606 Phil. 656
PUNO, C.J.:
x x xHowever, an erroneous assignment of the "Party of the First Part" and the "Party of the Second Part" resulted in a repeat of the mistake attendant in the Partition which the parties had intended to correct. Thus, once again, Lot 6297 was allotted to the heirs of the now deceased Adelo while Lot No. 6270 was partitioned to respondent Juanito. The latter only discovered the error later on in the year when petitioner Lynn caused the publication of the Partition in a local newspaper.
2. That the ownership of the parties over the said properties [is] not absolute considering the fact that there was a mistake in designating the owner of the respective properties. Lot No. 6270 should have been given to the Party of the Second Part and Lot No. 6297 should have been allotted to the Party of the First Part. This wrong designation was committed in the settlement and partition of the estate of the late Proceso Maagad.
3. That the parties herein in order to correct the foregoing error, do hereby covenanted and/or agreed to EXCHANGE THE SAID PROPERTIES in such a way that LOT NO. 6270 shall now belong or [be] exclusively owned by the Party of the Second Par[t], while LOT NO. 6297 shall be owned and belong to the Party of the First Part. That proper transfer of tax declarations shall be made in accordance with this agreement of exchange.[8]
When the heirs of Proceso Maagad executed the Extra-judicial Partition, all the four (4) heirs signed the document on the agreement that what was adjudicated to them should now belong to each of them. The allegation of the witnesses for plaintiff [now respondent] that Lot No. 6297 was only mistakenly adjudicated to Adelo Maagad as plaintiff's children were in possession of the property is belied by the fact that plaintiff signed the Extra-judicial Partition. Whatever right plaintiff may have had over the property had been waived by his signing the document.Hence, this petition for review on certiorari which calls upon the Court to resolve the following issues: (1) whether Juanito Maagad has a superior right over Lot 6297; (2) whether OCT No. P-3614, issued pursuant to the free patent application, should be declared null and void; and corollarily, (3) whether the title can be reconveyed to respondent.
It is worthy to note that a Deed of Exchange was executed at the instance of plaintiff 18 years after the partition. But still, it is clear under the terms of the document that Lot No. 6297 belongs to Adelo Maagad and Lot No. 6270 belongs to Juanito. [The] [p]ertinent provision of law applicable to the aforestated issue is Section 9 of Rule 130 which states:"SECTION 9. Evidence of written agreements. — When the terms of an agreement have been reduced to writing, i[t] i[s] 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 tha[n] the contents of the written agreement."Plaintiff is not allowed to alter the contents of the extra-judicial partition by parol evidence. Parol evidence rule forbids any addition to or contradiction of the terms of a written instrument. x x x
Even granting arguendo that there was a mistake in the extra-judicial partition, plaintiff's evidence still fall[s] short of justifying the reformation of the instrument. The testimonies of its witnesses have not proved by clear and convincing evidence that the alleged mistake did not express the true intention of the parties.
