Cases (parol evidence) Flashcards
Respondent bank filed instant collection suit against Petitioner Foundation and previous president Tan for failure to pay four matured loan as evidenced by promissory notes signed by Tan in his capacity as president of the said Foundation. In disclaiming any liability for the loans, the petitioner Foundation maintains that said loans were contracted by petitioner Tan in his personal capacity. On the other hand, while admitting that the loans were his personal obligation, petitioner Tan avers that the same is not yet due as he had an unwritten agreement with the respondent Bank that these loans would be renewed on a year-to-year basis and paid from the proceeds of his shares of stock in the Lapulapu Industries Corp. Trial Court ruled petitioners are liable to the bank solidarily. On appeal, the CA affirmed the judgment of the court a quo. CA likewise rejected petitioner Tans assertion that there was an unwritten agreement between him and the respondent Bank that he would pay the loans from the proceeds of his shares of stocks in the Lapulapu Industries Corp. Decide.
No. The parol evidence rule likewise constrains this Court to reject petitioner Tans claim regarding the purported unwritten agreement between him and the respondent Bank on the payment of the obligation. Section 9, Rule 130 of the of the Revised Rules of Court provides that when the terms of an agreement have been reduced to writing, it is to be considered as containing all the terms agreed upon and there can be, between the parties and their successors-in-interest, no evidence of such terms other than the contents of the written agreement. In this case, the promissory notes are the law between the petitioners and the respondent Bank. Nowhere was it stated therein that they would be renewed on a year-to-year basis or rolled-over annually until paid from the proceeds of petitioner Tans shares in the Lapulapu Industries Corp. Accordingly, this purported unwritten agreement could not be made to vary or contradict the terms and conditions in the promissory notes. Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or defeat the operation of a valid contract. While parol evidence is admissible to explain the meaning of written contracts, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in writing, unless there has been fraud or mistake. No such allegation had been made by the petitioners in this case.
