that led to the attachment warranties, to prove that the loss subject
1. PILIPINAS BANK, petitioner, vs . COURT OF APPEALS, HON.
ELOY R. BELLO, in his capacity as Presiding Judge, RTC-
Manila, Branch 15, and MERIDIAN ASSURANCE CORPORATION,
respondents
G.R. No. 141060
September 29, 2000
Doctrine: There is no ambiguity in the provisions of the Policy which
would necessitate the presentation of extrinsic evidence to clarify the
meaning thereof. The petitioner failed to set forth in its Complaint a
specific allegation that there is an intrinsic ambiguity in the insurance
policy which would warrant the presentation of further evidence to
clarify the intent of the contracting parties.
Facts: Petitioner obtained from private respondent Meridian
Assurance Corporation a Money Securities and Payroll Comprehensive
Policy. While the policy was in full force and effect, petitioner's
armored vehicle bearing Plate No. NBT 379 was on its way to deliver
the payroll withdrawal of its client Luzon Development Bank ACLEM
Paper Mills, was robbed by two armed men wearing police uniforms.
The loss suffered by petitioner amounted to P545,301.40.
Petitioner filed a formal notice of claim under its insurance policy with
private respondent invoking Section II of the Policy which states:
Section II-MONEY AND SECURITIES OUTSIDE PREMISES: The Company
will subject to the Limits of this Section as hereinafter provided
indemnify the insured against loss by any cause whatsoever occuring
(sic) outside the premises of Money and Securities in the personal
charge of a Messenger in transit on a Money Route x x x. and the
warranty/rider attached to the Policy which provides that-
WARRANTED that in respect of PILIPINAS BANK Head Office and all its
branches, pick-up and/or deposits and withdrawals without the use of
armored car, company car, or official's car shall be covered by this
policy.
Private respondent denied petitioner's claim and averred that the
insurance does not cover the deliveries of the withdrawals to
petitioner's clients. Petitioner filed a complaint against private
respondent with RTC-Manila. Private respondent filed a motion to
dismiss which was granted by the RTC. After the case was remanded
to the RTC and the latter set the case for pre-trial, petitioner filed its
Pre-Trial Brief, stating among others, that it would present as one of
its witnesses Mr. Cesar R. Tubianosa to testify on the existence and
due execution of the insurance policy, particularly on the negotiations
that were held prior to the execution thereof, including negotiations
of petitionerss claim is covered by the Policy.
When petitioner was about to present Mr. Tubianosa to testify, private
respondent objected and argued that said witness testimony
regarding the negotiations on the terms and conditions of the policy
would be violative of the best evidence rule. Private respondent's
objection was overruled and Tubianosa was allowed to take the stand.
Private respondent again objected to the questions regarding the
negotiations on the terms and conditions on the policy, and the trial
court sustained the objection in part and overruled it in part by
allowing petitioner to adduce evidence pertaining to the negotiations
other than what appears in the insurance policy. The petitioner filed a
Motion to Recall Witness, praying that it be allowed to recall
Tubianosa to testify on the negotiations pertaining to the terms and
conditions of the policy before its issuance to determine the intention
of the parties regarding the said terms and conditions. Private
respondent objected thereto, on the ground that the same would
violate the parol evidence rule. RTC issued an order denying
petitioners motion to recall Tubianosa to the witness stand, ruling that
the same would violate the parol evidence rule.
Petitioner filed a petition for certiorari with the Court of Appeals
assailing the aforementioned Orders of the RTC. CA dismissed the
petition and held that there was no grave abuse of discretion on the
part of respondent judge. It held that there is no ambiguity in the
provisions of the Policy which would necessitate the presentation of
extrinsic evidence to clarify the meaning thereof. The Court of
Appeals also stated that petitioner failed to set forth in its Complaint
a specific allegation that there is an intrinsic ambiguity in the
insurance policy which would warrant the presentation of further
evidence to clarify the intent of the contracting parties.
Issue: WON the provsions of the Policy are clear enough to warrant
the presentation of extrinsic evidence
Held: Yes. We find no cogent reason to disturb the findings of the
Court of Appeals. ThePetitioners Complaint merely alleged that under
the provisions of the Policy, it was entitled to recover from private
respondent the amount it lost during the heist. It did not allege
therein that the Policys terms were ambiguous or failed to express the
true agreement between itself and private respondent. Such being
the case, petitioner has no right to insist that it be allowed to present
Tubianosas testimony to shed light on the alleged true agreement of
the parties, notwithstanding its statement in its Pre-Trial Brief that it
was presenting said witness for that purpose.
Section 9, Rule 130 of the Revised Rules of Court expressly requires
that for parol evidence to be admissible to vary the terms of the
written agreement, the mistake or imperfection thereof or its failure
to express the true agreement of the parties should be put in issue by
the pleadings.

