleading:
(a) An intrinsic ambiguity, mistake or imperfection in the written
agreement;
(b) The failure of the written agreement to express the true intent
and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or their
successors in interest after the execution of the written
agreement
The term agreement includes wills.

PAROL EVIDENCE- Any evidence aliunde

which is intended or tends to vary or contradict
a
complete
and
enforceable
agreement
embodied
in
a
document.
EVIDENCE ALIUNDE- it may refer to
testimonial, real or documentary evidence.

PURPOSE OF THE RULE:

To give stability to a written agreement;
To remove the temptation and possibility of perjury;
To prevent possible fraud.

REQUISITES FOR THE ADMISSIBILITY

OF PAROL EVIDENCE:
1. There must be a valid contract;
2. The terms of the agreement must be reduced
to
writing;
3. The controversy must be between the parties
of
the
agreement of their successors in interest;
4. There is a dispute as to the terms of the
agreement.

WHEN PAROL EVIDENCE RULE

APPLIES:
GENERAL RULE: Parol Evidence Rule applies only
to
INTEGRATED
(finalized)
AGREEMENTS
( intended by both parties as the final and exclusive
written memorial of their dealings).
EXCEPTION:
COLLATERAL ORAL AGREEMENTS A
contract made prior to or contemporaneous with
another agreement and if ORAL and NOT
INCONSISTENT with written contract is ADMISSIBLE
within the exception to parol evidence rule.

Parol evidence does not apply to collateral

agreements refers to separate and distinct subjects.

WHEN AND HOW TO INTRODUCE

PAROL EVIDENCE:
The rule prohibiting Parol Evidence is not absolute.
A party may present evidence when he desires to
modify, explain or add to the terms of the written
agreement by showing any of the following:

1ST Exception to the Parol Evidence Rule:

An intrinsic ambiguity, mistake or imperfection

in the written agreement
Parol evidence may be allowed to modify, explain or
even add to the written agreement when an intrinsic
ambiguity exists in the written agreement.

RULE ON INTRINSIC AMBIGUITY:

1. Intrinsic and intermediate ambiguities are curable by
evidence aliunde or extraneous evidence.
2. Patent ambiguity cannot be cured by evidence aliunde.
3. PRINCIPLE OF FALSA DEMONSTRATIO NON NOCET
CUM
DE
CORPORE CONSTAT
-false description does not injure or vitiate a document,
provided that the thing or person intended has once been
sufficiently described.

4. Where there are two descriptions in a deed, the one

having been superadded to the other, and one description
being complete and sufficient of itself while the other which
is subordinate and superadded is incorrect, the incorrect
description or feature of circumstance of the description is
rejected as surplusage and the complete and correct
description is allowed to stand alone.

RULE ON MISTAKE:
The admission of evidence aliunde may be justified
when
there is a mistake in the written agreement.
The mistake must be put in issue in the pleading by the
party who wants to prove the defect in the writing.
Parol evidence is admissible to prove mistake in the
execution of a written agreement.

ELEMENTS OF MISTAKE:
1. It should be a mistake of fact and not a mistake of law;
2. It should be mutual or common to both parties to the
instrument;
3. It should be alleged and proved by clear and
convincing evidence.

RULE ON IMPERFECTION:
The admission of evidence aliunde may be justified when
there is an imperfection in the written agreement.
The imperfection must be put in issue in the pleading by
the party who wants to prove the defect in the
writing.
Where a writing, although embodying an agreement is
manifestly incomplete, and is not intended by the parties
to exhibit the whole agreement, but only to define some
of its terms, the writing is conclusive as far as it goes. But
such parts of the actual contract as are not embraced
within its scope may be established by parol.
IMPERFECTION includes:
-an inaccurate statement in the agreement or
-incompleteness in the writing, or
-the presence of inconsistent provisions therein.

2nd Exception to the Parol Evidence Rule:

The failure of the written agreement to express the
true intent and agreement of the parties thereto
Purpose: to enable the court to ascertain the true intention
of the parties or the true nature of the transaction.

Mistake or imperfection of the writing may be the reason

for the failure of the instrument or writing to embody the
intention of the parties.
There are also other reasons enumerated in substantive
law for the failure of the instrument to express the true
intention of the parties like fraud, inequitable conduct or
accident, ignorance, lack of skill, negligence or bad faith
on the part of the person drafting the instrument.

