Section 1. Who may file petition - Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may, before breach or violation thereof bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder. (Bar Matter No. 803, 17 February 1998)
An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought under this Rule. (Rule 63, Rules of Court)
Reformation is a remedy in equity, whereby a written instrument is made or construed so as to express or conform to the real intention of the parties, where some error or mistake has been committed. In granting reformation, the remedy in equity is not making a new contract for the parties, but establishing and perpetuating the real contract between the parties which, under the technical rules of law, could not be enforced but for such reformation. (Multi-Ventures Capital vs. Stalwart Management Servises Corp., G.R. No. 157439, July 4, 2007)
What are the requisites for reformation?
In order that an action for reformation of instrument may prosper, the following requisites must concur:
(1) there must have been a meeting of the minds of the parties to the contract;
(2) the instrument does not express the true intention of the parties; and
(3) the failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident. (Multi-Ventures Capital vs. Stalwart Management Servises Corp)
● An action for reformation is not an action brought to reform a contract but to reform the instrument evidencing the contract. The action for reformation presupposes that there is nothing wrong with the contract itself because there is a meeting of minds between the parties (Art. 1359, Civil Code). A contract does not refer to a deed or an instrument but to a meeting of the minds of the parties (Art. 1305, Civil Code). Art. 1359 of the civil code does not in fact refer to a reformation of the contract but of the `instrument'.
The contract is to be reformed because despite the meeting of minds of the parties as to the object and cause of the contract, the instrument which is supposed to embody the agreement of the parties does not reflect their true agreement by reason of mistake, fraud, inequitable conduct or accident. The action is brought so the true intention of the parties may be expressed in the instrument (Art. 1359, Civil Code).
Who has the burden to prove that reformation is proper?
The onus probandi is upon the party who insists that the contract should be reformed. (Multi-Ventures Capital vs. Stalwart Management Servises Corp)
In what cases reformation is not allowed?
There shall be no reformation in the following cases:
(1) Simple donations inter vivos wherein no condition is imposed;
(3) When the real agreement is void. (Art. 1366, Civil Code)
What is the prescriptive period for reformation of instrument?
●The prescriptive period for actions based upon a written contract and for reformation of an instrument is ten (10) years under Article 1144 of the Civil Code. Prescription is intended to suppress stale and fraudulent claims arising from transactions . . . which facts had become so obscure from the lapse of time or defective memory. (Rosello-Bentir vs. Leanda, G.R. No. 128991, April 12, 2000)
What is the remedy if the consent of a party to a contract has been procured by fraud, inequitable conduct or accident?
Where the consent of a party to a contract has been procured by fraud, inequitable conduct or accident, and an instrument was executed by the parties in accordance with the contract, what is defective is the contract itself because of vitiation of consent. The remedy is not to bring an action for reformation of the instrument but to file an action for annulment of the contract (Art. 1359, Civil Code). A contract where one party's consent is vitiated is voidable or annullable (Art. 1330, Art. 1390, Civil Code)
Reformation of instrument vs. annulment of contract
The action for reformation of instrument should not be confused with the action for annulment of contract. Reformation of instrument presupposes a valid, existing contract, in which there had been a meeting of the minds of the parties but the instrument drawn up and signed by them does not correctly express the terms of their agreement. Annulment of a contract, on the other hand, presupposes a defective contract in which the minds of the parties did not meet, or the consent of one was vitiated. The equity of reformation is ordinarily limited to written agreements, and its purpose is to establish and perpetuate the true agreement; annulment, on the other hand, is intended to declare the inefficiency which the contract already carries in itself and to render the contract inefficacious. (Veluz vs. Veluz)
Civil Code Provisions on Reformation of Instrument:
Art. 1359. When, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed.
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the parties, the proper remedy is not reformation of the instrument but annulment of the contract.
Art. 1360. The principles of the general law on the reformation of instruments are hereby adopted insofar as they are not in conflict with the provisions of this Code.
Art. 1361. When a mutual mistake of the parties causes the failure of the instrument to disclose their real agreement, said instrument may be reformed.
Art. 1362. If one party was mistaken and the other acted fraudulently or inequitably in such a way that the instrument does not show their true intention, the former may ask for the reformation of the instrument.
Art. 1363. When one party was mistaken and the other knew or believed that the instrument did not state their real agreement, but concealed that fact from the former, the instrument may be reformed.
Art. 1364. When through the ignorance, lack of skill, negligence or bad faith on the part of the person drafting the instrument or of the clerk or typist, the instrument does not express the true intention of the parties, the courts may order that the instrument be reformed.
