What is Parol Evidence Rule?

Parol evidence means “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, as between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.

However, a party may present evidence to modify, explain or add to the terms of the written agreement if he or she puts in issue in a verified 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;
3. The validity of the written agreement; or
4. 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”. (Section 10. Evidence of written agreements).

The parol evidence rule forbids any addition to, or contradiction.

The parol evidence rule forbids any addition to, or contradiction of, the terms of a written agreement by testimony or other evidence purporting to show that different terms were agreed upon by the parties, varying the purport of the written contract; although parol evidence is admissible to explain the meaning of a contract, it cannot serve the purpose of incorporating into the contract additional contemporaneous conditions which are not mentioned at all in the writing unless there has been fraud or mistake. (Raymundo v. Lunaria, 569 SCRA 526).

It is well settled that parol evidence can serve the purpose of incorporating into the contract additional contemporaneous conditions, which are not mentioned at all in writing, only if there is fraud or mistake (Ortanez v. CA, 334Phil.514, 5 I 9 (1997).

It is a cardinal rule of evidence that the written document is the best evidence of its own contents, although a party may present evidence to modify, explain or add to the terms of the agreement if he puts in issue in his pleading the failure of the written agreement to express the true intent and agreement of the parties (ACI Philippines vs. Coquia, 558 SCRA 219).

Under the parol evidence rule, the terms of the written contract are conclusive upon the parties and evidence aliunde is inadmissible to vary an enforceable agreement embodied in the document; Rule is not absolute and admits of exceptions (Amoncio vs. Benedicto, 560 SCRA 219). 

Courts need only to rely on the faces of the written contracts to determine their true intention on the principle that when the parties have reduced their agreements in writing, it is presumed that they have made the writings the only repositories and memorials of their true agreement (Suatengco v. Reyes, 574 SCRA 187). Unsubstantiated testimony, offered as proof of verbal agreements, which tends to vary the terms of a written agreement, is inadmissible under the parol evidence rule (Seaoil Petroleum Corporation v. Autocorp Group, 569 SCRA 387).

“While it is a general rule that parol evidence is not admissible for the purpose of varying the terms of a contract, when an issue is squarely presented that a contract does not express the true intention of the parties, courts will, when a proper foundation is laid therefore, hear evidence for the purpose of ascertaining the true intention of the parties. Once the intent is clear, then it shall prevail over what on its face the document appears to be. (Labasan v. Lacuesta, 86 SCRA 16, 22). The court does not reform the instrument. It remains as it was written. However, the court receives evidence to find out how the parties really bound themselves. The second exception to the parol evidence rule enables the court to ascertain the intent of the parties.” 
In the case of Sy v. Court of Appeals (131 SCRA 116, 124), we ruled: “It is a basic and fundamental rule in the interpretation of contracts that if the terms thereof are clear and leave no doubt as to the intention of the contracting parties, then the literal meaning of the stipulations shall control but when the words appear contrary to the evident intention of the parties, the latter shall prevail over the former” (Labasan v. Lacuesta, supra). In order to judge the intention of the parties, their contemporaneous and subsequent acts shall be principally considered. (Cited in the case of Rev. Fr. Pablo B. Lola vs. The Honorable Court of Appeals, G.R. No. L-46573, November 13, 1986).