Q: Seller sues buyer for ₱300,000, the unpaid balance of the price of the car bought by and delivered to the latter. The price of the car as stated in the deed of sale is ₱700,000. In his verified answer, the buyer contends that the actual price agreed upon was ₱400,000 which he had already fully paid, and that the price was mistakenly stated in the deed of sale and hence did not express the parties’ true intent. May the buyer over the relevant objection introduce evidence that the true price agreed upon was ₱400,000?
A: No, the buyer may not introduce evidence that the true price agreed upon was ₱400,000 over an objection that it violates the parol evidence rule.
Under the parol evidence rule, once an agreement has been reduced to writing, it is considered as containing all the terms agreed upon and evidence of prior or contemporaneous terms which would modify the terms of the written contract is not admissible.
Here the agreement was reduced to writing in a deed of sale. To allow the buyer to introduce evidence that the price was ₱400,000 would be to modify the terms of the agreement. The exceptions under S10(a) R130, regarding mistake, and S10(b) R130, regarding failure of the agreement to express the parties’ true intent, are available only where the written contract is so ambiguous or obscure that the parties’ contractual intention cannot be understood from a mere reading of the instrument. (Financial Building Corp. v. Rudlin International Corp., 4 October 2010, Villarama, J.; RCBC v Bernardino, 21 September 2016; Republic v. Roque, 10 October 2016; Spouses Agbada v. Inter-Urban Developers, Inc., G.R. No. 144029, 19 September 2002; Heirs of Del Rosario v. Santos, 194 Phil. 671 [1981]). Here a party cannot assert that the parties agreed upon a different consideration when the price was clearly and unambiguously stated in the contract. (Id.).
Hence the buyer may not introduce evidence that the true price was ₱400,000.
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