⇒ Trial court: dismissed case upon motion on the ground of prescription.
DAUDEN-HERNAEZ vs DE LOS ANGELES
FACTS:
Marlene Dauden-Hernaez, a movie actress, filed a case against Hollywood
Far East Productions its President and General Manager, Ramon Valenzuela,
to recover P14,700 allegedly the balance due for her services as leading
actress in two motion pictures. The complaint was dismissed by Judge De
Los Angeles mainly because her claim was not supported by a written
document, public or private in violation of Articles 1356 and 1358 of the
Civil Code. Upon a motion for reconsideration, the respondent judged
dismissed the same because the allegations were the same as the first
motion. According to Judge De Los Angeles, the contract sued upon was not
alleged to be in writing when Article 1358 requires it to be so because the
amount involved exceeds P500.
ISSUE:
Whether or not a contract for personal services involving more than
P500.00 was either invalid or unenforceable under the last paragraph of
Article 1358?
HELD:
No. The order dismissing the complaint is set aside and the case is
remanded to the CFI.
RATIO:
Consistent with the Spanish Civil Code in upholding spirit and intent of the
parties over formalities, in general, contracts are valid and binding from
their perfection regardless of whether they are oral or written. However, as
provided in the 2nd sentence of Art. 1356:
ART. 1356. Contracts shall be obligatory in whatever form they may have
been entered into, provided all the essential requisites for their validity are
present.
However, when the law requires that a contract be in some form in order
that it may be valid or enforceable, or that a contract be proved in a certain
way, that requirement is absolute and indispensable....
Thus, the two exceptions to the general rule that the form is irrelevant to
the binding effect of a contract are:
(a) Solemn Contracts - contracts which the law requires to be in some
particular form (writing) in order to make them valid and enforceable.
Examples:
1. Donation of immovable property (Art. 749) which must be in public
instrument to be valid. In order "that the donation maybe valid", i.e.,
existing or binding.
2. Donation of movables worth more than P5,000 (Art. 748)which must be
in writing otherwise they are void.
(b)Contracts that the law requires to be proved by some writing
(memorandum) of its terms, i.e. those covered by the old Statute of Frauds,
now Article 1403(2) of the Civil Code.
For the latter example, their existence are not provable by mere oral
testimony (unless wholly or partly executed) and are required to be in
writing to be enforceable by action in court.
However, the contract sued upon (compensation for services) does not
come under either exception. While the last clause of Article1358 provides
that "all other contracts where the amount involved exceeds five hundred
pesos must appear in writing, even a private one. “Said Article does not
provide that the absence of a written form in this case will make the
agreement invalid or unenforceable. On the contrary, Article 1357 clearly
indicates that contracts covered by Article 1358 are binding and enforceable
by action or suit despite the absence of writing.
PAULINO GARCIA, plaintiff & appellant, vs. MARIA BISAYA, et
al.,defendants & appellees [1955]
Facts:
⇒ Garcia’s claim: Bisaya & co. executed in favor of Garcia a deed of sale of
parcel of land erroneously designated as unregistered when in fact it was
registered w/the Office of the Register of Deeds in Oriental Mindoro.
Defendants refused to correct such mistake, thus, he instituted this action.
⇒ Defendants denied execution of the deed of sale & pleaded prescription.
⇒ Garcia claims he only learned about the error recently.
Issues & Ratio:
1. WON cause of action has already prescribed. – NO PROOF.
An action based on a written contract prescribes in 10yrs which is counted
from the time the injured party discovers the error. But court should have-
not dismissed the case w/o obtaining any factual basis as to when error was
actually discovered.
2. WON Garcia is entitled to the reformation of the contract (i.e., correction
of the alleged error). – NO. He failed to allege that the instrument does not
express the real agreement/intention of the parties.
⇒ Reformation is done to make an instrument conform to the real
agreement or intention of the parties. However, Garcia failed to allege what
the real agreement/intention was. A reformation does not make a new
agreement. It only establishes & perpetuates the true existing one.
⇒ Courts allow reformation to enable parties to assert their rights. But in
this case, Garcia has no rt to assert since according to himself, the land is
registered in the name of Torcuata Sandoval. Sale then would be ineffective
since he would knowingly buy a property not belonging to the vendor.
⇒ Since it appears that he entered into the contract thru
fraud/misrepresentation on the part of the vendor or in mistaken belief that
the land was unregistered, his cause action falls under CC Art. 1359
w/callows annulment of the contract.
Holding: Case dismissed not on the ground of prescription but for lack of
cause of action
Bentir v Leanda
Facts:
On May 15, 1992, respondent Leyte Gulf Traders, Inc. (herein referred to as
respondent corporation) filed a complaint for reformation of instrument,
specific performance, annulment of conditional sale and damages with
prayer for writ of injunction against petitioners Yolanda Rosello-Bentir and
the spouses Samuel and Charito Pormida. Respondent corporation alleged
that it entered into a contract of lease of a parcel of land with petitioner
Bentir for a period of twenty (20) years starting May 5, 1968. According to
respondent corporation, the lease was extended for another four (4) years
or until May 31, 1992. On May 5, 1989, petitioner Bentir sold the leased
premises to petitioner spouses Samuel Pormada and Charito Pormada.
Respondent corporation questioned the sale alleging that it had a right of
first refusal. Rebuffed, it filed Civil Case No. 92-05-88 seeking the
reformation of the expired contract of lease on the ground that its lawyer
inadvertently omitted to incorporate in the contract of lease executed in
1968, the verbal agreement or understanding between the parties that in
the event petitioner Bentir leases or sells the lot after the expiration of the
lease, respondent corporation has the right to equal the highest offer.
