Canuto vs. Mariano

A subsequent oral agreement extending the redemption period in a written deed of sale is enforceable notwithstanding the parol evidence rule, and a bona fide tender of the repurchase price preserves the right of repurchase without judicial deposit when the tender is refused; a party who grants such extension cannot repudiate it where the other party stood ready to pay and was prevented only by the former’s conduct.

On December 4, 1913, Espiridiona Canuto executed a deed of sale over a parcel of land in favor of Juan Mariano for P360, reserving the right to repurchase the land for that amount within one year from the date of the deed. The redemption period elapsed without Canuto exercising the right, and Mariano set up a claim of absolute ownership. Canuto insisted that she be permitted to exercise the reserved right of repurchase in accordance with an alleged oral agreement extending the redemption period to the end of December 1914.

Canuto claimed that on December 2, 1914, two days before the expiration of the original redemption period, she asked Mariano for an extension of time to repurchase the land. Upon her promise to make the repurchase during December 1914, Mariano agreed to extend the redemption period set out in the written contract to the end of that month. She testified that on the morning of December 2, 1914, while she was washing clothes near a well, Mariano passed by; she seized the opportunity to beg an extension, promising to borrow the money and make payment if he would extend the redemption period until the end of the month. After some demur, Mariano agreed to allow her the whole of December in which to redeem the land.

The following Sunday, Canuto went to Mariano’s house, and he promised to meet her at the house of Mercado, an attorney, at 4 o’clock the next day to receive the purchase price and execute the necessary documents. She took the money to the lawyer’s office at the appointed time and waited there until dark, but Mariano failed to meet his engagement. She then went to his house but was told that he was not at home. Since that time, Mariano refused to carry out his oral agreement, claiming that the redemption period set out in the original deed of sale expired on December 4, 1914, and that Canuto had no right to repurchase the land after that date. Canuto made repeated demands and tendered the purchase price, but Mariano refused to execute a deed of resale or to reserve the purchase price agreed upon.

Severino Pascual, who was present when the oral agreement to extend the time for repurchase was made, corroborated Canuto’s testimony. The trial judge accepted her testimony as a substantially true account of all that occurred and declined to believe the conflicting testimony of Mariano, which he characterized as vague and incredible. The record contained nothing that would justify disturbing those findings.

• Parol Evidence: Defendant-appellant (the party seeking reversal, treated as petitioner for this digest) contended that the plaintiff should not be permitted to alter, vary, or contradict the terms of the written instrument by the introduction of oral evidence.
• Judicial Deposit: Defendant-appellant contended that the plaintiff lost her right to redeem because she failed to make judicial deposit of the purchase price when the defendant declined to receive it.
• Absolute Ownership: Defendant-appellant claimed absolute ownership after the redemption period elapsed and maintained that the redemption period in the original deed expired on December 4, 1914, leaving the plaintiff no right to repurchase after that date.

• Oral Extension: Plaintiff-appellee (the party defending the judgment, treated as respondent for this digest) maintained that on December 2, 1914, two days before the expiration of the original redemption period, the defendant agreed to extend the redemption period to the end of December 1914 upon her promise to repurchase within that month.
• Tender and Refusal: Plaintiff-appellee maintained that she stood ready to make the repurchase within the extended period, took the money to the appointed place, and tendered the purchase price, but the defendant failed to appear and refused to execute a deed of resale.
• Prevention by Defendant: Plaintiff-appellee maintained that she was prevented from repurchasing only by the defendant’s conduct and that he should not be permitted to repudiate the extension.

• Validity of Subsequent Oral Agreement: Whether the oral agreement extending the redemption period, made after the written deed of sale, is enforceable notwithstanding the rule forbidding parol evidence to alter, vary, or contradict a written instrument.
• Necessity of Judicial Deposit: Whether a bona fide offer or tender of the repurchase price, refused by the defendant, preserves the plaintiff’s right to repurchase without judicial deposit.
• Repudiation of Extension: Whether the defendant may repudiate his promise to extend the redemption period where the plaintiff stood ready to pay within the extended period and was prevented from doing so by the defendant’s conduct.

• Validity of Subsequent Oral Agreement: Yes. The parol evidence rule does not bar proof of a subsequent oral agreement that adds to, changes, modifies, or abrogates a written contract.
• Necessity of Judicial Deposit: No. A bona fide offer or tender of the repurchase price is sufficient to preserve the right of repurchase; judicial deposit is unnecessary when the tender is refused.
• Repudiation of Extension: No. The defendant cannot repudiate his promise to extend the redemption period where the plaintiff stood ready to pay within the extended period and was prevented only by the defendant’s conduct.

