Deceitful son

If the terms of an agreement have been reduced to writing, there can be between the parties no evidence of such terms other than the contents of the written agreement. However when the true intent of the parties are not expressed in the written agreement, evidence may be introduced to explain the terms and find out the true intent. This is the rule applied in this case of Manuel and his son Gil.

Manuel and his wife Mina own a 340 square meters lot with a two-story residential house erected thereon. Living with them are five of their ten children. The others like Gil are already living elsewhere.

When Mina planned to travel to the US, Manuel thought of mortgaging their property with a bank to defray her expenses. However, Gil convinced his father not to proceed with the mortgage. Instead he will just advance the money on the condition that a portion of the property will be assigned to him. Gil assured his father that the latter could continue occupying the property and that his sister who operates a store thereat could continue operating it. He told his father however that he will occupy one of the rooms in the house in case he goes to the city on vacation and that he will renovate the other room and reserve it for his mother when she comes back from the States. He assured his father that he will not dispose off the property without his father’s consent and that the latter could redeem the property any time he acquires money.

And so relying on Gil’s words, Manuel and his wife Mina executed a document denominated as "Deed of Absolute Sale" dated October 22, 1987 wherein the couple appeared to have conveyed to their son Gil the house and lot in question for a consideration of P50,000 although the property easily commands much more than that. The deed also described the property sold as a one-story house on a land with an area of only 135 sq. m.

Then without Manuel’s knowledge, his son Gil sold the same property to his long time neighbor Bert via an instrument entitled "Kasulatan ng Bilihang Tuluyan" dated June 25, 1988.

So, Manuel was greatly shocked and completely taken aback when he received a demand from Bert to vacate the subject property. It was then that he came to know for the first time what his son did on their property. Thus on September 7, 1988, he sued his son and Bert for annulment of sale, redemption, damages with preliminary injunction. He prayed that the Deed of Absolute Sale dated October 22, 1987 be declared null and void, or in the alternative, that he be allowed to redeem the subject property at a reasonable price.

After trial, the Regional Trial Court, ruled in favor of Manuel ordering Bert to allow Manuel to redeem the property for P50,000 and to pay jointly and severally with Gil, moral and exemplary damages and attorney’s fees. This was affirmed in toto by the Court of Appeals (CA). Gil and Bert questioned this decision. They contended that the Deed of Absolute Sale was clearly a document of sale as its language unmistakably states, so it is error for both courts to receive parol evidence to establish that the instrument is one of equitable mortgage. Were Bert and Gil correct?

No. The Deed of Absolute sale cannot be viewed in isolation of the circumstances under which it was executed by Gil’s parents, more so in the light of his father’s disavowal of what the document, on its face purports to state.

Even when a document appears on its face to be a sale, the owner of the property may prove that the contract is really a loan with mortgage by raising as an issue the fact that the document does not express the true intent of the parties. In this case parol evidence then becomes competent and admissible to prove that the instrument was in truth and in fact merely as a security for the repayment of a loan. And upon proof of the truth of such allegations, the agreement or understanding will be enforced in consonance with the true intent of the parties at the time of the execution of the contract (Madrigal vs. Court of Appeals G.R. 142944, April 15, 2005. 456 SCRA 247)

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