Art. 1365. If two parties agree upon the mortgage or pledge of real or personal property, but the instrument states that the property is sold absolutely or with a right of repurchase, reformation of the instrument is proper.
Art. 1366. There shall be no reformation in the following cases:
(1) Simple donations inter vivos wherein no condition is imposed;
(3) When the real agreement is void.
Art. 1367. When one of the parties has brought an action to enforce the instrument, he cannot subsequently ask for its reformation.
Art. 1368. Reformation may be ordered at the instance of either party or his successors in interest, if the mistake was mutual; otherwise, upon petition of the injured party, or his heirs and assigns.
Art. 1369. The procedure for the reformation of instrument shall be governed by rules of court to be promulgated by the Supreme Court.
CHAPTER 4. REFORMATION OF INSTRUMENTS
Article 1359. When, there having been a meeting of the minds of the parties to a contract, their true intention is not expressed in the instrument purporting to embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed.
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the parties, the proper remedy is not reformation of the instrument but annulment of the contract.
By: Johannes Aquino
Kapag ang magkabilang partido ay namayagan sa kasunduan, ngunit ang kanilang dokumento ay naiiba sa kanilang napagkasunduan, ito ay maaring ipabago ng kahit sinong partido. Ngunit kapag magkaiba ang iniisip na napagkasunduan ng magkabilang panig, ang kasunduan ay maari lamang ipawalang bisa.
Meaning of reformation.
Reformation is that remedy by means of which a written instrument is amended or rectified so as to express or conform to the real agreement or intention of the parties when by reason of mistake, fraud, inequitable conduct, or accident, the instrument fails to express such agreement or intention.
Reason for reformation.
“Equity orders the reformation of an instrument in order that the intention of the contracting parties may be expressed.
The courts do not attempt to make another contract for the parties. The rationale of the doctrine is that it would be unjust and inequitable to allow the enforcement of a written instrument which does not reflect or disclose the real meeting of the minds of the parties. The rigor of the legalistic rule that the written instrument should be the final and inflexible criterion and measure of the rights and obligations of the contracting parties is thus tempered, to forestall the effects of mistake, fraud, inequitable conduct, or accident.”
Requisites of reformation.
In order that reformation may be availed of as a remedy, the following requisites must be present:
(1) There is a meeting of the minds of the parties to the contract;
(2) The written instrument does not express the true agreement or intention of the parties;
(3) The failure to express the true intention is due to mistake, fraud, inequitable conduct, or accident;(4) The facts upon which relief by way of reformation of the instrument is sought are put in issue by the pleadings; and
(5) There is clear and convincing evidence1 (which is more than mere preponderance of evidence) of the mistake, fraud, inequitable conduct, or accident.
Reformation and annulment distinguished.
In reformation, there has been a meeting of the minds of the parties (Art. 1359, par. 1.); hence, a contract exists but the written instrument purporting to embody the contract does not express the true intention of the parties by reason of mistake, fraud, inequitable conduct, or accident. Under the technical rules of law, the real contract cannot be enforced until it is reformed.
In annulment, there has been no meeting of the minds, the consent of one of the parties being vitiated by mistake, etc.
Reformation and annulment are thus inconsistent with each other. While the first gives life to a contract upon certain conditions, the second involves a complete nullification of it.
Illustration:
Cedie sold his mansion to Princess Sarah. It was agreed that the sale will include all the furniture and appliances inside the mansion. However, the contract as signed by the parties, states that the mansion is being sold is excluding the furniture pieces and appliances. In this case, the remedy is reformation because there has been a meeting of the minds.
If Cedie was willing to sell the mansion excluding the furniture and appliances, while B was willing to buy the mansion including the furniture and appliances, there has been no meeting of the minds and therefore the remedy is annulment.
Article 1360. The principles of the general law on the reformation of instruments are hereby adopted insofar as they are not in conflict with the provisions of this Code.
By: Kristia Capio
Artikulo 1360. Ang prinsipyo ng pangkalahatang batas sa repormasyon ng instrumento ay pinagtibay hangga’t ito ay hindi laban sa probisyon ng kodigo.
PRINCIPLES OF THE GENERAL LAW ON REFORMATION
In case of conflict between the provisions of the new Civil Code and the principles of the general law on reformation, the former prevail. The latter will have only suppletory effect.
REQUISITES OF REFORMATION
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- There must have been a meeting of minds upon the contract
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- Instrument or document evidencing the contract does not express the true agreement between the parties
- Failure of the instrument to express the agreement must be due to mistake, fraud, inequitable conduct, or accident.