3rd Exception to the Parol Evidence Rule:

THE VALIDITY OF THE WRITTEN AGREEMENT
In the inquiry into the Validity if the agreement,
Parol Evidence may be Admitted to show:
The true consideration of the contract or the want or
illegality thereof.
The incapacity of the parties
Whether or not the contract is fictitious or
absolutely simulated
Whether or not there was fraud or inducement

4th Exception to the Parol Evidence Rule:

The existence of other terms agreed to by the parties or
their successors in interest after the execution of the written
agreement
The rule forbidding the admission of evidence aliunde or
extrinsic evidence did not prohibit proof of an agreement
entered into after the written instrument was executed
notwithstanding that such agreement may have the effect
of adding to, changing or modifying the written agreement
of the parties.

Parol evidence
admitted.

on subsequent agreement may

The existence of another agreement may be introduced

but must first complying with the requirement of putting
the subsequent agreement in issue.

be

WAIVER OF THE PAROL EVIDENCE

RULE
The parol evidence rule can be waived by failure
to
invoke
the benefits of the rule.
This waiver may be made by:
-failure to object to the introduction of evidence
aliunde.

Inadmissible evidence
admissible
failure to object.

may
by

be

rendered

Failure to object to the parol evidence presented

by the adverse party operates as a waiver of the

PROBATIVE VALUE
Even if parol evidence is admitted, such admission
would not mean that the court would give
probative value to the parol evidence.
Admissibility is not the equivalent of probative
value or credibility.

CASES ON PAROL EVIDENCE:

LECHUGAS
VS
COURT OF APPEALS ET. AL
FACTS:

Victoria lechugas allegedly bought the subject properties

from leoncia lasangue, as evidenced by a public Deed of
absolute sale which was registered with the register of
deeds.
Lechugas, Claimed that the lozas, by means of fraud,
intimidation, strategy and stealth, unlawful entered said
properties and appropriated the produce thereof for
themselves, refusing to surrender the same despite
demand.
The lozas, however , deny that the properties which
lechugas bought from lasangue in 1950 was the same
subject land.

 They claimed that their predecessor, hugo loza,

had bought a parcel of land from one victorina
limor, and another
adjoining land from one
emeterio lasangue.
The remaining portion of the lot bought from
limor was allegedly the one bought by lechugas.
This was
corroborated by lasangue in her
testimony , who , although illiterate, was able to
specifically point out the land sold to lechugas.
Such testimony, however , was contrary to the
contents of the deed of sale executed between
lasangue and lechugas.
ISSUE: Whether or not Parol Evidence should be
admitted to determine the land bought by
Lechugas.

HELD:
YES. Parol evidence should be admitted to
determine the land bought by Lechugas.
The Parol Evidence Rule does not apply where
the controversy is between one of the parties to the
document and third persons. While the deed of sale
was executed between Lasangue and Lechugas, the
dispute over what was actually sold was between
Lachugas and the Lozas. Lasangue, therefore, is a
stranger to the dispute and is not bound by the rule.
The Parol Evidence Rule applies only as between
parties to the written agreement or their privies, and
not to strangers. It does not apply 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.

Suatengco
vs.
Reyes
G.R. NO. 162729 Dec. 17, 2008
FACTS:
Congressman Reyes, herein
respondent, lends
petitioners estimately 1.3 million. In the loan contract,
it is stipulated that in the event of default, Suatengco
must pay the balance plus 5% attorneys fees for the
total award.
Atty. Edmundo Reyes , son of the respondent, appeared
as the Attorney-In-fact of the respondent, and files a
case for collection of sum of money, the 12% interest
and 20% Attorneys fees.
The lower and appelate court award the same. The
petioners countered alleging that the stipulated
attorneys fees is only 5%.

ISSUE:
Whether or not 20% of the outstanding balance
prevails over the 5% stipulated in the promissory note
as basis for the attorneys fees.
HELD:
The attorneys fees herein litigated are in the nature of
liquidated damages and not the attorneys fees
recoverable as between attorney and client enunciated
and regulated by
the rules of court. Liquidated
damages are those agreed upon by the parties to a
contract to be paid in case of breach thereof. The
stipulation on attorneys
contained in the said
promissory note constitutes what is known as a penal
clause. A penalty clause, expressly recognized by law, is
an accessory undertaking to assume greater liability on
the part of the obligor in case of breach of an obligation.

The obligor would then be bound to pay the stipulated

indemnity without the necessity of proof on the existence and
the measure of damages cause by the breach. It is well-settled
that so long as such stipulation does not contravene law,
morals, or public order, it is strictly binding upon the obligor.
The attorneys fees so provided are awarded in favor of the
litigant, not the counsel. It is improper for both the RTC and
the CA to increase the award of attorneys fees despite the
express stipulation contained in the said promissory note since
it is not intended to be the compensation for the respondents
counsel but was rather in the nature of a penalty or liquidated
damages.
Thus, the supreme court modified the award for the attorneys
fees from 20% to 5% of the total balance of the outstanding
indebtedness but affirmed the decision of the appellate court
in all other respects.

