G.R. No.
170491 April 4, 2007 plaintiff attempted to justify the admission of the photocopies
NATIONAL POWER CORPORATION, Petitioner,
vs.
HON. RAMON G. CODILLA, JR., Presiding Judge,
RTC of Cebu, Br. 19, BANGPAI SHIPPING COMPANY,
and WALLEM SHIPPING,
INCORPORATED, Respondents.
Before Us is a Petition for Review on Certiorari under Rule
45 of the Rules of Civil Procedure, assailing the Decision1 of
the Court of Appeals in CA-G.R. CEB-SP No. 00848, dated
9 November 2005, which dismissed the Petition for Certiorari
filed by the National Power Corporation seeking to set aside
the Order2 issued by the Regional Trial Court (RTC) of Cebu,
Branch 19 dated 16 November 2004, denying admission and
excluding from the records plaintiff’s (herein petitioner)
Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I",
"J", and its sub-markings, "K", "L", "M" and its sub-
markings, "N" and its sub-markings, "O", "P" and its sub-
markings, "Q" and its sub-markings, "R" and "S" and its sub-
markings.
On 20 April 1996, M/V Dibena Win, a vessel of foreign
registry owned and operated by private respondent Bangpai
Shipping, Co., allegedly bumped and damaged petitioner’s
Power Barge 209 which was then moored at the Cebu
International Port. Thus, on 26 April 1996, petitioner filed
before the Cebu RTC a complaint for damages against private
respondent Bangpai Shipping Co., for the alleged damages
caused on petitioner’s power barges.
Thereafter, petitioner filed an Amended Complaint dated 8
July 1996 impleading herein private respondent Wallem
Shipping, Inc., as additional defendant, contending that the
latter is a ship agent of Bangpai Shipping Co. On 18
September 1996, Wallem Shipping, Inc. filed a Motion to
Dismiss which was subsequently denied by public respondent
Judge in an Order dated 20 October 1998. Bangpai Shipping
Co. likewise filed a Motion to Dismiss which was also denied
by public respondent Judge in an Order issued on 24 January
2003.
Petitioner, after adducing evidence during the trial of the case,
filed a formal offer of evidence before the lower court on 2
February 2004 consisting of Exhibits "A" to "V" together
with the sub-marked portions thereof. Consequently, private
respondents Bangpai Shipping Co. and Wallem Shipping,
Inc. filed their respective objections to petitioner’s formal
offer of evidence.
On 16 November 2004, public respondent judge issued the
assailed order denying the admission and excluding from the
records petitioner’s Exhibits "A", "C", "D", "E", "H" and its
sub-markings, "I", "J" and its sub-markings, "K", "L", "M"
and its sub-markings, "N" and its sub-markings, "O", "P" and
its sub-markings, "Q" and its sub-markings, "R" and "S" and
its sub-markings. According to the court a quo:
The Court finds merit in the objections raised and the motion
to strike out filed respectively by the defendants. The record
shows that the plaintiff has been given every opportunity to
present the originals of the Xerox or photocopies of the
documents it offered. It never produced the originals. The
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
by contending that "the photocopies offered are equivalent to
the original of the document" on the basis of the Electronic
Evidence (Comment to Defendant Wallem Philippines’
Objections and Motion to Strike). But as rightly pointed out
in defendant Wallem’s Reply to the Comment of Plaintiff, the
Xerox copies do not constitute the electronic evidence
defined in Section 1 of Rule 2 of the Rules on Electronic
Evidence as follows:
"(h) "Electronic document" refers to information or the
representation of information, data, figures, symbols or other
models of written expression, described or however
represented, by which a right is established or an obligation
extinguished, or by which a fact may be proved and affirmed,
which is received, recorded, transmitted, stored, processed,
retrieved or produced electronically. It includes digitally
signed documents and any printout, readable by sight or other
means which accurately reflects the electronic data message
or electronic document. For the purpose of these Rules, the
term "electronic document" may be used interchangeably
with "electronic data message".
The information in those Xerox or photocopies was not
received, recorded, retrieved or produced electronically.
Moreover, such electronic evidence must be authenticated
(Sections 1 and 2, Rule 5, Rules on Electronic Evidence),
which the plaintiff failed to do. Finally, the required Affidavit
to prove the admissibility and evidentiary weight of the
alleged electronic evidence (Sec. 1, Rule 9, Ibid) was not
executed, much less presented in evidence.
The Xerox or photocopies offered should, therefore, be
stricken off the record. Aside from their being not properly
identified by any competent witness, the loss of the principals
thereof was not established by any competent proof.
xxxx
WHEREFORE, plaintiff’s Exhibits "A", "C", "D", "E", "H"
and its sub-markings, "I", "J", and its sub-markings, "K", "L",
"M" and its sub-markings, "N" and its sub-markings, "O", "P"
and its sub-markings, "Q" and its sub-markings, and "R" are
hereby DENIED admission and excluded from the records.
However, these excluded evidence should be attached to the
records of this case to enable the appellate court to pass upon
them should an appeal be taken from the decision on the
merits to be rendered upon the termination of the trial of this
case.
Exhibits "S" and its sub-markings are also DENIED
admission for lack of proper identification since the witness
who brought these pictures expressly admitted that he was not
present when the photos were taken and had not knowledge
when the same where taken.3
Upon denial of petitioner’s Motion for Reconsideration in an
Order dated 20 April 2005, petitioner filed a Petition
for Certiorari under Rule 65 of the Rules of Civil Procedure
before the Court of Appeals maintaining that public
respondent Judge acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in denying the
admission of its Exhibits "A", "C", "D", "E", "H" and its sub-
markings, "I", "J" and its sub-markings, "K", "L", "M" and its
1
sub-markings, "N" and its sub-markings, "O", "P" and its sub-
markings, "Q" and its sub-markings, "R", and "S" and its sub-
markings.
On 9 November 2005, the appellate court issued a Decision
dismissing petitioner’s petition for certiorari, the pertinent
portions of which elucidate:
After a judicious scrutiny of the record of the case on hand,
together with the rules and jurisprudence which are
applicable in the premises, we have come up with a finding
that the petition for certiorari filed in this case is not
meritorious.
It appears that there is no sufficient showing by the petitioner
that the respondent judge acted with grave abuse of discretion
in issuing the assailed orders in Civil Case No. CEB-18662.
As what our jurisprudence tells us, grave abuse of discretion
is meant such capricious and whimsical exercise of judgment
as would be equivalent to lack of jurisdiction x x x.
In the case at bench, what has been shown to the contrary by
the totality of the record on hand is that the respondent judge
acted correctly and within the pale of his sound discretion in
issuing the assailed order, dated November 16, 2004, in Civil
Case No. CEB-18662.
Indeed, it appears that the pieces of petitioner’s documentary
evidence which were denied admission by the respondent
judge were not properly identified by any competent witness.
As pointed out by the respondent Bangpai Shipping Company
in its comment on the petition filed in this case which
reproduces some excerpts of the testimonies in the court a
quo of Atty. Marianito De Los Santos, Engr. Nestor Enriquez,
Jr. and Mr. Rodulfo I. Pagaling, the said witnesses did not
have personal knowledge of and participation in the
preparation and making of the pieces of documentary
evidence denied admission by respondent judge x x x. In
other words, there was lack of proper identification of said
pieces of documentary evidence. x x x.
Then another ground for denying admission of petitioner’s
Exhibits A, C, D, E, H, I, J, K, L, M, N, O, P, Q, R, and S by
the respondent judge is that said pieces of documentary
evidence were merely photocopies of purported documents or
papers. There is no gainsaying the fact that the respondent
judge acted within the pale of his discretion when he denied
admission of said documentary evidence. Section 3 of Rule
130 of the Rules of Court of the Philippines is very explicit in
providing that, when the subject of inquiry are the contents of
documents, no evidence shall be admissible other than the
original documents themselves, except in certain cases
specifically so enumerated therein, and the petitioner has not
shown that the non-presentation or non-production of its
original documentary pieces of evidence falls under such
exceptions. As aptly pointed out by the respondent judge in
the order issued by him on November 16, 2004:
"x x x The record shows that the plaintiff (petitioner herein)
has been given every opportunity to present the originals of
the Xerox or photocopies of the documents it offered. It never
produced said originals."
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So, the petitioner has only itself to blame for the respondent
judge’s denial of admission of its aforementioned
documentary evidence.
Of course, the petitioner tries to contend that the photocopies
of documents offered by it are equivalent to the original
documents that it sought to offer in evidence, based on the
Rules on Electronic Evidence which were in force and effect
since August 1, 2001. However, such a contention is devoid
of merit. The pieces of documentary evidence offered by the
petitioner in Civil Case CEB-18662 which were denied
admission by the respondent judge do not actually constitute
as electronic evidence as defined in the Rules on Electronic
Evidence. The informations therein were not received,
retrieved or produced electronically. The petitioner has not
adequately established that its documentary evidence were
electronic evidence. it has not properly authenticated such
evidence as electronic documents, assuming arguendo that
they are. Lastly, the petitioner has not properly established by
affidavit pursuant to Rule 9 of the Rules on Electronic
Evidence the admissibility and evidentiary weight of said
documentary evidence.
Thus, by any legal yardstick, it is manifest that the respondent
judge did not commit grave abuse of discretion in denying
admission of the aforementioned documentary evidence of
petitioner.
But even if it be granted just for the sake of argument that the
respondent judge committed an error in denying the
aforementioned documentary evidence of the petitioner, still
the petition for certiorari filed in this case must fail. Such
error would at most be only an error of law and not an error
of jurisdiction. In Lee vs. People, 393 SCRA 397, the
Supreme Court of the Philippines said that certiorari will not
lie in case of an error of law. x x x.
WHEREFORE, in view of the foregoing premises, judgment
is hereby rendered by us DISMISSING the petition filed in
this case and AFFIRMING the assailed orders issued by
respondent judge in Civil Case No. CEB-18662.4
Aggrieved by the aforequoted decision, petitioner filed the
instant petition.
The focal point of this entire controversy is petitioner’s
obstinate contention that the photocopies it offered as formal
evidence before the trial court are the functional equivalent of
their original based on its inimitable interpretation of the
Rules on Electronic Evidence.
Petitioner insists that, contrary to the rulings of both the trial
court and the appellate court, the photocopies it presented as
documentary evidence actually constitute electronic evidence
based on its own premise that an "electronic document" as
defined under Section 1(h), Rule 2 of the Rules on Electronic
Evidence is not limited to information that is received,
recorded, retrieved or produced electronically. Rather,
petitioner maintains that an "electronic document" can also
refer to other modes of written expression that is produced
electronically, such as photocopies, as included in the
section’s catch-all proviso: "any print-out or output, readable
by sight or other means".
2
We do not agree.
In order to shed light to the issue of whether or not the
photocopies are indeed electronic documents as contemplated
in Republic Act No. 8792 or the Implementing Rules and
Regulations of the Electronic Commerce Act, as well as the
Rules on Electronic Evidence, we shall enumerate the
following documents offered as evidence by the petitioner, to
wit:
1. Exhibit "A" is a photocopy of a letter manually
signed by a certain Jose C. Troyo, with
"RECEIVED" stamped thereon, together with a
handwritten date;
2. Exhibit "C" is a photocopy of a list of estimated
cost of damages of petitioner’s power barges 207
and 209 prepared by Hopewell Mobile Power
Systems Corporation and manually signed by
Messrs. Rex Malaluan and Virgilio Asprer;
3. Exhibit "D" is a photocopy of a letter manually
signed by a certain Nestor G. Enriquez, Jr., with
"RECEIVED" stamped thereon, together with a
handwritten notation of the date it was received;
4. Exhibit "E" is a photocopy of a Standard Marine
Protest Form which was filled up and accomplished
by Rex Joel C. Malaluan in his own handwriting and
signed by him. Portions of the Jurat were
handwritten, and manually signed by the Notary
Public;
5. Exhibit "H" is a photocopy of a letter manually
signed by Mr. Nestor G. Enriquez, Jr. with
"RECEIVED" stamped thereon, together with a
handwritten notation of the date it was received;
6. Exhibit "I" is a photocopy of a computation of the
estimated energy loss allegedly suffered by
petitioner which was manually signed by Mr. Nestor
G. Enriquez, Jr.;
7. Exhibit "J" is a photocopy of a letter containing
the breakdown of the cost estimate, manually signed
by Mr. Nestor G. Enriquez, Jr., with "RECEIVED"
stamped thereon, together with a handwritten
notation of the date it was received, and other
handwritten notations;
8. Exhibit "K" is a photocopy of the Subpoena Duces
Tecum Ad Testificandum written using a manual
typewriter, signed manually by Atty. Ofelia Polo-De
Los Reyes, with a handwritten notation when it was
received by the party;
9. Exhibit "L" is a photocopy of a portion of the
electricity supply and operation and maintenance
agreement between petitioner and Hopewell,