The Chapter on Reformation of Instruments is based on American Law. The prevailing jurisprudence in America will be persuasive but not necessarily binding, provided the same does not contradict with the provisions of the code and other Philippine laws.
The governing law is: Article 17.
The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed.
When the acts referred to are executed before the diplomatic or consular officials of the Republic of the Philippines in a foreign country, the solemnities established by Philippine laws shall be observed in their execution.
Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country.
Article 1361. When a mutual mistake of the parties causes the failure of the instrument to disclose their real agreement, said instrument may be reformed.
by: Bryan Glenn Fabiaña
Kapag ang parihong pagkakamali ng mga partido ay nagdulot ng pagkabigo ng instrumento na ihayag ang tunay na kasunduan, and nasabing instrumento ay maaring baguhin.
Comment:
Reformation is a remedy in equity by means of which a written instrument is made or construed so as to express or confirm the real intention of the parties when some error or mistake is committed.
This article applies when the mistake is mutual that is both parties committed the same mistake which caused the failure of the instrument to express their true agreement.
Illustration:
Salvy sold to Ben lot no. 5 which was erroneously designated as lot number 10 in the deed of sale. Subsequently, Salvy sold to Catherine lot number 5 in the deed of sale. In this case reformation is proper because there is a simple mistake in drafting the documents of sale. There being meeting of the minds of the parties to their contracts.
Article 1362. If one party was mistaken and the other acted fraudulently or inequitably in such a way that the instrument does not show their true intention, the former may ask for the reformation of the instrument.
By: Janine Gumangol
COMMENT:
In this Article, the mistake is unilateral but the other party acted fraudulently or inequitably.
Example:
Jean agreed with Rey that Jean would be loaned P5, 000, 000.00 by Rey. In the contract signed by Jean and Rey, it was stated that Jean was selling her house to Rey for said amount. Jean signed the contract in the belief that it was really a contract of loan. Who may ask for the reformation of the instrument if Rey had acted fraudulently?
Answer: Jean may ask for the reformation of the instrument because after the meeting of the minds, one party (Rey) acted fraudulently or inequitably in such a way that the contract does not show their real intention. In such a case, the law provides that the person who acted by mistake may ask for the reformation of the instrument.
Article 1363. When one party was mistaken and the other knew or believed that the instrument did not state their real agreement, but concealed that fact from the former, the instrument may be reformed.
By: Algy Riguer
On this article if the party is guilty of concealment and attended with bad faith therefore reformation is authorized to avoid injustice and inequity while if the second party is not aware of the imperfection and acted in good faith as the first party therefore the mistake becomes mutual and reformation is authorized.
The remedy of formation may be availed of the party who acted in good faith. The concealment mistake by the other party constitute Fraud.
Examples:
Mrs. Dy owed 5M to Mrs. Gong and made a promissory note that she will pay Mrs. Gong her land title in Cavite which is equivalent to the amount that she owed. Six months after their contract was made Mrs. Dy delivered her land title to Mrs. Gong as her payment for her debt to the latter. Mrs. Gong accepted the land title but she noticed that it was the land title of Mrs. Dy in Ilocos Norte which is 3x more than the amount that Mrs. Dy owed but she concealed it to Mrs. Dy. Therefore Mrs. Dy is entitled for the reformation of instrument that they used in their contract.
Article 1364. When through the ignorance, lack of skill, negligence or bad faith on the part of the person drafting the instrument or of the clerk or typist, the instrument does not express the true intention of the parties, the courts may order that the instrument be reformed.
By: Rose Ann Villanueva
Nang dahil sa walang kaalaman, walang kasanayan, kapabayaan, may masamang intensiyon, sa panig ng taong nagsususog ng kapamaraanan, o ang tagatala, ang kapamaraanan o instrumento na hindi nagpapahayag ng tunay na intensiyon ng mga partido, ang hukuman ay pwedeng mag-atas na baguhin ang kapamaraanan.
Ignorance, lack of skill, negligence or bad faith must be on the part of a third person. Under the above article, neither party is responsible for the mistake. Hence, either party may ask for reformation.
Article 1365. If two parties agree upon the mortgage or pledge of real or personal property, but the instrument states that the property is sold absolutely or with a right of repurchase, reformation of the instrument is proper.
By: Jayson Calventas
Kung ang dalawang partido ay sumang-ayon sa sangla o pangako ng tunay o personal na ari-arian, ngunit ang instrumento ay nagsasaad na ang ari-arian ay ganap na naibenta o mayroong karapatan na bilhin itong muli, ang pagbabago ng instrumento ay angkop.