INTERPRETATION
OF DOCUMENTS
(Sec. 10- Sec. 13)
RULES ON INTERPRETATION:
FOR CONTRACTS- New Civil Code Articles 1370-1379
FOR WILLS- New Civil Code Articles 788-794

SECTION 10:
Interpretation of a writing according to its legal
meaning
SECTION 10: Interpretation of a writing according to its
legal meaning- the language of a writing is to be interpreted
according to the legal meaning it bears in the place of its
execution, unless the parties intended otherwise.

Generally, rules on interpretation provided by

the New Civil Code are followed.
The language of a writing is to be interpreted:
-according to the legal meaning it bears in
the place of
its execution.
- Unless the parties intended otherwise.

SECTION 11:
Instrument construed so as to give effect to all
provisions.
SECTION 11: Instrument construed so as to give effect
to all provisions.- In the construction of an instrument where
there are several provisions or particulars, such a construction
is, if possible, to be adopted as will give effect to all.

In the construction of an instrument, where

there are several provisions or particulars:
such a construction is, if possible, to be
adopted as will give effect to all.
Contracts should be so construed as to
harmonize and give effect to the different
provisions thereof.

SECTION 12.
Interpretation according to intention; general and
particular provisions.
SECTION 12. Interpretation according to intention;
general and particular provisions.- In the construction of an
instrument the intention of the parties is to be pursued; and
when a general and particular provision are inconsistent, the
latter is paramount to the former. So a particular intent will
control a general one that is inconsistent with it.

A particular intent will control a general one that

is inconsistent with it.
When there are inconsistencies between the
general and particular provisions , the particular
provision is paramount to the general provision.

 If the terms of the contract are clear and leave no

doubt upon the intention of the contracting parties,
the literal meaning of its stipulations shall control.
When the words appear contrary to the evident
intention of the parties, the latter shall prevail over
the former. In order to judge the intention of the
parties, their contemporaneous and subsequent
acts shall be principally considered.
To determine the nature of a contract courts are not
bound to rely upon the name of title given to it by
the contracting parties. Should the performance
conflict with the name or title given the contract by
the parties, the former must prevail over the latter.

SECTION 13.
Interpretation according to circumstances.
SECTION 13.- Interpretation according to
circumstances.- For the proper construction of an
instrument, the circumstances under which it was made,
including the situation of the subject thereof and of the parties
to it, may be shown, so that the judge may be placed in the
position of those whose language he is to interpret.

For the proper construction of the instrument the

circumstance from which it was made including
the situation of the subject and the parties may
be presented or made known.

LAMBERT
VS.
FOX
26 PHIL 588
FACTS:

Lambert and fox are two of the creditors of John R. Edgar &
Co., engaged in retail book and stationary business. The said
company suffered financial reverses and was taken over and
incorporated by its creditors, the stocks of which were received
by the latter as payments of their respective credits.
Lambert and Fox became the two largest stockholders of the
new corporation and entered into a contract wherein both
mutually and reciprocally agree not to sell, transfer, or
otherwise dispose of any part of their present stockholdings for
one year commencing from the date stated therein.
The said contract further provides that P1,000.00 as liquidated
damages shall be paid for the violation of the agreement
unless previous consent in writing to the sale, transfer or
disposition is obtained.

 Before the lapse of one year, Fox sold his stock to

McCullough, who is connected to the corporations
competitor.
Lambert then brought an action against fox to
recover the P1,000.00 penalty indicated in the
foregoing agreement. The trial court rendered
judgment in favor of the defendant, which
construed the agreement as being effective only
until the corporation reach a sound financial basis.
Thus such event already occurred before the
expiration of the one year from the execution of
the contract. Thus, Lambert brought the present
appeal to the Supreme Court.

ISSUE:
Whether or not Lambert is entitled to the penalty
prescribed in his agreement with Fox.
HELD:
YES. Lambert is entitled to collect the penalty for the
violation of the subject contract, as agreed upon.
The lower court erred in construing the provisions of
the contract because construction and interpretation of
contracts and instruments should be last resorted to in
determining what the parties have agreed upon. The
intention of the parties must be ascertained from the
words of the contract itself for it must be presumed that
persons mean what they say when they use plain or
ordinary language. When there is no ambiguity in the
contract, no construction of the same must be
undertaken. Otherwise, the court will itself make the
contract for the parties.

Thank you!