containing handwritten notations and every page
containing three unidentified manually placed
signatures;
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
10. Exhibit "M" is a photocopy of the Notice of
Termination with attachments addressed to Rex Joel
C. Malaluan, manually signed by Jaime S. Patinio,
with a handwritten notation of the date it was
received. The sub-markings also contain manual
signatures and/or handwritten notations;
11. Exhibit "N" is a photocopy of a letter of
termination with attachments addressed to VIrgilio
Asprer and manually signed by Jaime S. Patino. The
sub-markings contain manual signatures and/or
handwritten notations;
12. Exhibit "O" is the same photocopied document
marked as Annex C;
13. Exhibit "P" is a photocopy of an incident report
manually signed by Messrs. Malaluan and Bautista
and by the Notary Public, with other handwritten
notations;
14. Exhibit "Q" is a photocopy of a letter manually
signed by Virgilio Asprer and by a Notary Public,
together with other handwritten notations.
On the other hand, an "electronic document" refers to
information or the representation of information, data,
figures, symbols or other models of written expression,
described or however represented, by which a right is
established or an obligation extinguished, or by which a fact
may be proved and affirmed, which is received, recorded,
transmitted, stored, processed, retrieved or produced
electronically.5 It includes digitally signed documents and
any printout, readable by sight or other means which
accurately reflects the electronic data message or electronic
document.6
The rules use the word "information" to define an electronic
document received, recorded, transmitted, stored, processed,
retrieved or produced electronically. This would suggest that
an electronic document is relevant only in terms of the
information contained therein, similar to any other document
which is presented in evidence as proof of its
contents.7 However, what differentiates an electronic
document from a paper-based document is the manner by
which the information is processed; clearly, the information
contained in an electronic document is received, recorded,
transmitted, stored, processed, retrieved or produced
electronically.
A perusal of the information contained in the photocopies
submitted by petitioner will reveal that not all of the contents
therein, such as the signatures of the persons who purportedly
signed the documents, may be recorded or produced
electronically. By no stretch of the imagination can a person’s
signature affixed manually be considered as information
electronically received, recorded, transmitted, stored,
processed, retrieved or produced. Hence, the argument of
petitioner that since these paper printouts were produced
through an electronic process, then these photocopies are
electronic documents as defined in the Rules on Electronic
Evidence is obviously an erroneous, if not preposterous,
interpretation of the law. Having thus declared that the
offered photocopies are not tantamount to electronic
3
documents, it is consequential that the same may not be
considered as the functional equivalent of their original as
decreed in the law.
Furthermore, no error can be ascribed to the court a quo in
denying admission and excluding from the records
petitioner’s Exhibits "A", "C", "D", "E", "H" and its sub-
markings, "I", "J" and its sub-markings, "K", "L", "M" and its
sub-markings, "N" and its sub-markings, "O", "P" and its sub-
markings, "Q" and its sub-markings, and "R". The trial court
was correct in rejecting these photocopies as they violate the
best evidence rule and are therefore of no probative value
being incompetent pieces of evidence. Before the onset of
liberal rules of discovery, and modern technique of electronic
copying, the best evidence rule was designed to guard against
incomplete or fraudulent proof and the introduction of altered
copies and the withholding of the originals.8 But the modern
justification for the rule has expanded from the prevention of
fraud to a recognition that writings occupy a central position
in the law.9The importance of the precise terms of writings in
the world of legal relations, the fallibility of the human
memory as reliable evidence of the terms, and the hazards of
inaccurate or incomplete duplicate are the concerns addressed
by the best evidence rule.10
Moreover, as mandated under Section 2, Rule 130 of the
Rules of Court:
"SECTION 2. Original writing must be produced; exceptions.
— There can be no evidence of a writing the contents of
which is the subject of inquiry, other than the original writing
itself, except in the following cases:
(a) When the original has been lost, destroyed, or
cannot be produced in court;
(b) When the original is in the possession of the
party against whom the evidence is offered, and the
latter fails to produce it after reasonable notice;
(c) When the original is a record or other document
in the custody of a public officer;
(d) When the original has been recorded in an
existing record a certified copy of which is made
evidence by law;
(e) When the original consists of numerous accounts
or other documents which cannot be examined in
court without great loss of time and the fact sought
to be established from them is only the general result
of the whole."
When the original document has been lost or destroyed, or
cannot be produced in court, the offeror, upon proof of its
execution or existence and the cause of its unavailability
without bad faith on his part, may prove its contents by a
copy, or by a recital of its contents in some authentic
document, or by the testimony of witnesses in the order
stated.11 The offeror of secondary evidence is burdened to
prove the predicates thereof: (a) the loss or destruction of the
original without bad faith on the part of the proponent/offeror
which can be shown by circumstantial evidence of routine
practices of destruction of documents;12 (b) the proponent
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must prove by a fair preponderance of evidence as to raise a
reasonable inference of the loss or destruction of the original
copy; and (c) it must be shown that a diligent and bona fide
but unsuccessful search has been made for the document in
the proper place or places.13 However, in the case at bar,
though petitioner insisted in offering the photocopies as
documentary evidence, it failed to establish that such offer
was made in accordance with the exceptions as enumerated
under the abovequoted rule. Accordingly, we find no error in
the Order of the court a quo denying admissibility of the
photocopies offered by petitioner as documentary evidence.
Finally, it perplexes this Court why petitioner continued to
obdurately disregard the opportunities given by the trial court
for it to present the originals of the photocopies it presented
yet comes before us now praying that it be allowed to present
the originals of the exhibits that were denied admission or in
case the same are lost, to lay the predicate for the admission
of secondary evidence. Had petitioner presented the originals
of the documents to the court instead of the photocopies it
obstinately offered as evidence, or at the very least laid the
predicate for the admission of said photocopies, this
controversy would not have unnecessarily been brought
before the appellate court and finally to this Court for
adjudication. Had it not been for petitioner’s intransigence,
the merits of petitioner’s complaint for damages would have
been decided upon by the trial court long ago. As aptly
articulated by the Court of Appeals, petitioner has only itself
to blame for the respondent judge’s denial of admission of its
aforementioned documentary evidence and consequently, the
denial of its prayer to be given another opportunity to present
the originals of the documents that were denied admission nor
to lay the predicate for the admission of secondary evidence
in case the same has been lost.
WHEREFORE, premises considered, the instant petition is
hereby DENIED. The Decision of the Court of Appeals in
CA-G.R. CEB-SP No. 00848, dated 9 November 2005 is
hereby AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 171601 April 8, 2015
SPOUSES BONIFACIO AND LUCIA
PARAS, Petitioners,
vs.
KIMWA CONSTRUCTION AND DEVELOPMENT
CORPORATION, Respondent.
This resolves the Petition for Review on Certiorari1 under
Rule 45 of the 1997 Rules of Civil Procedure praying that the
assailed Decision2 dated July 4, 2005 and Resolution3 dated
February 9, 2006 of the Court of Appeals Special 20th
Division in CA-G.R. CV No. 74682 be reversed and set aside,
and that the Decision4 of Branch 55 of the Regional Trial
Court, Mandaue City dated May 16, 2001 in Civil Case No.
MAN-2412 be reinstated.5
The trial court's May 16, 2001 Decision ruled in favor of
petitioners Spouses Bonifacio and Lucia Paras (plaintiffs
before the Regional Trial Court) in their action for breach of
contract with damages against respondent Kimwa
Construction and Development Corporation (Kimwa).6 The
4
assailed Decision of the Court of Appeals reversed and set
aside the trial court’s May 16, 2001 Decision and dismissed
Spouses Paras’ Complaint.7 The Court of Appeals’ assailed
Resolution denied Spouses Paras’ Motion for
Reconsideration.8
Lucia Paras (Lucia) was a "concessionaire of a sand and
gravel permit at Kabulihan, Toledo City[.]" 9 Kimwa is a
"construction firm that sells concrete aggregates to
contractors and haulers in . . . Cebu." 10
On December 6, 1994, Lucia and Kimwa entered into a
contract denominated "Agreement for Supply of Aggregates"
(Agreement) where 40,000 cubic meters of aggregates were
"allotted"11 by Lucia as supplier to Kimwa.12 Kimwa was to
pick up the allotted aggregates at Lucia’s permitted area in
Toledo City13 at ₱240.00 per truckload.14
The entirety of this Agreement reads:
AGREEMENT FOR SUPPLY OF AGGREGATES
KNOW ALL MEN BY THESE PRESENTS:
This Agreement made and entered into by and between:
LUCIA PARAS, of legal age, Filipino, married and resident
of Poblacion, Toledo City, Province of Cebu, hereinafter
referred to as the SUPPLIER:
-and-
KIMWA CONSTRUCTION AND DEVELOPMENT
CORP., a corporation duly organized and existing under the
laws of the Philippines with office address at Subangdaku,
Mandaue City, hereinafter represented by its President MRS.
CORAZON Y. LUA, of legal age, Filipino and a resident of
Subangdaku, Mandaue City[,] hereinafter referred to as the
CONTRACTOR;
W I T N E S S E T H:
That the SUPPLIER is [sic] 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 [sic] to be picked-
up by the CONTRACTOR at the
SUPPLIER [sic] 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 [sic] for the exclusive use of
the Contractor;
4. That the terms of payment is Fifteen (15)
days after the receipt of billing;
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5. That there is [sic] 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.
IN WITNESS WHEREOF, we have hereunto affixed our
signatures this 6th day of December, 1994 at Mandaue City,
Cebu, Philippines.
LUCIA PARAS(sgd.) CORAZON Y. LUA(sgd.)
Supplier Contractor
(Emphasis supplied)
Pursuant to the Agreement, Kimwa hauled 10,000 cubic
meters of aggregates. Sometime after this, however, Kimwa
stopped hauling aggregates.16
Claiming that in so doing, Kimwa violated the Agreement,
Lucia, joined by her husband, Bonifacio, filed the
Complaint17 for breach of contract with damages that is now
subject of this Petition.
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.18 Kimwa
allegedly asked that it be "assured"19 of 40,000 cubic meters
worth of aggregates.20 Lucia countered that her concession
area was due to be rechanneled on May 15,1995, when her
Special Permit expires.21 Thus, she emphasized that she
would be willing to enter into a contract with Kimwa
"provided the forty thousand cubic meter[s] w[ould] be
withdrawn or completely extracted and hauled before 15 May
1995[.]"22 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.23 Convinced of Kimwa’s assurances,
Lucia and Kimwa entered into the Agreement.24
Spouses Paras added that within a few days, Kimwa was able
to extract and haul 10,000 cubic meters of aggregates.
However, after extracting and hauling this quantity, Kimwa
allegedly transferred to the concession area of a certain Mrs.
Remedios dela Torre in violation of their Agreement. They
then addressed demand letters to Kimwa. As these went
unheeded, Spouses Paras filed their Complaint.25
In its Answer,26 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.27 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. 28 It denied that
the hauling of 10,000 cubic meters of aggregates was
completed in a matter of days and countered that it took
weeks to do so. It also denied transferring to the concession
area of a certain Mrs. Remedios dela Torre.29
Kimwa asserted that the Agreement articulated the parties’
true intent that 40,000 cubic meters was a maximum limit and
5
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. 30
On May 16, 2001, the Regional Trial Court 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.31 Considering that the Special
Permit32 granted to Lucia (petitioners’ Exhibit "A" before the
trial court) clearly indicated that her authority was good for
only six (6) months from November 14, 1994, 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
by May 15, 1995. As it failed to do so, it was liable to Spouses
Paras for the total sum of ₱720,000.00, the value of the
30,000 cubic meters of aggregates that Kimwa did not haul,
in addition to attorney’s fees and costs of suit.33
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. 34
In a subsequent Resolution, the Court of Appeals denied
reconsideration to Spouses Paras.35
Hence, this Petition was filed.
The issue for resolution is whether respondent Kimwa
Construction and Development Corporation is liable to
petitioners Spouses Paras for (admittedly) failing to haul
30,000 cubic meters of aggregates from petitioner Lucia
Paras’ permitted area by May 15, 1995.
To resolve this, it is necessary to determine 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.
We reverse the Decision of the Court of Appeals and reinstate
that of the Regional Trial Court. Respondent Kimwa is liable
for failing to haul the remainder of the quantity which it was
obliged to acquire from petitioner Lucia Paras.
I puts in issue in its pleading any of the four(4) items