Article 1365 NCC | speaks of…
Mortgage or pledge stated as sale
- When any of the circumstances enumerated in the law exists, an instrument purporting to be a sale with right of repurchase shall be presumed to be an equitable mortgage.
- The true intention of the parties must prevail.
Article 1365 NCC | example:
- Angeles purchased a parcel of land from Velasquez.
- By the terms of the document, the contract is one of sale.
- Later on, Justo bought the subject land from the heirs of Angeles.
- The heirs of Velasquez sued Justo contending that the contract between Angeles and Velasquez is a mortgage.
- Justo argued that it is a sale with the right of repurchase
- HOWEVER, in one of the clauses in the document, it appears that Velasquez did NOT reserve the right to repurchase the property, but bound himself to return the principal interest.
- This contract is a mortgage.
Article 1366. There shall be no reformation in the following cases:
(1) Simple donations inter vivos wherein no condition is imposed;
(2) Wills;
(3) When the real agreement is void.
By: Johannes Aquino
Hindi maaring baguhin ang simple na donasyon, pamana, at kung ang tunay na kasunduan ay walang bisa.
Cases when reformation not allowed.
(1) Simple donations inter vivos where no condition is imposed. — Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it. (Art. 725.) When the donor intends that the donation shall take effect during his lifetime, it is a donation inter vivos. It is distinguished from donation mortis causa in that this kind of donation takes effect after the donor’s death.
(a) In donation, the act is essentially gratuitous and the donee has, therefore, no just cause for complaint. If in the deed of donation, a mistake or defect has been committed, it is a mere failure in a bounty which, as the donor was not bound to make, he is not bound to correct. (see 45 Am. Jur. 599.) Of course, the donor may ask for the reformation of a deed of donation.
(b) If the donation is conditional or is onerous in character, the deed may be reformed so that the true conditions imposed by the donor or the real intention of the parties might be expressed.
(2) Wills. — A will is an act whereby a person is permitted with the formalities prescribed by law to control to a certain degree the disposition of his estate, to take effect after his death. (Art. 783.) Like a donation, the making of a will is a strictly personal and a free act which cannot be left to the discretion of a third person (see Art. 784.); hence, upon the death of the testator, the right to reformation is lost. Furthermore, a will may be revoked by the testator any time before his death and this right is not subject to waiver or restriction. (see Art. 828.)
(3) Where the real agreement is void. — If the real agreement is void, there is nothing to reform. Reformation would be useless because the real agreement being void, it is unenforceable.
(4) Art. 1367
Illustration:
Jellybee donated the trademark for his fried chicken to Mangdo without conditions. In this case, the act is essentially gratuitous and Mangdo has no just cause for complaint.
Article 1367. When one of the parties has brought an action to enforce the instrument, he cannot subsequently ask for its reformation.
Artikulo 1367. Kapag ang isa sa mga partido ay nagsampa ng aksiyon upang maipatupad ang instrumento, hindi siya makakahiling ng malalim na pagbabago.
Article 1367 is based on estoppel (Art. 1431.) or ratification. When a party brings an action to enforce the contract, he admits its validity and that it expresses the true intention of the parties. The bringing of the action is thus inconsistent with reformation. There is no prohibition against joining in one action the reformation of instrument and its enforcement as reformed.
ILLUSTRATION
Art. 1368. Reformation may be ordered at the instance of either party or his successors in interest, if the mistake was mutual; otherwise, upon petition of the injured party, or his heirs and assigns.
by: Bryan Glenn Fabiaña
Ang pagbabago ay maaring ipag utos ng sinuman sa partido o taga pagmana kapag ang pagkakamali ay sa parihong partido, sa petisyon ng partidong agrabyado o kanyang tagapagmana o tinalaga.
Comment:
Reformation of an instrument cannot be just be done according to the whims and caprice of one or even both parties but it is done only upon order of the court.
If by mutual mistake there in non meeting of the minds of the parties, either parties or their successor in interest or their heir may petition the court for the reformation of the instrument.
If mistake is not mutual, the reformation of the instrument may be petition by the injured party, his heirs or assigns. An action for reformation of a contract prescribes after ten(10) years.
Illustration:
“A” entered a contract to “B” for the construction of a building. The parties agreed that the payment be made in dollars. However what was typewritten in the contract occasioned by mistake was the peso sign. Either party or the successor in interest of A or B may petition the court for reformation of the instrument within ten years.
Article 1369. The procedure for the reformation of instrument shall be governed by rules of court to be promulgated by the Supreme Court.
By: Janine Gumangol
Ang proseso sa pagbabago ng instrumento ay sinasaklawan ng mga alituntunin ng korte na na ipapahayag ng korte suprema.