Myline Cordial

Seaoil Petroleum Corporation vs. Autocorp Group
G.R. No. 164326, October 17, 2008
569 SCRA 387

FACTS:
Appellant Seaoil Petroleum Corporation (Seaoil) purchased a crawler excavator from appellee Autocorp Group payable in 12 monthly installments. The sales agreement was embodied in a Vehicle Sales Invoice and Vehicle Sales Confirmation both signed by the president of Seaaoil. Also agreed by the parties was that despite delivery of the excavator, ownership thereof was to remain with Autocorp until the obligation is fully settled. The president, on behalf of Seaoil, signed and issued 12 postdated checks with Autocorp as payee. The excavator was subsequently delivered by Autocorp and was received by Seaoil in its depot in Batangas.

However, payment was not completed as 10 checks were dishonored by the bank. Despite repeated demands, Seaoil refused to pay the remaining balance. Hence, Autocorp filed a complaint for recovery of personal property with damages and replevin with the RTC of Pasig which rendered a favorable decision and ruled that the transaction between Autocorp and Seaoil was a simple contract of sale payable in installments.

Seaoil appealed before the Court of Appeals claiming that the transaction was not between Seaoil and Autocorp as they were only utilized as conduits to settle the obligation of one foreign entity named Uniline Asia, in favor of another foreign entity, Focus Point International, Inc. The appellate court dismissed the petition and affirmed the trial court’s decision.

ISSUE:
Is petitioner’s contention that the document falls within the exception to the parol evidence rule tenable?

RULING:
No. The Vehicle Sales Invoice and Vehicle Sales Confirmation did not fail to express the true intent and agreement of the parties. The exception obtains only where the written contract is so ambiguous or obscure in terms that the contractual intention of the parties cannot be understood from a mere reading of the instrument. In such a case, extrinsic evidence of the subject matter of the contract, of the relations of the parties to each other, and of the facts and circumstances surrounding them when they entered into the contract may be received to enable the court to make a proper interpretation of the instrument.

Moreover, 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. Evidence of a prior or contemporaneous verbal agreement is generally not admissible to vary, contradict or defeat the operation of a valid contract.

Full text: Seaoil Petroleum Corporation vs. Autocorp Group G.R. No. 164326, October 17, 2008