G.R. No. 168387 August 25, 2010 SALUN-AT MARQUEZ and NESTOR DELA CRUZ, Petitioners, vs. ELOISA ESPEJO, ELENITA ESPEJO, EMERITA ESPEJO, OPHIRRO ESPEJO, OTHNIEL ESPEJO, ORLANDO ESPEJO, OSMUNDO ESPEJO, ODELEJO ESPEJO and NEMI FERNANDEZ, Respondents.

G.R. No. 168387               August 25, 2010

SALUN-AT MARQUEZ and NESTOR DELA CRUZ, Petitioners,
vs.
ELOISA ESPEJO, ELENITA ESPEJO, EMERITA ESPEJO, OPHIRRO ESPEJO, OTHNIEL ESPEJO, ORLANDO ESPEJO, OSMUNDO ESPEJO, ODELEJO ESPEJO and NEMI FERNANDEZ, Respondents.

Facts:

Respondents Espejos were the original registered owners of the two agricultural lands of Lantap Property located at Barangay Lantap, Bagabag, Nueva Vizcaya and the Murong Property located at Brgy. Murong of the same town which were subsequently foreclosed and sold to Rural Bank of Bayombong, Inc. (RBBI) due to their failure to pay the loans in the said bank. But a Deed of Sale was made on Feb. 26, 1985covering "TCT No. T-62096" (corresponds to Murong property) without description as to the location of the subject property whether it is in Brgy. Murong or Brgy.Lantap.

TCT No. T-62096 dated January 14, 1985 was issued for the Murong Property and TCT No. T-62836 dated June 4, 1985 was issued for the Lantap Property in favor of RBBI. However, both TCTsdid not specifically state its location whether it is in Barangay Lantap or Barangay Murong.

RBBI executed separate Deeds of Voluntary Land Transfer (VLTs) in favor of Marquez and DelaCruz covered by TCT No.  T-62836 (corresponds to Lantap Property) but described being located in Brgy. Murong.DAR issued Certificate of Land Ownership Award (CLOA) to Marquez and Dela Cruz upon payment of the purchase price to RBBI.

Nemi Fernandez, husband of ElenitaEspejo, was the tenant of Lantap Property while Salun-at Marquez and Nestor Dela Cruz were the tenants of the Murong Property. No evidence that Espejos took possession of Murong Property nor demanded lease rentals from petioners, Marquez and Dela Cruz.

Espejos filed Complaint on Feb. 10, 1997 before the Regional Agrarian Reform Adjudicator (RARAD) of Bayombong, Nueva Vizcaya based on the Deed of Sale indicating that TCT No. T-62096 (referring to Murong Property) was the subject of theirbuy-back transaction.RARAD gave precedence to the TCT numbers appearing on the Deed of Sale and VLTs but was reversed by Department of Agrarian Reform Adjudication Board (DARAB).

In appeal, the CA annulled and set aside DARAB’s decision because in using the Best Evidence Rule embodied in Rule 130, Section 3, 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 additional description in the VLTs that the subject thereof is located in Barangay Murong was considered to be a mere typographical error.

On June 22, 2004, RBBI filed a separate Petition for Review on Certiorari, docketed as G.R. No. 163320 with the Supreme Court but was denied. CA’s decision becomes final and executory. A petition for review on Certiorari was filed in the SC by Marquez and Dela Cruz.

Issues:

1.      Whether or not the said petition is proper when it raises factual issues.

2.      Whether or not the CA erred in utilizing the Best Evidence Rule to determine the subject of the contracts.

3.      Whether or not Parol Evidence Rule can be applied in this case.

Ruling:

1.      The issues involved herein are not entirely factual. Petitioners assail the CA’s 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 Court’s authority to review.Besides, even if it were a factual question,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.

2.      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.

There is no room for the application of the Best Evidence Rule in this case because there is no dispute regarding the contents of the documents for it is admitted by the parties that the Deed of Sale referred to TCT No. T-62096 as its subject; while the petitioners’ VLTs referred to TCT No.T-62836 as its subject.The real issue is whether the admitted contents of these documents adequately and correctly express the true intention of the parties.

There’s 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.

3.      The CA 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 partiesin which itwould appear that what it actually applied was the Parol Evidence Rule instead, which provides that 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.It 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.

But even the application of the Parol Evidence Rule is improper in the case at bar.First,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.

Second, the instant casefalls under theexceptions to the Parol Evidence Rule because there were issues on the intrinsic ambiguity, mistake or imperfection in the written agreement; and the failure of the written agreement to express the true intent and agreement of the parties thereto as provided in the second paragraph of Rule 130, Section 9.

It was squarely put in issue that the written agreement failed to express the true intent of the parties which necessitates an examination of the parties’ respective parol evidence, in order to determine the true intent of the parties.

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.

Although the CA’s decision had already become final and executory as against RBBI with the dismissal of RBBI’s 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.

The SC granted the Petition for Review on Certiorari and declared thatthe Deed of Sale between respondents and RBBI covers the Lantap property under TCT No. T-62836, while the VLTs and CLOAs of the petitioners covered 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.