• Validity of Subsequent Oral Agreement: The rule forbidding the admission of parol or extrinsic evidence to alter, vary, or contradict a written instrument does not apply so as to prohibit the establishment by parol of an agreement between the parties to a writing entered into subsequent to the time when the written instrument was executed. Such parol evidence does not deny that the original agreement was that which the writing purports to express; it merely shows that the parties exercised their right to change or abrogate the same, or to make a new and independent contract. It makes no difference how soon after the execution of the written contract the parol one was made; if it was in fact subsequent and otherwise unobjectionable, it may be proved and enforced. Thus, the oral agreement extending the redemption period was valid and enforceable.
• Necessity of Judicial Deposit: The settled rule in this jurisdiction is that a bona fide offer or tender of the price agreed upon for the repurchase is sufficient to preserve the rights of the party making it, without the necessity of making judicial deposit, if the offer or tender is refused. In Fructo vs. Fuentes, the Court further held that when diligent effort is made by the vendor of the land to exercise the right to repurchase reserved in the deed of sale and fails by reason of circumstances over which he has no control, he does not lose his right to repurchase on the day of maturity. Canuto’s tender and Mariano’s refusal preserved her right.
• Repudiation of Extension: Mariano extended the time within which Canuto could repurchase the land on condition that she would find the money and make the repurchase within the extended period. Canuto stood ready to make the payment within that period and was only prevented from doing so by Mariano’s conduct. He cannot be permitted to repudiate his promise. The trial judge’s findings, corroborated by Severino Pascual, were accepted as substantially true, and the conflicting testimony of Mariano was characterized as vague and incredible; nothing in the record justified disturbing those findings.

• Parol Evidence Rule — Subsequent Oral Agreements — The rule forbidding the admission of parol or extrinsic evidence to alter, vary, or contradict a written instrument does not prohibit the establishment by parol of an agreement between the parties to a writing entered into subsequent to the writing, even if it adds to, changes, modifies, or altogether abrogates the written contract. The parol evidence does not deny the original agreement but shows that the parties exercised their right to change or abrogate it or to make a new and independent contract. Applied: the oral agreement extending the redemption period after the deed of sale was enforceable.
• Bona Fide Tender Preserves Right of Repurchase — A bona fide offer or tender of the price agreed upon for repurchase is sufficient to preserve the rights of the party making it, without the necessity of judicial deposit, if the offer or tender is refused. Applied: Canuto’s tender preserved her right despite Mariano’s refusal.
• Prevention by the Party Extending Time — A party who has extended the time for performance on condition that the other party perform within the extended period cannot repudiate the promise where the other party stood ready to perform and was prevented only by the promisor’s conduct. Applied: Mariano could not claim absolute ownership after agreeing to extend the redemption period and failing to appear to receive payment.
• Diligent Effort and Circumstances Beyond Control — When diligent effort is made by the vendor of land to exercise the right to repurchase reserved in the deed of sale and fails by reason of circumstances over which he has no control, he does not lose the right to repurchase on the day of maturity. Applied: Canuto’s failure to pay on the original maturity was due to the extension and Mariano’s conduct.

• “The rule forbidding the admission of parol or extrinsic evidence to alter, vary, or contradict a written instrument does not apply so as to prohibit the establishment by parol of an agreement between the parties to a writing, entered into subsequent to the time when the written instrument was executed, notwithstanding such agreement may have the effect of adding to, changing, modifying, or even altogether abrogating the contract of the parties as evidenced by the writing; for the parol evidence does not in any way deny that the original agreement of the parties was that which the writing purports to express, but merely goes to show that the parties have exercised their right to change or abrogate the same, or to make a new and independent contract.” — This passage states the ratio decidendi on why the parol evidence rule did not bar proof of the subsequent oral agreement extending the redemption period.
• “It makes no difference how soon after the execution of the written contract the parol one was made. If it was in fact subsequent and is otherwise unobjectionable it may be proved and enforced.” — This reinforces that the timing of the subsequent oral agreement does not affect its enforceability under the parol evidence rule.
• “In that case and in the cases cited therein we declared that the settled rule in this jurisdiction is that a bona fide offer or tender of the price agreed upon for the repurchase is sufficient to preserve the rights of the party making it, without the necessity of making judicial deposit, if the offer or tender is refused;” — This is the Court’s canonical formulation of the rule that a bona fide tender preserves the right of repurchase without judicial deposit.
• “The defendant having extended the time within which the plaintiff could repurchase the land on condition that she would find the money and make repurchase within the extended period, it is clear that he cannot be permitted to repudiate his promise, it appearing that the plaintiff stood ready to make the payment within the extended period, and was only prevented from doing so by the conduct of the defendant himself.” — This passage supplies the ratio decidendi on why Mariano could not repudiate the extension after preventing Canuto’s performance.

• Villegas vs. Capistrano, 9 Phil. Rep., 416 — Cited in support of the rule that a party who has extended the time for performance cannot repudiate the promise where the other party stood ready and was prevented by the promisor’s conduct.
• Fructo vs. Fuentes, 15 Phil. Rep., 362 — Cited for the rule that diligent effort to exercise the right to repurchase, failing by reason of circumstances over which the vendor had no control, does not cause loss of the right on the day of maturity.
• Retes vs. Suelto, 20 Phil. Rep., 394 — Cited together with Villegas and Fructo in support of the ruling that the defendant could not repudiate his promise to extend the redemption period.
• Rosales vs. Reyes and Ordoveza, 25 Phil. Rep., 495 — Cited for the settled rule that a bona fide offer or tender of the repurchase price is sufficient to preserve the right of repurchase without judicial deposit when the tender is refused.

Arellano, C.J.; Street; Malcolm; Avanceña; and Fisher concurred. Torres and Araullo concurred in the result. Johnson, J., did not sign.