x x x x
WHEREFORE, premises considered, judgment is hereby rendered dismissing the above-entitled case for lack of evidence.[10]
On appeal, the CA reversed and set aside the ruling of the RTC, viz.:
WHEREFORE, all the foregoing considered, the appeal is hereby GRANTED and the assailed decision is REVERSED AND SET ASIDE. OCT No. P-3614 issued to the Heirs of Adelo Maagad is hereby declared NULL AND VOID and plaintiff-appellant declared the rightful owner and possessor of Lot No. 6297, Cad 237, C-5.[11]
The records of the case indubitably show that the Deed of Extrajudicial Partition executed in 1972 between and among the heirs of Proce[s]o Maagad, namely Adelo, Juanito, Loreto and Amadeo, contained a patent mistake by the erroneous adjudication of Lot No. 6297 to Adelo, herein defendant-appellee's [now petitioner's] father, considering that the said lot had long been in the actual possession of plaintiff-appellant [now respondent], through his father, and of the adjudication of Lot No. 6270 to plaintiff-appellant when the same had already been declared in Adelo's name.The parol evidence rule, [13] as relied on by the RTC to decide in favor of Lynn Maagad, proscribes any addition to or contradiction of the terms of a written agreement by testimony purporting to show that, at or before the signing of the document, other or different terms were orally agreed upon by the parties.[14] However, the rule is not absolute and admits of exceptions. Thus, among other grounds, a party may present evidence to modify, explain, or add to the terms of the written agreement if he puts in issue in his pleading a mistake in the written agreement. For the mistake to validly constitute an exception to the parol evidence rule, the following elements must concur: (1) the mistake should be of fact; (2) the mistake should be mutual or common to both parties to the instrument; and (3) the mistake should be alleged and proved by clear and convincing evidence.[15]
Consequently, the necessity to rectify the error arose. Hence, on January 29, 1990, plaintiff-appellant together with Adelo's heirs, including herein defendant-appellee Lynn, executed a Memorandum of Exchange to conform to the real intention of the extra-judicial partition. The instrument intended to exchange [Lot Nos.] 6297 and 6270; specifically, to transfer Lot No. 6297 from the heirs of Adelo Maagad to plaintiff-appellant, and in turn, to effect the transfer of Lot No. 6270 from the latter to the former. But for reasons beyond the intervention of the parties, the Memorandum of Exchange reflected the same mistake, thus, no exchange of property was in reality effected.
We find, however, that notwithstanding the failure to effect the exchange of the properties, defendant-appellee's voluntary and active participation in the execution of the Memorandum of Exchange clearly demonstrated his recognition of the mistake in the instrument of partition. The intent to effect the exchange in order to correct the defect in the partition was strongly manifested when defendant-appellee voluntarily subscribed to the instrument. By his act, the latter is estopped from negating the existence of the mistake in the adjudication of the properties and of plaintiff-appellant's pre-existing rights over Lot No. 6297.
Hence, We find defendant-appellee's contention tenuous that Lot No. 6297 belonged to him and his siblings by way of inheritance from their father Adelo, who in turn obtained the same through the Extrajudicial Partition. It would be highly illogical and absurd for the parties to execute a Memorandum of Exchange in the first place if there was nothing to exchange at all, unless the purpose of said exchange was precisely to rectify and effect the correct adjudication of the two lots in question.[12] (emphasis added)
x x xThe strongest evidence of mistake, however, is the admission by the petitioner himself. In his Petition for Review on Certiorari, petitioner admits that, because of mutual mistake, the Memorandum of Exchange failed to express the agreement of the parties to exchange the properties. Moreover, he quotes, and agrees with, the decision of the CA and even refers to the reformation of the original contract. Petitioner states:
2. That the ownership of the parties over the said properties [is] not absolute considering the fact that there was a mistake in designating the owner of the respective properties. x x x
3. That the parties herein in order to correct the foregoing error, do hereby covenanted and/or agreed to EXCHANGE THE SAID PROPERTIES x x x.[17] (emphases added)
In the case at bar, it became apparent that there was failure of the Memorandum of Exchange to disclose the real agreement of the parties brought about by the mutual mistakes of the parties as reflected in the said instrument (Article 1361, Civil Code of the Philipp[in]es).[18]It is well-settled that a judicial admission conclusively binds the party making it. He cannot thereafter take a position contradictory to, or inconsistent with his pleadings. Acts or facts admitted do not require proof and cannot be contradicted unless it is shown that the admission was made through palpable mistake or that no such admission was made.[20] In the case at bar, there is no proof of such exceptional circumstances, nor were they even alleged or availed of by the petitioner.
Thus[,] by reason of the mutual mistake which did not express the true intent and agreement of the parties from a prior oral agreement to exchange the property before they have attempted to reduce it in writing, which attempt fails by reason of such mistake, hence reformation enforces the original contract, if necessary.