Rule 130, Section 9 of the Revised Rules on Evidence
provides for the Parol Evidence Rule, the rule on
admissibility of documentary evidence when the terms of an
agreement have been reduced into writing:
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.
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
However, a party may present evidence to modify, explain or
add to the terms of written agreement if he puts in issue in his
pleading:
(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.
Per this rule, reduction to written form, regardless of the
formalities observed,36 "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."37
This rule is animated by a perceived wisdom in deferring to
the contracting parties’ articulated intent. In choosing to
reduce their agreement into writing, they are deemed to have
done so meticulously and carefully, employing specific —
frequently, even technical — language as are appropriate to
their context. From an evidentiary standpoint, this is also
because "oral testimony . . . 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."38 As illustrated in Abella v. Court of Appeals: 39
Without any doubt, oral testimony as to a certain fact,
depending as it does exclusively on human memory, is not as
reliable as written or documentary evidence.1âwphi1 "I
would sooner trust the smallest slip of paper for truth," said
Judge Limpkin of Georgia, "than the strongest and most
retentive memory ever bestowed on mortal man." This is
especially true in this case where such oral testimony is given
by . . . a party to the case who has an interest in its outcome,
and by . . . a witness who claimed to have received a
commission from the petitioner.40
This, however, is merely a general rule. Provided that a party
enumerated in the second paragraph of Rule 130, Section 9,
"a party may present evidence to modify, explain or add to
the terms of the agreement[.]"41 Raising any of these items as
an issue in a pleading such that it falls under the exception is
not limited to the party initiating an action. In Philippine
National Railways v. Court of First Instance of Albay, 42 this
court noted that "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[.]"43 Moreover, as with all possible objections to the
admission of evidence, a party’s failure to timely object is
deemed a waiver, and parol evidence may then be entertained.
6
Apart from pleading these exceptions, it is equally imperative
that the parol evidence sought to be introduced points to the
conclusion proposed by the party presenting it. That is, it
must be relevant, tending to "induce belief in [the]
existence"44 of the flaw, true intent, or subsequent extraneous
terms averred by the party seeking to introduce parol
evidence.
In sum, two (2) things must be established for parol evidence
to be admitted: first, that the existence of any of the four (4)
exceptions has been put in issue in a party’s pleading or has
not been objected to by the adverse party; and second, that the
parol evidence sought to be presented serves to form the basis
of the conclusion proposed by the presenting party.
II
Here, the Court of Appeals found fault in the Regional Trial
Court for basing its findings "on the basis of evidence
presented in violation of the parol evidence rule." 45 It
proceeded to fault petitioners Spouses Paras for showing "no
proof . . . of [respondent Kimwa’s] obligation."46 Then, it
stated that "[t]he stipulations in the agreement between the
parties leave no room for interpretation." 47
The Court of Appeals is in serious error.
At the onset, two (2) flaws in the Court of Appeals’ reasoning
must be emphasized. First, it is inconsistent to say, on one
hand, that the trial court erred on the basis of "evidence
presented"48 (albeit supposedly in violation of the Parol
Evidence Rule),and, on the other, that petitioners Spouses
Paras showed "no proof."49 Second, without even accounting
for the exceptions provided by Rule 130, Section 9, the Court
of Appeals immediately concluded that whatever evidence
petitioners Spouses Paras presented was in violation of the
Parol Evidence Rule.
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.
Paragraphs 6 to 10 of petitioners’ Complaint read:
6. Sensing that the buyers-contractors and haulers
alike could easily consumed [sic] the deposits
defendant proposed to the plaintiff-wife that it be
assured of a forty thousand (40,000) cubic meter
[sic];
7. Plaintiff countered that the area is scheduled to be
rechanneled on 15 May 1995 and by that time she
will be prohibited to sell the aggregates;
8. She further told the defendant that she would be
willing to enter into a contract provided the forty
thousand cubic meter [sic] will be withdrawn or
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
completely extracted and hauled before 15 May
1995, the scheduled rechanneling;
9. Defendant assured her that it will take them only
two to three months to haul completely the desired
volume as defendant has all the trucks needed;
10. Convinced of the assurances, plaintiff-wife and
the defendant entered into a contract for the supply
of the aggregates sometime on 6 December 1994 or
thereabouts, at a cost of Two Hundred Forty
(₱240.00) Pesos per truckload[.]50
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"51 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.
Proof of how petitioners Spouses Paras successfully pleaded
and put this in issue in their Complaint is how respondent
Kimwa felt it necessary to respond to it or address it in its
Answer. Paragraphs 2 to 5 of respondent Kimwa’s Answer
read:
2. The allegation in paragraph six of the complaint
is admitted subject to the qualification that when
defendant offered to buy aggregates from the
concession of the plaintiffs, it simply asked the
plaintiff concessionaire if she could sell a sufficient
supply of aggregates to be used in defendant’s
construction business and plaintiff concessionaire
agreed to sell to the defendant aggregates from her
concession up to a limit of 40,000 cubic meters at
the price of ₱240.00 per cubic meter.
3. The allegations in paragraph seven and eight of
the complaint are vehemently denied by the
defendant. The contract which was entered into by
the plaintiffs and the defendant provides only that
the former supply the latter the volume of 40,000.00
cubic meters of aggregates. There is no truth to the
allegation that the plaintiff wife entered into the
contract under the condition that the aggregates must
be quarried and hauled by defendant completely
before May 15, 1995, otherwise this would have
been unequivocally stipulated in the contract.
4. The allegation in paragraph nine of the complaint
is hereby denied. The defendant never made any
assurance to the plaintiff wife that it will take only
two to three months to haul the aforesaid volume of
aggregates. Likewise, the contract is silent on this
aspect for in fact there is no definite time frame
agreed upon by the parties within which defendant
7
 is to quarry and haul aggregates from the concession
of the plaintiffs.
5. The allegation in paragraph ten of the complaint
is admitted insofar as the execution of the contract is
concerned. However, the contract was executed, not
by reason of the alleged assurances of the defendant
to the plaintiffs, as claimed by the latter, but because
of the intent and willingness of the plaintiffs to
supply and sell aggregates to it. It was upon the
instance of the plaintiff that the defendant sign the
subject contract to express in writing their
agreement that the latter would haul aggregates from
plaintiffs’ concession up to such point in time that
the maximum limit of 40,000 cubic meters would be
quarried and hauled without a definite deadline
being set. Moreover, the contract does not obligate
the defendant to consume the allotted volume of
40,000 cubic meters.52
Considering how the Agreement’s mistake, imperfection, or
supposed failure to express the parties’ true intent was
successfully put in issue in petitioners Spouses Paras’
Complaint (and even responded to by respondent Kimwa in
its Answer), this case falls under the exceptions provided by
Rule 130, Section 9 of the Revised Rules on Evidence.
Accordingly, the testimonial and documentary parol evidence
sought to be introduced by petitioners Spouses Paras, which
attest to these supposed flaws and what they aver to have been
the parties’ true intent, may be admitted and considered.
III
Of course, this admission and availability for consideration is
no guarantee of how exactly the parol evidence adduced shall
be appreciated by a court. That is, they do not guarantee the
probative value, if any, that shall be attached to them. In any
case, we find that petitioners have established that respondent
Kimwa was obliged to haul 40,000 cubic meters of
aggregates on or before May 15, 1995. Considering its
admission that it did not haul 30,000 cubic meters of
aggregates, respondent Kimwa is liable to petitioners.
The Pre-Trial Order issued by the Regional Trial Court in
Civil Case No. MAN-2412 attests to respondent Kimwa’s
admission that:
6) 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 [sic] special permit indicating
that the Plaintiff’s [sic] authority was only good for (6)
months from November 14, 1994.53
This Special Permit was, in turn, introduced by petitioners in
evidence as their Exhibit "A,"54 with its date of issuance and
effectivity being specifically identified as their Exhibit "A-
1."55 Relevant portions of this Special Permit read:
To All Whom It May Concern:
PERMISSION is hereby granted to:
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
Name Address
LUCIA PARAS Poblacion, Toledo City
to undertake the rechannelling of Block No. VI of Sapang
Daco River along Barangay Ilihan, Toledo City, subject to
following terms and conditions:
1. That the volume to be extracted from the area is
approximately 40,000 cubic meters;
....
This permit which is valid for six (6) months from the date
hereof is revocable anytime upon violation of any of the
foregoing conditions or in the interest of public peace and
order.
Cebu Capitol, Cebu City, November 14, 1994.56
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.
The Special Permit’s condition that a total of only about
40,000 cubic meters of aggregates may be extracted by
petitioner Lucia Paras from the permitted area lends credence
to the position that the aggregates "allotted" to respondent
Kimwa was in consideration of its corresponding
commitment to haul all 40,000 cubic meters. This is so,
especially in light of the Agreement’s own statement that "the
said Aggregates is for the exclusive use of [respondent
Kimwa.]"57 By allotting the entire 40,000 cubic meters,
petitioner Lucia Paras bound her entire business to
respondent Kimwa. Rational human behavior dictates that
she must have done so with the corresponding assurances
from it. It would have been irrational, if not ridiculous, of her
to oblige herself to make this allotment without respondent
Kimwa’s concomitant undertaking that it would obtain the
entire amount allotted.
Likewise, the condition that the Special Permit shall be valid
for only six (6) months from November 14,1994 lends
credence to petitioners Spouses Paras’ assertion that, in
entering into the Agreement with respondent Kimwa,
petitioner Lucia Paras did so because of respondent Kimwa's
promise that hauling can be completed by May 15, 1995.
Bound as she was by the Special Permit, petitioner Lucia
Paras needed to make it eminently clear to any party she was
transacting with that she could supply aggregates only up to
May 15, 1995 and that the other party's hauling must be
completed by May 15, 1995. She was merely acting with due
diligence, for otherwise, any contract she would enter into
would be negated; any commitment she would make beyond
May 15, 1995 would make her guilty of misrepresentation,
and any prospective income for her would be rendered
illusory.
Our evidentiary rules impel us to proceed from the position
(unless convincingly shown otherwise) that individuals act as
8
rational human beings, i.e, "[t]hat a person takes ordinary care
of his concerns[.]"58 This basic evidentiary stance, taken with
the. supporting evidence petitioners Spouses Paras adduced,
respondent Kimwa's awareness of the conditions under which
petitioner Lucia Paras was bound, and the Agreement's own
text specifying exclusive allotment for respondent Kimwa,
supports petitioners Spouses Paras' position that respondent
Kimwa was obliged to haul 40,000 cubic meters of
aggregates on or before May 15, 1995. As it admittedly
hauled only 10,000 cubic meters, respondent Kimwa is liable
for breach of contract in respect of the remaining 30,000
cubic meters.
WHEREFORE, the Petition is GRANTED. The assailed
Decision dated July 4, 2005 and Resolution dated February 9,
2006 of the Court of Appeals Special 20th Division in CA-
G.R. CV No. 74682 are REVERSED and SET ASIDE. The
Decision of Branch 55 of the Regional Trial Court, Mandaue
City dated May 16, 2001 in Civil Case No. MAN-2412 is
REINSTATED.
A legal interest of 6% per annum shall likewise be imposed
on the total judgment award from the finality of this Decision
until full satisfaction.
SO ORDERED.
Well-settled is the rule that in case of doubt, it is the intention of the
contracting parties that prevails, for the intention is the soul of a
contract, not its wording which is prone to mistakes, inadequacies,
or ambiguities. To hold otherwise would give life, validity, and
precedence to mere typographical errors and defeat the very purpose
of agreements.
This Petition for Review on Certiorari[1] assails the October 7, 2003
Decision,[2] as well as the May 11, 2005 Resolution[3] of the Court
of Appeals (CA) in CA G.R. SP No. 69981. The dispositive portion
of the appellate courts Decision reads:
WHEREFORE, finding reversible error
committed by the Department of Agrarian
Reform Adjudication Board, the instant petition
for review is GRANTED. The assailed
Decision, dated 17 January 2001, rendered by
the Department of Agrarian Reform
Adjudication Board is hereby ANNULLED
and SET ASIDE. The Decision of the
Department of Agrarian Reform Adjudication
Board of Bayombong[,] Nueva Vizcaya, dated
17 March 1998, is REINSTATED. Costs
against respondents.
SO ORDERED.[4]
The reinstated Decision of the Department of Agrarian Reform
Adjudication Board (DARAB) of Bayombong, Nueva Vizcaya, in
turn, contained the following dispositive portion:

Accordingly, judgment is rendered:

1. Finding [respondents] to be the

owner by re-purchase from RBBI [of] the
Murong property covered by TCT No.
[T-]62096 (formerly TCT No. 43258);

SALUN-AT MARQUEZ G.R. No. 168387 2. Ordering the cancellation of TCT

and NESTOR DELA CRUZ, with CLOA Nos. 395 and 396 in the
Petitioners, name[s] of Salun-at Marquez and Nestor
de la Cruz respectively, as they are
disqualified to become tenants of the
- versus -
Lantap property;

ELOISA ESPEJO, 3. Directing RBBI to sell through

ELENITA ESPEJO, VOS the Lantap property to its rightful
EMERITA ESPEJO, beneficiary, herein tenant-farmer Nemi
OPHIRRO ESPEJO, Fernandez under reasonable terms and
OTHNIEL ESPEJO, conditions;
ORLANDO ESPEJO,
OSMUNDO ESPEJO, 4. Ordering RBBI to return the
ODELEJO ESPEJO and amount paid to it by Nestor and Salun-at;
NEMI FERNANDEZ, and ordering the latter to pay 20 cavans of
Respondents. August 25, 2010 palay per hectare at 46 kilos per cavan
unto [respondents] plus such accrued and
x----------------------------------------------- unpaid rentals for the past years as may be
---------x duly accounted for with the assistance of
the Municipal Agrarian Reform Officer of
Bagabag, Nueva Vizcaya who is also
When the parties admit the contents of written documents but put in hereby instructed to assist the parties
issue whether these documents adequately and correctly express the execute their leasehold contracts and;
true intention of the parties, the deciding body is authorized to look
beyond these instruments and into the contemporaneous and
subsequent actions of the parties in order to determine such intent. 5. The order to supervise harvest
dated March 11, 1998 shall be observed

Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019 9
 until otherwise modified or dissolved by
the appellate body.
SO ORDERED.[5]
Factual Antecedents
Respondents Espejos were the original registered owners of two
parcels of agricultural land, with an area of two hectares each. One
is located at Barangay Lantap, Bagabag, Nueva Vizcaya
(the Lantap property) while the other is located
in Barangay Murong, Bagabag, Nueva Vizcaya (the Murong
property). There is no dispute among the parties that the Lantap
property is tenanted by respondent Nemi Fernandez (Nemi)[6] (who
is the husband[7] of respondent Elenita Espejo (Elenita), while the
Murong property is tenanted by petitioners Salun-at Marquez
(Marquez) and Nestor Dela Cruz (Dela Cruz).[8]
The respondents mortgaged both parcels of land to Rural Bank of
Bayombong, Inc. (RBBI) to secure certain loans. Upon their failure
to pay the loans, the mortgaged properties were foreclosed and sold
to RBBI. RBBI eventually consolidated title to the properties and
transfer certificates of title (TCTs) were issued in the name of
RBBI.TCT No. T-62096 dated January 14, 1985 was issued for the
Murong property. It contained the following description:
Beginning at a point marked I on plan H-
176292, S. 44034 W. 1656.31 m. more or less
from B.L.L.M. No 1, Bagabag Townsite, K-27,
thence N. 28 deg. 20 E., 200.00 m. to point 2;
thence S. 61 deg. 40 E., 100.00 m. to point 3;
thence S. 28 deg. 20 W., 200.00 m. to point 4;
thence N. 61 deg. 40 W., 100.00 m. to point 1;
point of beginning;
Containing an area of 2.000 hectares. Bounded
on the northeast, by Road; on the southeast, and
southwest by public land; and on the northwest
by Public Land, properties claimed by Hilario
Gaudia and Santos Navarrete. Bearings
true. Declination 0131 E. Points referred to are
marked on plan H-176292. Surveyed under
authority of sections 12-22 Act No. 2874 and in
accordance with existing regulations of the
Bureau of Lands by H.O. Bauman Public Land
Surveyor, [in] December 1912-March
1913. Note: All corners are Conc. Mons.
15x15x60 cm. This is Lot No. 79-A=Lot No.
159 of Bagabag Townsite, K-27.[9]
Subsequently, TCT No. T-62836 dated June 4, 1985 was issued for
the Lantap property and contained the following description:
Beginning at a point marked 1 on plan H-
105520, N. 80 deg. 32 W., 1150.21 m. from
BLLM No. 122, Irrigation project,
thence N. 61 deg. 40E., 200.00 m. to point 2;
thence N. 28 deg. 20E, 100.00 m. to point 3;
thence S. 61 deg. 40E, 200.00 m. to point 4;
thence S. 28 deg. 20W, 100.00 m. to point 1;
point of beginning; containing an area of 2.0000
hectares. Bounded on the northeast, southeast,
and southwest by Public land; and on the
northwest by Road and public land. Bearings
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
true. Declination 0 deg. 31E., points referred to
are marked on plan H-105520. Surveyed under
authority of Section 12-22, Act No. 2874 and in
accordance with existing regulations of the
Bureau of Lands, by H.O. Bauman Public Land
Surveyor, [in] Dec. 1912-Mar. 1913 and
approved on January 6, 1932. Note: This is Lot
No. 119-A Lot No. 225 of Bagabag Townsite
K-27. All corners are B.I. Conc. Mons. 15x60
cm.[10]
Both TCTs describe their respective subjects as located in Bagabag
Townsite, K-27, without any reference to either Barangay Lantap
or Barangay Murong.
On February 26, 1985, respondents Espejos bought back one of
their lots from RBBI. The Deed of Sale[11] described the property
sold as follows:
x x x do hereby SELL, TRANSFER, and
CONVEY, absolutely and unconditionally x x
x that certain parcel of land, situated in the
Municipality of Bagabag, Province of Nueva
Vizcaya, and more particularly bounded and
described as follows, to wit:
Beginning at a point
marked 1 on plan x x x x
Containing an area of 2.000
hectares. Bounded on the
NE., by Road; on the SE.,
and SW by Public Land;
and on the NW., by Public
Land, properties claimed
by Hilario Gaudia and
Santos Navarrete. Bearing
true. Declination 013
B. Points referred to are
marked on plan H-176292.
of which the Rural Bank of Bayombong (NV)
Inc., is the registered owner in fee simple in
accordance with the Land Registration Act, its
title thereto being evidenced by Transfer
Certificate of Title No. T-62096 issued by the
Registry of Deeds of Nueva Vizcaya.
As may be seen from the foregoing, the Deed of Sale did not
mention the barangay where the property was located but
mentioned the title of the property (TCT No. T-62096), which title
corresponds to the Murong property. There is no evidence,
however, that respondents took possession of the Murong property,
or demanded lease rentals from the petitioners (who continued to be
the tenants of the Murong property), or otherwise exercised acts of
ownership over the Murong property. On the other hand, respondent
Nemi (husband of respondent Elenita and brother-in-law of the
other respondents), continued working on the other property -- the
Lantap property -- without any evidence that he ever paid rentals to
RBBI or to any landowner. The Deed of Sale was annotated on TCT
No. T-62096 almost a decade later, on July 1, 1994.[12]
Meanwhile, on June 20, 1990, RBBI, pursuant to Sections 20[13] and
21[14] of Republic Act (RA) No. 6657,[15] executed separate Deeds
of Voluntary Land Transfer (VLTs) in favor of petitioners Marquez
10
and Dela Cruz, the tenants of the Murong property. Both VLTs
described the subject thereof as an agricultural land located
in Barangay Murong and covered by TCT No. T-62836 (which,
however, is the title corresponding to the Lantap property).[16]
After the petitioners completed the payment of the purchase price
of P90,000.00 to RBBI, the DAR issued the corresponding
Certificates of Land Ownership Award (CLOAs) to petitioners
Marquez[17] and Dela Cruz[18] on September 5, 1991. Both CLOAs
stated that their subjects were parcels of agricultural land situated
in Barangay Murong.[19] The CLOAs were registered in the
Registry of Deeds of Nueva Vizcaya on September 5, 1991.
On February 10, 1997 (more than 10 years after the Deed of Sale in
favor of the respondents and almost seven years after the execution
of VLTs in favor of the petitioners), respondents filed a
Complaint[20] before the Regional Agrarian Reform Adjudicator
(RARAD) of Bayombong, Nueva Vizcaya for the cancellation of
petitioners CLOAs, the deposit of leasehold rentals by petitioners in
favor of respondents, and the execution of a deed of voluntary land
transfer by RBBI in favor of respondent Nemi. The complaint was
based on respondents theory that the Murong property, occupied by
the petitioners, was owned by the respondents by virtue of the 1985
buy-back, as documented in the Deed of Sale. They based their
claim on the fact that their Deed of Sale refers to TCT No. 62096,
which pertains to the Murong property.
Petitioners filed their Answer[21] and insisted that they bought the
Murong property as farmer-beneficiaries thereof. They maintained
that they have always displayed good faith, paid lease rentals to
RBBI when it became the owner of the Murong property, bought
the same from RBBI upon the honest belief that they were buying
the Murong property, and occupied and exercised acts of ownership
over the Murong property. Petitioners also argued that what
respondents Espejos repurchased from RBBI in 1985 was actually
the Lantap property, as evidenced by their continued occupation and
possession of the Lantap property through respondent Nemi.
RBBI answered[22] that it was the Lantap property which was the
subject of the buy-back transaction with respondents Espejos. It
denied committing a grave mistake in the transaction and
maintained its good faith in the disposition of its acquired assets in
conformity with the rural banking rules and regulations.
OIC-RARAD Decision[23]
The OIC-RARAD gave precedence to the TCT numbers appearing
on the Deed of Sale and the VLTs. Since TCT No. T-62096
appeared on respondents Deed of Sale and the said title refers to the
Murong property, the OIC-RARAD concluded that the subject of
sale was indeed the Murong property. On the other hand, since the
petitioners VLTs referred to TCT No. T-62836, which corresponds
to the Lantap property, the OIC-RARAD ruled that petitioners
CLOAs necessarily refer to the Lantap property. As for the
particular description contained in the VLTs that the subject thereof
is the Murong property, the OIC-RARAD ruled that it was a mere
typographical error.
Further, since the VLTs covered the Lantap property and petitioners
are not the actual tillers thereof, the OIC-RARAD declared that they
were disqualified to become tenants of the Lantap property and
ordered the cancellation of their CLOAs. It then ordered RBBI to
execute a leasehold contract with the real tenant of the Lantap
property, Nemi.
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
The OIC-RARAD recognized that petitioners only right as the
actual tillers of the Murong property is to remain as the tenants
thereof after the execution of leasehold contracts with and payment
of rentals in arrears to respondents.
DARAB Decision[24]
Upon appeal filed by petitioners, the DARAB reversed the OIC-
RARAD Decision. It ruled that in assailing the validity of the
CLOAs issued to petitioners as bona fide tenant-farmers, the burden
of proof rests on the respondents. There being no evidence that the
DAR field personnel were remiss in the performance of their official
duties when they issued the corresponding CLOAs in favor of
petitioners, the presumption of regular performance of duty
prevails. This conclusion is made more imperative by the
respondents admission that petitioners are the actual tillers of the
Murong property, hence qualified beneficiaries thereof.
As for respondents allegation that they bought back the Murong
property from RBBI, the DARAB ruled that they failed to support
their allegation with substantial evidence. It gave more credence to
RBBIs claim that respondents repurchased the Lantap property, not
the Murong property. Respondents, as owners of the Lantap
property, were ordered to enter into an agricultural leasehold
contract with their brother-in-law Nemi, who is the actual tenant of
the Lantap property.
The DARAB ended its January 17, 2001 Decision in this wise:
We find no basis or justification to question the
authenticity and validity of the CLOAs issued to
appellants as they are by operation of law
qualified beneficiaries over the landholdings;
there is nothing to quiet as these titles were
awarded in conformity with the CARP program
implementation; and finally, the Board declares
that all controverted claims to or against the
subject landholding must be completely and
finally laid to rest.
WHEREFORE, premises considered and
finding reversible errors[,] the assailed decision
is ANNULLED and a new judgment is hereby
rendered, declaring:
1. Appellants Salun-at
Marquez and Nestor Dela Cruz as the bona fide
tenant-tillers over the Murong property and
therefore they are the qualified beneficiaries
thereof;
2. Declaring Transfer
Certificate of Title (TCT) Nos. 395 and 396
issued in the name of [farmer-beneficiaries]
Salun-at Marquez and Nestor Dela Cruz
respectively, covered formerly by TCT No.
62096 (TCT No. 43258) of the Murong
property as valid and legal;
3. Ordering the co-
[respondents] to firm-up an agricultural
leasehold contract with bona fide tenant-tiller
Nemi Fernandez over the Lantap property, [the
latter] being the subject matter of the buy back
arrangement entered into between
11
 [respondents] and Rural Bank of Bayombong,
Incorporated, and other incidental matters are
deemed resolved.
SO ORDERED.[25]
Ruling of the Court of Appeals
In appealing to the CA, the respondents insisted that the DARAB
erred in ruling that they repurchased the Lantap property, while the
petitioners were awarded the Murong property. They were adamant
that the title numbers indicated in their respective deeds of
conveyance should control in determining the subjects
thereof. Since respondents Deed of Sale expressed that its subject is
