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Reformation of an Instrument

Declaratory Relief Reformation of an Instrument Rule 63


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)

What is reformation?

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;
(2) Wills;
(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)

● As an action for reformation, plaintiff had 10 years within which to bring it from the time the right of action accrued. (Veluz vs. Veluz, G.R. No. L-23261, July 31, 1968)


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;

(2) Wills;

(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.

 

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