As aptly quoted from the basic decision, p. 15, thus:"Hence, WE find defendant-appellee's contention tenuous that Lot No. 6297 belonged to him and his siblings by way of inheritance from their father, Adelo, who in turn obtained the same through Extra-judicial Partition. It would be highly illogical and absurd for the parties to execute a Memorandum of Exchange in the first place if there was nothing to exchange at all, unless the purpose of said exchange was precisely to rectify and effect the correct adjudication of the two lots in question.Indeed there was an attempt to rectify and effect the correct adjudication of the two lots in question.[19](emphases added)
Sec. 44. Any natural-born citizen of the Philippines who is not the owner of more than twelve (12) hectares and who, for at least thirty (30) years prior to the effectivity of this amendatory Act, has continuously occupied and cultivated, either by himself or through his predecessors-in-interest a tract or tracts of agricultural public lands subject to disposition, who shall have paid the real estate tax thereon while the same has not been occupied by any person shall be entitled, under the provisions of this Chapter, to have a free patent issued to him for such tract or tracts of such land not to exceed twelve (12) hectares.The Order approving the free patent application of petitioner Lynn, representing the Heirs of Adelo Maagad, stated that "the applicant ha[d] already complied with all the requirements of the law for the issuance of patent to the land."[23] As clearly provided by Sec. 44 of the Public Land Act, the requirements include, among others, that: (1) the applicant has continuously occupied and cultivated, either by himself or through his predecessors-in-interest, the tract or tracts of agricultural public lands; (2) he shall have paid the real estate tax thereon; and (3) the land has not been occupied by any person.
The letter proves that (1) petitioner Lynn was not in possession, much less occupation, of Lot 6297; and (2) he had knowledge that the same was occupied by another person, contrary to the claims he made when he applied for the free patent. Moreover, the records show that it was, in fact, respondent who had possessed, occupied and cultivated Lot 6297 by planting coconut trees thereon since around 1950.January 6, 1993
Mr. Juanito Maagad
Zone 8, Bulua,
Cagayan de Oro City
Dear Mr. Maagad,
Please be informed that the parcel of land, Lot No. 6297 which has been occupied by your children situated at Bulua, Cagayan de Oro City had been the same property adjudicated in favor of ADELO MAAGAD as per Extra-Judicial Partition of Real Estate executed by and between the Heirs of Proceso Maagad before Notary Public, Ricardo A. Tapia per Doc. No. 433, Page No. 88, Book No. IV, series of 1972.
In this connection, my client, Lynn V. Maagad, one of the Heirs of Adelo Maagad, desires to recover possession over the said Lot No. 6297. And, being close relatives it is hoped that you could peacefully turn-over possession over the said property to Lynn V. Maagad, without resorting to the costly avenue of litigation.
Anticipating your kind cooperation on the matter.Very truly yours,
(SGD.) ELIZER C. FLORES
At my instance:
(SGD.) LYNN V. MAAGAD[24] (emphases added)
Art. 1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former. (n)Teodora Maagad, wife of respondent and witness to the execution of the Memorandum of Exchange, testified that the Memorandum was in English and was not translated to Visayan dialect (TSN, 15 November 1995, p. 54) which is the language used and fully understood by the respondent. She also stated that the content of the Memorandum was read aloud to the parties by the son of the lawyer who prepared the document. Her husband, hard of hearing, just signed it (TSN, 15 November 1995, p. 46). Courts are given a wide latitude in weighing the facts or circumstances in a given case and in deciding in favor of what they believe actually occurred, considering the age, physical infirmity, intelligence, relationship and the conduct of the parties at the time of making the contract and subsequent thereto (Leonardo v. Court of Appeals, G.R. No. 125485, 13 September 2004, 438 SCRA 201). We consider the advanced age of the respondent, his hearing defect, his unfamiliarity with the English language used in the Memorandum, and the fact that he was executing it among his relatives as sufficient reasons to grant him some leniency for failing to detect yet another mistake in a written agreement he has signed.