the property with TCT No. T-62096, then what was sold to them
was the Murong property. On the other hand, petitioners VLTs and
CLOAs say that they cover the property with TCT No. T-62836;
thus it should be understood that they were awarded the Lantap
property.Respondents added that since petitioners are not the actual
tillers of the Lantap property, their CLOAs should be cancelled due
to their lack of qualification.
The CA agreed with the respondents. Using the Best Evidence Rule
embodied in Rule 130, Section 3, the CA held that the Deed of Sale
is the best evidence as to its contents, particularly the description of
the land which was the object of the sale. Since the Deed of Sale
expressed that its subject is the land covered by TCT No. T-62096
the Murong property then that is the property that the respondents
repurchased.
The CA further ruled that as for petitioners VLTs, the same refer to
the property with TCT No. T-62836; thus, the subject of their
CLOAs is the Lantap property. The additional description in the
VLTs that the subject thereof is located in Barangay Murong was
considered to be a mere typographical error. The CA ruled that the
technical description contained in the TCT is more accurate in
identifying the subject property since the same particularly describes
the properties metes and bounds.
Both the RBBI[26] and petitioners[27] filed their respective motions
for reconsideration, which were separately denied.[28]
On June 22, 2004, RBBI filed a separate Petition for Review
on Certiorari, docketed as G.R. No. 163320, with this
Court.[29] RBBI raised the issue that the CA failed to appreciate that
respondents did not come to court with clean hands because they
misled RBBI to believe at the time of the sale that the two lots were
not tenanted. RBBI also asked that they be declared free from any
liability to the parties as it did not enrich itself at anyones
expense. RBBIs petition was dismissed on July 26, 2004 for lack of
merit. The said Resolution reads:
Considering the allegations, issues[,] and
arguments adduced in the petition for review on
certiorari, the Court Resolves to DENY the
petition for lack of sufficient showing that the
Court of Appeals had committed any reversible
error in the questioned judgment to warrant the
exercise by this Court of its discretionary
appellate jurisdiction in this case.[30]
Their Motion for Reconsideration was likewise denied with
finality.[31] Entry of judgment was made in that case on December
15, 2004.[32]
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
On July 27, 2005,[33] petitioners filed the instant petition.
Issues
Rephrased and consolidated, the parties present the following issues
for the Courts determination:
I
What is the effect of the final judgment dismissing RBBIs Petition
for Review on Certiorari, which assailed the same CA Decision
II
Whether the CA erred in utilizing the Best Evidence Rule to
determine the subject of the contracts
III
What are the subject properties of the parties respective contracts
with RBBI
Our Ruling
Propriety of the Petition
Respondents maintain that the instant petition for review raises
factual issues which are beyond the province of Rule 45.[34]
The issues involved herein are not entirely factual. Petitioners assail
the appellate courts rejection of their evidence (as to the contractual
intent) as inadmissible under the Best Evidence Rule. The question
involving the admissibility of evidence is a legal question that is
within the Courts authority to review.[35]
Besides, even if it were a factual question, the Court is not precluded
to review the same. The rule that a petition for review should raise
only questions of law admits of exceptions, among which are (1)
when the findings are grounded entirely on speculations, surmises,
or conjectures; (2) when the inference made is manifestly mistaken,
absurd or impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on a misappreciation of facts; (5) when
the findings of fact are conflicting; (6) when, in making its findings,
the same are contrary to the admissions of both appellant and
appellee; (7) when the findings are contrary to those of the trial court;
(8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioner's main and reply briefs are not
disputed by the respondent; and (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted by
the evidence on record.[36]
In the instant case, we find sufficient basis to apply the exceptions to
the general rule because the appellate court misappreciated the facts
of the case through its erroneous application of the Best Evidence
Rule, as will be discussed below. Moreover, the disparate rulings of
the three reviewing bodies below are sufficient for the Court to
exercise its jurisdiction under Rule 45.
First Issue
Dismissal of RBBIs appeal
Respondents maintain that the Courts earlier dismissal of RBBIs
petition
for review of the same CA Decision is eloquent proof that there is
no reversible error in the appellate courts decision in favor of the
respondents.[37]
12
We are not persuaded. This Court dismissed RBBIs earlier petition
in G.R. No. 163320 because it failed to convincingly demonstrate
the alleged errors in the CA Decision. The bank did not point out the
inadequacies and errors in the appellate courts decision but simply
placed the responsibility for the confusion on the respondents for
allegedly misleading the bank as to the identity of the properties and
for misrepresenting that the two lots were not tenanted. Thus, RBBI
argued that respondents did not come to court with clean hands.
These arguments were ineffectual in convincing the Court to review
the appellate courts Decision. It is the appellants responsibility to
point out the perceived errors in the appealed decision. When a party
merely raises equitable considerations such as the clean hands
doctrine without a clear-cut legal basis and cogent arguments to
support his claim, there should be no surprise if the Court is not
swayed to exercise its appellate jurisdiction and the appeal is
dismissed outright. The dismissal of an appeal does not always and
necessarily mean that the appealed decision is correct, for it could
simply be the result of the appellants inadequate discussion,
ineffectual arguments, or even procedural lapses.
RBBIs failure to convince the Court of the merits of its appeal
should not prejudice petitioners who were not parties to RBBIs
appeal, especially because petitioners duly filed a separate appeal
and were able to articulately and effectively present their
arguments. A party cannot be deprived of his right to appeal an
adverse decision just because another party had already appealed
ahead of him,[38] or just because the other partys separate appeal had
already been dismissed.[39]
There is another reason not to bind the petitioners to the final
judgment against RBBI. RBBI executed the transfer (VLTs) in
favor of petitioners prior to the commencement of the action. Thus,
when the action for cancellation of CLOA was filed, RBBI had
already divested itself of its title to the two properties
involved. Under the rule on res judicata, a judgment (in personam)
is conclusive only between the parties and their successors-in-
interest by title subsequent to the commencement of the
action.[40] Thus, when the vendor (in this case RBBI) has already
transferred his title to third persons (petitioners), the said transferees
are not bound by any judgment which may be rendered against the
vendor.[41]
Second Issue
Is it correct to apply the Best Evidence Rule?
Citing the Best Evidence Rule in Rule 130, Section 3, the CA held
that the Deed of Sale between respondents and RBBI is the best
evidence as to the property that was sold by RBBI to the
respondents. Since the Deed of Sale stated that its subject is the land
covered by TCT No. T-62096 the title for the Murong property then
the property repurchased by the respondents was the Murong
property. Likewise, the CA held that since the VLTs between
petitioners and RBBI refer to TCT No. T-62836 the title for the
Lantap property then the property transferred to petitioners was the
Lantap property.
Petitioners argue that the appellate court erred in using the best
evidence rule to determine the subject of the Deed of Sale and the
Deeds of Voluntary Land Transfer. They maintain that the issue in
the case is not the contents of the contracts but the intention of the
parties that was not adequately expressed in their
contracts. Petitioners then argue that it is the Parol Evidence Rule
that should be applied in order to adequately resolve the dispute.
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
Indeed, the appellate court erred in its application of the Best
Evidence Rule. The Best Evidence Rule states that when the subject
of inquiry is the contents of a document, the best evidence is
the original document itself and no other evidence (such as a
reproduction, photocopy or oral evidence) is admissible as a general
rule. The original is preferred because it reduces the chance of
undetected tampering with the document.[42]
In the instant case, there is no room for the application of the Best
Evidence Rule because there is no dispute regarding the contents of
the documents. It is admitted by the parties that the respondents
Deed of Sale referred to TCT No. T-62096 as its subject; while the
petitioners Deeds of Voluntary Land Transfer referred to TCT No.
T-62836 as its subject, which is further described as located
in Barangay Murong.
The real issue is whether the admitted contents of these documents
adequately and correctly express the true intention of the parties. As
to the Deed of Sale, petitioners (and RBBI) maintain that while it
refers to TCT No. T-62096, the parties actually intended the sale of
the Lantap property (covered by TCT No. T-62836).
As to the VLTs, respondents contend that the reference to TCT No.
T-62836 (corresponding to the Lantap property) reflects the true
intention of RBBI and the petitioners, and the reference
to Barangay Murong was a typographical error. On the other hand,
petitioners claim that the reference to Barangay Murong reflects
their true intention, while the reference to TCT No. T-62836 was a
mere error. This dispute reflects an intrinsic ambiguity in the
contracts, arising from an apparent failure of the instruments to
adequately express the true intention of the parties. To resolve the
ambiguity, resort must be had to evidence outside of the instruments.
The CA, however, refused to look beyond the literal wording of the
documents and rejected any other evidence that could shed light on
the actual intention of the contracting parties. Though the CA cited
the Best Evidence Rule, it appears that what it actually applied was
the Parol Evidence Rule instead, which provides:
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.[43]
The Parol Evidence Rule excludes parol or extrinsic evidence by
which a party seeks to contradict, vary, add to or subtract from the
terms of a valid agreement or instrument. Thus, it appears that what
the CA actually applied in its assailed Decision when it refused to
look beyond the words of the contracts was the Parol Evidence Rule,
not the Best Evidence Rule. The appellate court gave primacy to the
literal terms of the two contracts and refused to admit any other
evidence that would contradict such terms.
However, even the application of the Parol Evidence Rule is
improper in the case at bar. In the first place, respondents
are not parties to the VLTs executed between RBBI and petitioners;
they are strangers to the written contracts. Rule 130, Section 9
specifically provides that parol evidence rule is exclusive only as
between the parties and their successors-in-interest. The parol
evidence rule may not be invoked where at least one of the parties
to the suit is not a party or a privy of a party to the written document
in question, and does not base his claim on the instrument or assert
a right originating in the instrument.[44]
13