As correctly noted by the appellate court, petitioner failed to raise the

issue of an intrinsic ambiguity, mistake or imperfection in the terms
of the Policy, or of the failure of said contract to express the true
intent and agreement of the parties thereto in its Complaint. There
was therefore no error on the part of the appellate court when it
affirmed the RTCs Order disallowing the recall of Tubianosa to the
witness stand, for such disallowance is in accord with the rule 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 other terms other than the contents of the written agreement.

Under the general rule in Section 9 of Rule 130 of the Rules of Court,
when the terms of an agreement were reduced to writing, as in this
case, it is deemed to contain all the terms agreed upon and no
evidence of such terms can be admitted other than the contents
thereof.
7. LEIGHTON CONTRACTORS PHILIPPINES, INC., petitioner, vs.
CNP INDUSTRIES, INC., respondent
G.R. No. 160972
March 9, 2010
Doctrine: Respondent, presented the August 12, 1997 progress
report signed by Bennett. However, respondent knew that Bennett
was not authorized to order any changes in the scope of works or to
approve the cost thereof. Bennett did not sign the subcontract for and
in behalf of respondent but only as a witness. Respondent was
therefore aware of Bennett's lack of authority. We find that the
contract was never modified.
Facts: Hardie Jardin, Inc. (HJI) awarded the contract for site
preparation, building foundation and structural steel works of its fibre
cement plant project in Barangay Tatalon in San Isidro, Cabuyao,
Laguna to petitioner Leighton Contractors Philippines, Inc.
Respondent CNP Industries, Inc. submitted to petitioner a proposal to
undertake, as subcontractor, the construction of the structural
steelworks of HJI's fibre cement plant project. It estimated the project
to require 885,009 kgs. of steel costing P44,223,909. petitioner
accepted respondent's proposal specifying that the project cost was
for the fixed lump sum price of P44,223,909. Respondent agreed and
petitioner instructed it to commence work. Petitioner revised the
fabrication drawings of several of the structure's columns
necessitating adjustments in the designs of roof ridge ventilation and
crane beams. Petitioner communicated the said revisions to
respondent and respondent estimated that the said revisions required
an additional 8,132 kgs. of steel costing P13,442,882. However, it did
not re-negotiate the fixed lump-sum price with petitioner.
Petitioner and respondent signed a sub-contract providing:
(B) Subcontract works. To carry out complete structural steelworks
outlined in the Sub-contract Lump Sum Price [of P44,223,909] in
accordance with the Main Drawing and Technical Specifications and
in accordance with the Main Contract, all of which are available on
Site.
(C) Special Conditions of the Sub-Contract. Notwithstanding the
provisions of Clause 11(4) of the General Conditions of the Sub-
contract, this Sub-contract is on a Fixed Lump Sum basis and
is not subject to re-measurement. It is the responsibility of
[respondent] to derive his own quantities for the purpose of the Lump
Sum Subcontract price. No additional payments will be made to
[respondent] for any errors in quantities that may be revealed during
the Sub-contract period.
In a letter, respondent informed petitioner that, due to the revisions
in the designs of the roof ridge ventilation and crane beams, it
incurred "additional costs" amounting to P13,442,882. In its August
12, 1997 progress report, respondent reiterated that the roof ridge
ventilation and crane beams were not included in the scope of work
and were not part of the sub-contract price and presented the cost
estimates in the progress report. Because respondent was unable to
meet the project schedule, petitioner took over the project on April
27, 1998. At the time of the takeover, respondent had already
accomplished 86% of the project for which petitioner paid
P42,008,343.69. Respondent asked petitioner to settle the
"outstanding balance" of P12,364,993.94, asserting that the roof
ridge ventilation and crane beams were excluded from the project
cost. Petitioner refused to pay as the subcontract clearly stated that
the sub-contract price was a fixed lump sum.
The parties submitted the matter to the Construction Industry
Arbitration Commission (CIAC) for arbitration. Respondent argued that
the proposal it submitted (accepted by petitioner) excluded the roof
ridge ventilation and crane beams as the fabrications drawings were
"clouded" or had not been finalized when the subcontract was
executed. Furthermore, petitioner approved the cost estimates when