Moreover, the instant case falls under the exceptions to the Parol
Evidence Rule, as provided in the second paragraph of Rule 130,
Section 9:
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:
(1) An intrinsic
ambiguity, mistake or
imperfection in the written
agreement;
(2) The failure of the
written agreement to express
the true intent and agreement
of the parties thereto;
x x x x (Emphasis supplied)
Here, the petitioners VLTs suffer from intrinsic ambiguity. The
VLTs described the subject property as covered by TCT No. T-
62836 (Lantap property), but they also describe the subject property
as being located in Barangay Murong. Even the respondents Deed
of Sale falls under the exception to the Parol Evidence Rule. It refers
to TCT No. T-62096 (Murong property), but RBBI contended that
the true intent was to sell the Lantap property. In short, it was
squarely put in issue that the written agreement failed to express the
true intent of the parties.
Based on the foregoing, the resolution of the instant case necessitates
an examination of the parties respective parol evidence, in order to
determine the true intent of the parties. Well-settled is the rule that in
case of doubt, it is the intention of the contracting parties that
prevails, for the intention is the soul of a contract,[45] not its wording
which is prone to mistakes, inadequacies, or ambiguities. To hold
otherwise would give life, validity, and precedence to mere
typographical errors and defeat the very purpose of agreements.
In this regard, guidance is provided by the following articles of the
Civil Code involving the interpretation of contracts:
Article 1370. If the terms of a contract are clear
and leave no doubt upon the intention of the
contracting parties, the literal meaning of its
stipulations shall control.
If the words appear to be contrary to the evident
intention of the parties, the latter shall prevail
over the former.
Article 1371. In order to judge the intention of
the contracting parties, their contemporaneous
and subsequent acts shall be principally
considered.
Rule 130, Section 13 which provides for the rules on the
interpretation of documents is likewise enlightening:
Section 13. Interpretation according to
circumstances. For the proper construction of
an instrument, the circumstances under which it
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
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.
Applying the foregoing guiding rules, it is clear that the Deed of Sale
was intended to transfer the Lantap property to the respondents,
while the VLTs were intended to convey the Murong property to the
petitioners. This may be seen from the contemporaneous and
subsequent acts of the parties.
Third issue
Determining the intention of the parties
regarding the subjects of their contracts
We are convinced that the subject of the Deed of Sale between
RBBI and the respondents was the Lantap property, and not the
Murong property. After the execution in 1985 of the Deed of Sale,
the respondents did not exercise acts of ownership that could show
that they indeed knew and believed that they repurchased the
Murong property. They did not take possession of the Murong
property. As admitted by the parties, the Murong property was in the
possession of the petitioners, who occupied and tilled the same
without any objection from the respondents. Moreover, petitioners
paid leasehold rentals for using the Murong property to RBBI, not
to the respondents.
Aside from respondents neglect of their alleged ownership rights
over the Murong property, there is one other circumstance that
convinces us that what respondents really repurchased was the
Lantap property. Respondent Nemi (husband of respondent Elenita)
is the farmer actually tilling the Lantap property, without turning
over the supposed landowners share to RBBI. This strongly
indicates that the respondents considered themselves (and not
RBBI) as the owners of the Lantap property. For if respondents
(particularly spouses Elenita and Nemi) truly believed that RBBI
retained ownership of the Lantap property, how come they never
complied with their obligations as supposed tenants of RBBIs
land? The factual circumstances of the case simply do not support
the theory propounded by the respondents.
We are likewise convinced that the subject of the Deeds of
Voluntary Land Transfer (VLTs) in favor of petitioners was
the Murong property, and not the Lantap property.When the VLTs
were executed in 1990, petitioners were already the tenant-farmers
of the Murong property, and had been paying rentals to RBBI
accordingly. It is therefore natural that the Murong property and no
other was the one that they had intended to acquire from RBBI with
the execution of the VLTs. Moreover, after the execution of the
VLTs, petitioners remained in possession of the Murong property,
enjoying and tilling it without any opposition from anybody.
Subsequently, after the petitioners completed their payment of the
total purchase price of P90,000.00 to RBBI, the Department of
Agrarian Reform (DAR) officials conducted their investigation of
the Murong property which, with the presumption of regularity in
the performance of official duty, did not reveal any
anomaly. Petitioners were found to be in actual possession of the
Murong property and were the qualified beneficiaries thereof. Thus,
the DAR officials issued CLOAs in petitioners favor; and these
CLOAs explicitly refer to the land in Barangay Murong. All this
time, petitioners were in possession of the Murong property,
undisturbed by anyone for several long years, until respondents
started the controversy in 1997.
14
All of these contemporaneous and subsequent actions of RBBI and
petitioners support their position that the subject of their contract
(VLTs) is the Murong property, not the Lantap
property. Conversely, there has been no contrary evidence of the
parties actuations to indicate that they intended the sale of the Lantap
property. Thus, it appears that the reference in their VLT to TCT No.
T-62836 (Lantap property) was due to their honest but mistaken
belief that the said title covers the Murong property.Such a mistake
is not farfetched considering that TCT No. T-62836 only refers to
the Municipality of Bayombong, Nueva Vizcaya, and does not
indicate the particular barangay where the property is
located. Moreover, both properties are bounded by a road and public
land. Hence, were it not for the detailed technical description, the
titles for the two properties are very similar.
The respondents attempt to discredit petitioners argument that their
VLTs were intrinsically ambiguous and failed to express their true
intention by asking why petitioners never filed an action for the
reformation of their contract.[46] A cause of action for the
reformation of a contract only arises when one of the contracting
parties manifests an intention, by overt acts, not to abide by the true
agreement of the parties.[47] It seems fairly obvious that petitioners
had no cause to reform their VLTs because the parties thereto (RBBI
and petitioners) never had any dispute as to the interpretation and
application thereof. They both understood the VLTs to cover the
Murong property (and not the Lantap property). It was only much
later, when strangers to the contracts argued for a different
interpretation, that the issue became relevant for the first time.
All told, we rule that the Deed of Sale dated February 26, 1985
between respondents and RBBI covers the Lantap property under
TCT No. T-62836, while the Deeds of Voluntary Land Transfer and
TCT Nos. CLOA-395 and CLOA-396 of the petitioners cover
the Murong property under TCT No. T-62096. In consequence, the
CAs ruling against RBBI should not be executed as such execution
would be inconsistent with our ruling herein. Although the CAs
decision had already become final and executory as against
RBBI with the dismissal of RBBIs petition in G.R. No. 163320, our
ruling herein in favor of petitioners is a supervening cause which
renders the execution of the CA decision against RBBI unjust and
inequitable.
WHEREFORE, the Petition for Review
on Certiorari is GRANTED. The assailed October 7, 2003
Decision, as well as the May 11, 2005 Resolution of the Court of
Appeals in CA-G.R. SP No. 69981
are REVERSED and SET ASIDE. The January 17, 2001
Decision of the DARAB Central Office is REINSTATED. The
Deed of Sale dated February 26, 1985 between respondents and
Rural Bank of Bayombong, Inc. covers the Lantap property under
TCT No. T-62836, while the Deeds of Voluntary Land Transfer and
TCT Nos. CLOA-395 and CLOA-396 of the petitioners cover the
Murong property under TCT No. T-62096. The Register of Deeds
of Nueva Vizcaya is directed to make the necessary corrections to
the titles of the said properties in accordance with this
Decision. Costs against respondents.
SO ORDERED.
G.R. No. 203610, October 10, 2016
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
REPUBLIC OF THE PHILIPPINES AND HOUSING
AND URBAN DEVELOPMENT COORDINATING
COUNCIL (HUDCC), Petitioners, v. GONZALO
ROQUE, JR., MANUELA ALMEDA ROQUE,
EDUVIGIS A. PAREDES, MICHAEL A. PAREDES,
PURIFICACION ALMEDA, JOSE A. ALMEDA,
MICHELLE A. ALMEDA, MICHAEL A. ALMEDA,
ALBERTO DELURA, AND THERESA
ALMEDA, Respondent.
We resolve the petition for review on certiorari1 filed by the
Republic of the Philippines (Republic) assailing the July 4,
2012 decision2 and the September 26, 2012 resolution3 of the
Court of Appeals (CA) in CA G.R. CV No. 93018. The CA
affirmed the Regional Trial Court's (RTC) decision annulling
the sale of the respondents' properties to the Republic, and
ordering the respondents to return the purchase price they
received from the government.
ANTECEDENT FACTS
Gonzalo Roque, Jr. (Gonzalo), Manuela Almeda-Roque,
Eduvigis A. Paredes, Michael A. Paredes, Purification
Almeda, Jose A. Almeda, Michelle A. Almeda, Michael A.
Almeda, Alberto Delura, and Theresa Almeda (respondents),
owned several parcels of land with a total area of about 9,811
square meters,4located in Constitution Hills, Quezon
City.5 Gonzalo represented the respondents in the court
proceedings.
In 1978, the Republic, through the Department of Public
Works and Highways (DPWH), approached the respondents
and asked them to sell a portion of the land at government-
dictated prices lower than the market value.6 The Republic
was supposed to use the land for President Marcos' National
Government Center (NGC) Project — his plan to bring
together the various national government offices in one venue
for greater efficiency and to create additional areas for the
expanding needs of the central government and the
people.7chanrobleslaw
The respondents allege that several public hearings regarding
the sale took place between the Republic and the
respondents;8 and that during these meetings, the Republic
made the following representations:
chanRoblesvirtualLawlibraryFirst, the Republic guaranteed
that although the respondents would get paid a price much
lower than the market value of the land, the construction of
the NGC Project would eventually enhance the value of the
surrounding portions of the land that they still
own.9chanrobleslaw
Second, the Republic assured the respondents that, in the
remote possibility that it abandons the project, they will have
the right to buy back the land.10chanrobleslaw
The respondents further allege that they were reluctant to sell
the land, but felt compelled to do so because martial law was
in force, and they dared not resist a project of President
Marcos.11 Thus, relying on the Republic's representations, the
respondents signed the deeds of absolute sale.
The Register of Deeds cancelled the three certificates of title
(TCT) and issued six new titles.12 Three of these new titles
15
were issued in the Republic's name: (a) TCT No. RT-115781
(283214); (b) TCT No. RT-34249 (283216); and (c) TCT No.
RT-115907 (283212).13chanrobleslaw
The Republic did not immediately take possession of all of
the land it had bought from the respondents;14 thus, the
respondents continued to occupy portions of the sold
properties.15chanrobleslaw
After several years, informal settlers began to occupy parts of
the land, and the respondents felt that the Republic was
reneging on its undertaking to develop the land into the NGC
Project.16 Hence, Gonzalo sent letters dated March 25, 1987,
and September 23, 1988, to then DPWH Secretary Vicente R.
Jayme (Jayme) offering to buy back the properties.17 Gonzalo
received no response.
The respondents' suspicion was confirmed in December
2003. Armando A. De Castro (De Castro), then
undersecretary of the Housing and Urban Development
Coordinating Council (HUDCC), wrote a letter to the
respondents, requesting them to vacate all portions of the sold
land that they were still occupying, because the government
would use the properties for socialized housing pursuant to
Republic Act (R.A.) No. 9207.18chanrobleslaw
On August 23, 2004, Gonzalo wrote another letter to then
HUDCC Secretary Michael Defensor, offering to buy back
the properties.19 He argued that the respondents have the right
to repurchase the properties after the Republic abandoned the
NGC Project and diverted the use of the properties to
socialized housing.20chanrobleslaw
Secretary Defensor allegedly found the respondents' position
reasonable and requested a feedback on the possibility of a
repurchase.21 However, the secretary was transferred to
another department and was unable to further address the
situation.22 Despite persistent follow-ups, the respondents
failed to receive any action from the Republic on this
matter.23chanrobleslaw
Realizing that the Republic had completely abandoned its
initial plan to use the land for the NGC Project, in 2005, the
respondents filed a complaint for the annulment of the
sale of the properties on the grounds of fraud, force,
intimidation, or undue influence.24 They also asserted their
right to buy back the properties at the same price at which
they sold them since the Republic failed to develop the land
according to the original purpose for which it was
"expropriated."25cralawred Alternatively, they asked for the
payment of additional compensation in the amount of not less
than Five Million Pesos.26chanrobleslaw
In their answer,27 the Republic and the HUDCC (defendants)
argue that: (1) they are immune from suit as government
instrumentalities; (2) they agreed to neither the respondents'
right to repurchase the properties in case the government
abandons the NGC Project nor a right to additional
compensation in case the respondents' remaining properties
suffer a decrease in market value; (3) the respondents were
not forced, intimidated, or unduly influenced to sell their
properties to the government; and (4) even assuming that any
vice of consent attended the sale, the respondents' action for
the annulment of sale is barred by prescription28 and laches.
During trial, Dante Viloria (Viloria) testified on the
Evidence.ParolEvidenceRule.MidtermsCasesFULL.nts2019
negotiations that took place. Viloria was the Assistant City
Assessor of Quezon City and was part of the government's
negotiating team for the NGC Project. He testified that: (a)
the negotiated price was lower than the base amounts in
Presidential Decree No. 1517;29 (b) the government did not
file any court action to expropriate the properties; (c) it did
not take possession of the properties; and (d) it undertook to
resell the properties to the respondents at the same price if the
project would not push through.30 Gonzalo's testimony
corroborated Viloria's testimony.
Several presidential proclamations were issued pertaining to
the NGC Project from 1979-1998.31 In 2003, Congress
passed RA 9207, amending the proclamations. Under Section
3 of RA 9207, 184 hectares on the west side and 238 hectares
on the east side were excluded from the original 444-hectare
NGC reservation.32chanrobleslaw
THE RTC RULING
The RTC decided in the respondents' favor. It held that: (1)
the Republic is not immune from suit; (2) the respondents'
action is not barred by either prescription or laches; and (3)
the sale should be annulled.
First, the RTC held that the Republic is not immune from suit.
Citing Section 9, Article III of the Constitution,33the Republic
cannot invoke government immunity since the nature of the
case is either to obtain just compensation or to retrieve the
properties.
Second, the respondents' action is not barred by either
prescription or laches.
It noted Roque's letters to DPWH Secretary Jayme dated
March 25, 1987 and September 23, 1988. In the March letter,
Gonzalo brought up the agreement he had with the Republic
that he has pre-emptive right to buy back his property from
the government should the project not push through. In the
September letter, Gonzalo told the DPWH Secretary that he
prevented the informal settlers from building structures
within his former property and reiterated his pre-emptive
right to buy back the property. The RTC took these letters as
clear indications of the respondents' vigilance in invoking
their right; thus, their action is not barred by laches.
The RTC added that the respondents found out about the
Republic's plan to divert the use of the properties to low-cost
housing only on May 14, 2003, when RA 9207 was enacted.
Thus, the filing of the complaint in 2005 was within the four-
year prescriptive period reckoned from the enactment of RA
9207.
Third, the RTC annulled the deeds of absolute sale on the
ground of fraud. It gave credence to Viloria and Gonzalo's
testimonies about the matters discussed during negotiations.
Based on these testimonies, the RTC emphasized that the
respondents signed the deeds of absolute sale relying on the
government's assurances that they could retrieve the
properties should the NGC Project not materialize.
Fourth, the RTC declared that the respondents are not entitled
to damages and attorney's fees because the Republic was not
in bad faith in resisting the complaint. The RTC added that
the Republic is not entitled to its counterclaims because RA
9207 recognizes the validity of vested rights and precedence
16
of proclamations.
Aggrieved, the Republic filed an appeal with the CA.
THE CA RULING
The CA affirmed the RTC's decision.34 It held that: (1) the
Republic is not immune from suit; (2) the sale was
conditioned upon the materialization of the NGC Project; and
(3) the respondents' action is not barred by prescription or
laches.
First, the CA ruled that the doctrine of sovereign immunity
must be read with Section 9, Article III of the Constitution,
which provides that "private property shall not be taken for
public use without just compensation." This provision
imposes two requirements: public purpose and payment of
just compensation.
In the present case, the Republic "extrajudicially
expropriated" the respondents' properties for a public
purpose, i.e., the construction of the NGC Project. However,
the Republic failed to pay just compensation to the
respondents. To recall, it expropriated the land at an amount
far below the actual market value. Despite the low price, the
respondents sold their properties relying on the Republic's
promise that they would be amply compensated by the
appreciation of their remaining properties' values.
Not only did the NGC Project not materialize but the values
of their remaining properties depreciated due to the illegal
settlers in their vicinity. Thus, the respondents were deprived
of just compensation to which they are entitled.
Consequently, the Republic may not validly invoke the non-
suability of the State and conveniently hide under the State's
cloak of invincibility against suit. The ends of justice would
be subverted if the court were to uphold the State's immunity
from suit in this case.
Second, the CA held that the parties entered into a conditional
sale with a right to repurchase the properties from the
Republic. The sale was subject to these conditions: (a) the
landowners may repurchase the properties at selling price
should the NGC Project not materialize; and (b) the
construction of the NGC Project will increase the land value
of the landowners' remaining properties.
The Republic invoked the parol evidence rule in arguing that
the sale had no conditions. In response, the CA noted that the
parol evidence rule admits of exceptions, such as the failure
of the written agreement to express the parties' true
intent.35 This exception applies in the present case.
The testimony of Viloria established that the sale contracts
failed to express the parties' true intent and agreement. He
explained that the Republic assured the respondents that it
would reconvey the properties to them should the NGC
Project not push through.
The CA added that the enactment of R.A. No. 9207 had no
effect on the respondents' right to repurchase their land,
because the law recognizes the precedence and validity of
vested rights. Given that the Republic no longer pushed
through with the NGC Project, it should have allowed the
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respondents to exercise their right to buy back the land.
Third, the CA ruled that the respondents' action is not barred
by prescription and/or laches. As the RTC held, the
respondents filed their complaint within the prescribed period
and were prompt and vigilant in protecting their rights.
Hence, the Republic filed this petition.
THE PARTIES' ARGUMENTS
In its petition, the Republic argues that: (a) the lower courts
erred in annulling the sale on the ground of fraud; (b) the
respondents have no right to reacquire the properties sold to
the Republic; (c) the respondents' action is barred by laches
and/or prescription; and (d) the State has not given its consent
to be sued.
The Republic submits that the government did not use
insidious words or machinations constitutive of fraud in
transacting with the respondents. The government did not lie
when it told the respondents that it intended to establish the
NGC Project in the area, and its failure to realize the project
cannot be considered a fraudulent act.36chanrobleslaw
Furthermore, the respondents' failure to realize their expected
gain from the "economic boom" is not a ground to annul the
sale. They voluntarily agreed to the sale, albeit reluctantly.
They should not be allowed to obtain judicial relief just
because they believe they got the short end of the bargain.
Moreover, any deficiency in the purchase price has been more
than adequately compensated by the respondents'
uninterrupted use of a portion of the government's property
for over thirty (30) years.37chanrobleslaw
The Republic points out that the respondents failed to present
any document to prove that there were conditions imposed on
the sale.38 Furthermore, the enactment of R.A. No. 9207 has
determined the public use of the land.39chanrobleslaw
Even assuming that vices of consent attended the sale in 1978
and persisted during the Marcos regime, the Republic argues
that the respondents should have filed the action to annul
within four (4) years from February 24, 1986. 40 The
respondents, however, only filed their complaint in January
2005, or clearly beyond the prescriptive period.
Finally, the Republic reiterates that, under the doctrine of
state immunity from suit, it cannot be sued without its
consent.41chanrobleslaw
In their comment, the respondents argue that: (a) the defense
of immunity from suit is not proper in an eminent domain
case; (b) the action is not barred by prescription and/or laches;
(c) the Republic compelled them to sell their properties
through extrajudicial expropriation at a government-dictated
price; and (d) the CA correctly annulled the extrajudicial
expropriation of the land and allowed the respondents to
repurchase the land given the government's abandonment of
the NGC Project.
The respondents submit that the Republic cannot hide behind
the state immunity doctrine to defeat the constitutionally
guaranteed right against the taking of private property for a
purpose other than the specified public use and only after
payment of just compensation.
17