Simon Bennett, petitioner's quantity surveyor, signed the August 12,
1997 progress report. This proved that the said portions were
"additional works" excluded from the fixed lump-sum price.
Petitioner, on the other hand, asserted that the subcontract explicitly
included the aforementioned works in the scope of work.
Furthermore, it was not liable for the "additional costs" incurred by
respondent as the subcontract clearly provided that the project was
for the fixed lump-sum price of P44,223,909. It likewise denied
approving respondent's additional cost estimates as Bennett signed
the August 12, 1997 progress report only to acknowledge its receipt.
The CIAC found that the subcontract was perfected when petitioner
accepted respondent's proposal. Thus, because the fabrication
drawings for the roof ridge ventilation and crane beams had not yet
been finalized then, the same were deemed "additional works" not
included in the lump-sum price.
Petitioner assailed the CIAC decision via a petition for review in the
CA. the CA dismissed the petition and affirmed the CIAC decision in
toto.
Issue: WON the cost of the additional steel used for the roof ridge
ventilation and crane beams was included in the fixed lump-sum
price.
Held: Yes. The scope of work was defined in the subcontract as the
completion of the structural steel works according to the main
drawing, technical specifications and the main contract. Thus, to
determine whether the roof ridge ventilation and crane beams were
included in the scope of work, reference to the main drawing,
technical specifications and main contract is necessary. The main
contract stated that the structural steel works included Drawing Nos.
P302-6200-S-405 and P302-6200-S-402. This, according to petitioner
and respondent, referred to the roof ridge ventilation and crane
beams. Hence, the said works were clearly included in the sub-
contract works.
The parol evidence rule, embodied in Section 9, Rule 130 of the Rules
of Court holds that when the terms of an agreement have been
reduced into 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, however, admits of exceptions
such as when the parties subsequently modify the terms of their
original agreement.
contract, petitioner was only liable to pay the stipulated subcontract
price.
IMPORTANT TOPIC BUT NOT EVID-RELATED - In contracts for a
stipulated price like fixed lump-sum contracts, the recovery of
additional costs is governed by Article 1724 of the Civil Code. Settled
is the rule that a claim for the cost of additional work arising from
changes in the scope of work can only be allowed upon the: (1)
written authority from the developer or project owner ordering or
allowing the written changes in work and (2) written agreement of
parties with regard to the increase in price or cost due to the change
in work or design modification.
The compliance with the two requisites of Article 1724, a specific
provision governing additional works, is a condition precedent for the
recovery. The absence of one or the other condition bars the recovery
of additional costs. Neither the authority for the changes made nor
the additional price to be paid therefor may be proved by any other
evidence.

Respondent contends that when Bennett signed the August 12, 1997
progress report, petitioner approved the additional cost estimates, in
effect modifying the original agreement in the subcontract.
Respondent therefore claims an exception to the parole evidence rule.
Respondent, in this instance, presented the August 12, 1997 progress
report signed by Bennett. However, respondent knew that Bennett
was not authorized to order any changes in the scope of works or to
approve the cost thereof. It addressed all correspondences relating to
the project to (petitioner's) project manager Michael Dent, not
Bennett. Moreover, Bennett did not sign the subcontract for and in
behalf of respondent but only as a witness. Respondent was therefore
aware of Bennett's lack of authority. We find that the contract was
never modified.

In a fixed lump-sum contract, the project owner agrees to pay the

contractor a specified amount for completing a scope of work
involving a variety of unspecified items of work without requiring a
cost breakdown. By entering into a fixed lump-sum contract,
respondent undertook the risk of incurring a loss due to errors in
measurement. The sub-contract explicitly stated that the stipulated
price was not subject to remeasurement. Since the roof ridge
ventilation and crane beams were included in the scope of work,
respondent was presumed to have estimated the quantity of steel
(the minimum and maximum amount) needed on the said portions
when it made its formal offer. By the very nature of a fixed lump-sum