The respondents argue that their action has not prescribed
because they filed the complaint within four (4) years from
the enactment of RA 9207.42 Their action is also not barred
by laches because their act of sending the letters to the DPWH
shows their vigilance in protecting their rights.43 Further, the
Republic failed to prove that the respondents had any
constructive or actual knowledge of the presidential decrees
reducing or modifying the land meant for the NGC
Project.44chanrobleslaw
The respondents contend that they had no choice but to accept
the price that the government offered during the Marcos
regime.45 Even the State recognized the dark period of fear
that enveloped the country under President Marcos, as shown
by the passage of R.A. No. 10368.46 This law made it a policy
to acknowledge the State's moral and legal obligation to
recognize and provide reparation to victims of rights
violations committed at the time.47chanrobleslaw
Finally, the respondents note that the Republic did not dispute
Viloria's testimony that during the negotiations for the
expropriation of the land, the government undertook to resell
the land to its former owners should the government abandon
the NGC Project.48chanrobleslaw
The Republic reiterates its arguments in the reply. It stresses
that the RTC annulled the sale on the ground of fraud despite
the absence of deceit or use of insidious words or
machinations to induce the respondents to enter into the sale
contracts. It also insists that the properties will still be devoted
to public use, which is socialized housing. It stresses that the
respondents failed to present evidence that P60.00 per square
meter in 1987 did not constitute just compensation.
Moreover, the respondents used the properties without paying
rent.
OUR RULING
We grant the Republic's petition.
The issues for the Court's resolution are: (a) whether the
Republic is immune from suit; (b) whether the action is
barred by prescription or laches; and (c) whether an exception
to the parol evidence rule applies.
A. Immunity from Suit
We rule that the Republic is not immune from suit in the
present case.
The Constitution provides that "the State may not be sued
without its consent."49 One instance when a suit is against the
State is when the Republic is sued by name,50 as in this case.
A suit against the State is allowed when the State gives its
consent, either expressly or impliedly. Express consent is
given through a statute51 while implied consent is given when
the State enters into a contract or commences
litigation.52 Although not all contracts entered into by the
government operates as a waiver of its non-suability, the
Court held in the two cases below that the State effectively
gave its consent when it entered into contracts and committed
breach.
In Santiago v. The Government of the Republic of the
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Philippines,53 Ildefonso Santiago and his wife donated a
parcel of land to the Republic on the alleged condition that
the latter would install lighting facilities and a water system
and would build an office building and parking lot on the
property on or before December 7, 1974. Santiago filed a
complaint for the revocation of the donation due to the
government's breach of the condition. The trial court
dismissed the case based on the State's non-suability. The
Court set aside the dismissal on certiorari, reasoning that the
State's consent to be sued is presumed when the State fails to
comply with the alleged terms of a deed of donation. It
essentially held that the Republic impliedly waived its
immunity.
In Republic v. Sandiganbayan,54 the Court ruled that when
the Republic entered into a compromise agreement with a
private person, it stripped itself of its immunity from suit and
placed itself on the same level as its adversary. When the
State enters into a contract which creates mutual or reciprocal
rights and obligations, the State may be sued even without
express consent.55 Its consent to be sued is implied from its
entry into the contract and the Republic's breach grants the
other party the right to enforce or repudiate the contract.
In the present case, the Republic entered into deeds of sale
with the respondents to construct the NGC Project on the lots
sold. To facilitate the sale, the Republic created a negotiating
team to discuss the terms of the sale with the respondents. The
latter agreed to the negotiated sale on these alleged
conditions: (a) that they will have the right to repurchase the
properties if the NGC Project does not push through; and (b)
that the NGC Project will increase the market value of their
remaining properties.
Following Santiago and Republic, the State's failure to abide
by these conditions constitutes the State's implied waiver of
its immunity. We reiterate that the doctrine of state immunity
from suit cannot serve to perpetrate an injustice on a
citizen.56 If we rule otherwise, we will be tolerating unfair
dealing in contract negotiation.
B. Prescription and Laches
We turn to the issue of whether the respondents' action for
annulment of sale is barred by prescription and/or laches.
Prescription can either be a question of law or fact.57 It is
question of fact where there is a need to determine the
veracity of factual matters.58 Laches is also evidentiary in
nature.59chanrobleslaw
This Court is not a trier of facts. It is not our function to
review, examine, and evaluate the probative value of the
evidence presented. We give great weight to the RTC's
conclusion and findings; we are even bound by the RTC's
findings when the CA adopts them.60chanrobleslaw
Resolving the issues of prescription and laches in the present
case requires a factual review, specifically whether the
presidential proclamations that reduced the land allotted for
the NGC Project covered the subject properties and when the
prescription period should start to run under the
circumstances. These are questions of fact that this Court
need not delve into.
Nevertheless, the RTC found and concluded, with the CA
18
affirming, that the respondents' action to annul the sale is not
barred either by prescription or laches. Both court ruled that
the enactment of RA 9207 was the earliest time that the
respondents could have known about the government's plans
to officially use the land for socialized housing. Thus, the
respondents were not barred by prescription when they filed
their complaint in 2005, within four (4) years from the
enactment of RA 9207.
As to laches, both the RTC and the CA found that the
respondents' letters to the DPWH showed that they were
vigilant in asserting their alleged right to repurchase the
properties from the Republic. This vigilance negates the
Republic's claim of laches.
We are bound and accordingly adopt these findings and
conclusions by the lower courts.
C. Parol Evidence
The core issue in this case is whether an exception to the parol
evidence rule applies. In resolving this issue, we examine
whether the parol evidence presented, particularly Gonzalo
and Viloria's testimonies, are admissible to establish the
alleged oral conditions in the sale contract.
We rule in the negative.
Section 9, Rule 130 of the Rules of Court provides that a
written contract is deemed to contain all the terms agreed
upon by the parties and no evidence of these terms is
admissible other than the contents of the contract.
The parol evidence rule forbids any addition to the terms of a
written agreement by testimony showing that the parties
orally agreed on other terms before the signing of the
document.61 However, a party may present evidence to
modify, explain, or add to the terms of a written agreement if
he puts in issue in his pleadings either: (a) an intrinsic
ambiguity, mistake, or imperfection in the written agreement;
(b) the failure of the written agreement to express the
parties' true intent and agreement; (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 issue must be
squarely presented.62chanrobleslaw
We note the basic rule that he who alleges must prove his
case. In this case, the respondents have the burden to prove
that the sale was subject to two conditions: (a) their remaining
properties will benefit from the increase in land value after
the construction of the NGC Project and (b) the government
will return the sold properties to them should the NGC Project
not materialize. However, they failed to discharge this
burden.
Notably, they failed to present copies of the deeds of sale to
show that the sale was attended by the alleged conditions.
Pursuant to the parol evidence rule, no evidence of
contractual terms is admissible other than the contract itself.
On this level alone, the respondents failed to discharge their
burden.
Furthermore, the respondents failed to put in issue in their
pleadings the sale contract's failure to express the parties'
agreement. In Ortañez v. Court of Appeals,63 the respondents
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alleged the existence of oral conditions which were not
reflected in the deeds of sale. A witness testified in court that
the sale was subject to the oral conditions. The Court held that
the parol evidence was inadmissible because, among others,
the respondents failed to expressly plead that the deeds of
sale did not reflect the parties' intentions. Instead, they merely
alleged that the sale was subject to four conditions which they
tried to prove during trial. The Court emphasized that this
cannot be done because they failed to put in issue in their
pleadings any exception to the parol evidence rule.
Similar to Ortañez, a review of the complaint reveals that the
respondents failed to put in issue in their complaint that the
deeds of sale do not express the parties' true intent. Hence, the
failure of the deeds of sale to reflect the parties' agreement
was not squarely presented as an issue for the court to hear
evidence on it. Therefore, the exceptions to the parol evidence
rule cannot apply.
Even assuming that the respondents put in issue in the
complaint the deed of sales' failure to express the parties' true
agreement, the parol evidence will still not apply because
they failed to justify the applicability of the second exception
to the parol evidence in this case.
The second exception to the parol evidence rule applies only
when the written contract is so ambiguous or obscure in
terms that the parties' contractual intention cannot be
understood from a mere reading of the
agreement.64 Hence, the court may receive extrinsic
evidence to enable the court to address the
ambiguity.65chanrobleslaw
Although parol evidence is admissible to explain the
contract's meaning, it cannot serve to incorporate into the
contract additional conditions which are not mentioned at all
in the contract unless there is fraud or mistake.66 Evidence of
a prior or contemporaneous verbal agreement is generally not
admissible to vary, contradict, or defeat the operation of a
valid contract.67 Hence, parol evidence is inadmissible to
modify the terms of the agreement if the complaint fails to
allege any mistake or imperfection in the written agreement.
In the present case, the respondents failed to allege that the
terms of the deeds of sale are ambiguous or obscure to require
the presentation of parol evidence to ascertain the parties'
intent. Both parties agree that the transaction was clearly a
sale to transfer ownership over the properties to the Republic.
Absent any allegation that the contractual terms are
ambiguous, the testimonies of Gonzalo and Viloria are
unnecessary to establish the two alleged oral conditions.
To reiterate, the respondents failed to comply with the parol
evidence rule because: first, they failed to produce copies of
the deeds of sale; second, they failed to prove that the second
exception to the parol evidence rule applies. Hence, the
testimonies of Gonzalo and Viloria are inadmissible under the
parol evidence rule.
CONCLUSION
In sum, we rule that (a) the State is not immune from suit; (b)
the respondents' action is not barred by either prescription or
laches; and (c) the second exception to the parol evidence rule
does not apply. Consequently, we grant the Republic's
petition and reverse the CA's ruling annulling the sale
19
contract between the parties.

On a final note, we point out that the parties entered into a

negotiated sale transaction; thus, the Republic did not acquire
the property through expropriation.

In expropriation, the Republic's acquisition of the

expropriated property is subject to the condition that the
Republic will return the property should the public purpose
for which the expropriation was done did not
materialize.68 On the other hand, a sale contract between the
Republic and private persons is not subject to this same
condition unless the parties stipulate it.

The respondents in this case failed to prove that the sale was
attended by a similar condition. Hence, the parties are bound
by their sale contract transferring the property without the
condition applicable in expropriation cases.

WHEREFORE, we grant the Republic's petition and

accordingly REVERSE and SET ASIDE the Court of
Appeal's July 4, 2012 decision and September 26, 2012
resolution in CA G.R. CV No. 93018.

SO ORDERED.chanRoblesvirtualLawlibrary

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