Issue:
Whether the complaint for reformation filed by respondent Leyte Gulf
Traders, Inc. has prescribed
Whether it is entitled to the remedy of reformation sought
Held:
The remedy of reformation of an instrument is grounded on the principle of
equity where, in order to express the true intention of the contracting
parties, an instrument already executed is allowed by law to be reformed.
The right of reformation is necessarily an invasion or limitation of the parol
evidence rule since, when a writing is reformed, the result is that an oral
agreement is by court decree made legally effective. The remedy, being an
extraordinary one, must be subject to limitations as may be provided by
law. Our law and jurisprudence set such limitations, among which is laches.
A suit for reformation of an instrument may be barred by lapse of time. 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 like the one at bar which facts had become so
obscure from the lapse of time or defective memory. In the case at bar,
respondent corporation had ten (10) years from 1968, the time when the
contract of lease was executed, to file an action for reformation. Sadly, it
did so only on May 15, 1992 or twenty-four (24) years after the cause of
action accrued, hence, its cause of action has become stale, hence, time-
barred.
The prescriptive period of ten (10) years provided for in Art. 1144 applies by
operation of law, not by the will of the parties. Therefore, the right of action
for reformation accrued from the date of execution of the contract of lease
in 1968.
Prescription; Reformation of an instrument is that remedy in equity by
means of which a written instrument is made or construed so as to express
or conform to the real intention of the parties when some error or mistake
has been committed. It is predicated on the equitable maxim that equity
treats as done that which ought to be done. The rationale of the doctrine is
that it would be unjust and unequitable to allow the enforcement of a
written instrument which does not reflect or disclose the real meeting of
the minds of the parties. However, an action for reformation must be
brought within the period prescribed by law, otherwise, it will be barred by
the mere lapse of time.
Atilano vs. Atilano
Facts:
In 1916, Atilano I acquired lot No. 535 by purchase. In 1920, he had the land
subdivided into five parts, identified as lots Nos. 535-A, 535-B, 535-C, 535-
D and 535-E, respectively. After the subdivision had been effected, Atilano
I executed a deed of sale covering lot No. 535-E in favor of his brother
Atilano II. Three other portions, namely, lots Nos. 535-B, 535-C, and 535-D,
were likewise sold to other persons. Atilano I retained for himself the
remaining portions of the land, presumably covered by the title to lot No.
535-A. upon his death, the title to this lot passed to Ladislao, in whose name
the corresponding certificate was issued.
On 1959, Atilano II and his children had the land resurveyed so that it could
be properly subdivided. However, they discovered that the land they were
actually occupying on the strength of the deed of sale was lot No. 353-A and
not lot 535-E, while the land which remained in the possession of Atilano I,
and which was passed to Ladislao was lot No. 353-E and not lot No. 535-A.
On 1960, the heirs of Atilano II alleging, inter alia, that they offered to
surrender to the possession of lot No. 535-A and demanded in return the
possession of lot No. 535-E, but the defendants refused to accept the
exchange. The plaintiffs' insistence is quite understandable, since lot No.
535-E has an area of 2,612 square meters as compared to the 1,808 square-
meter area of lot No. 535-A.
In their answer to the complaint, the defendants alleged that the reference
to lot No. 535-E in the deed of sale was an involuntary error; that the
intention of the parties to that sale was to convey the lot correctly identified
as lot No. 535-A. On the basis of the foregoing allegations the defendants
interposed a counterclaim, praying that the plaintiffs be ordered to execute
in their favor the corresponding deed of transfer with respect to Lot No.
535-E.
The trial court rendered judgment in favor of the plaintiffs.
Issue:
Whether or not there has been a valid sale in view of the real intention of
the parties.
Held:
From the facts and circumstances, the object is lot No. 535-A and its
designation as lot No. 535-E in the deed of sale was a simple mistake in the
drafting of the document. The mistake did not vitiate the consent of the
parties, or affect the validity and binding effect of the contract between
them. The new Civil Code provides a remedy by means of reformation of
the instrument. This remedy is available 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
In this case, the deed of sale executed in 1920 need no longer be reformed.
The parties have retained possession of their respective properties
conformably to the real intention of the parties to that sale, and all they
should do is to execute mutual deed of conveyance.
Therefore, the judgment appealed from is reversed. The plaintiffs are
ordered to execute a deed of conveyance of lot No. 535-E in favor of the
defendants, and the latter, in turn, are ordered to execute a similar
document, covering lot No. 535-A, in favor of the plaintiffs. Costs against
the latter.
RITA SARMING, et. al vs. CRESENCIO DY
Facts:
Valentina Unto Flores, who owned, among others, Lot 5734, covered by
OCT 4918-A; and Lot 4163. After the death of Valentina, her three children,
namely: Jose, Venancio, and Silveria, took possession of Lot 5734 with each
occupying a one-third portion. Upon their death, their children and
grandchildren took possession of their respective shares. The other parcel,
Lot 4163 which is solely registered under the name of Silveria, was sub-
divided between Silveria and Jose. Two rows of coconut trees planted in the
middle of this lot serves as boundary line.
The grandchildren of Jose and now owners of one-half of Lot 4163, entered
into a contract with plaintiff Alejandra Delfino, for the sale of one-half share
of Lot 4163 after offering the same to their co-owner, Silveria, who declined
for lack of money. Silveria did not object to the sale of said portion to
Alejandra Delfino.
The late Atty. Pinili, Alejandra's lawyer, called Silveria and the heirs of
Venancio to a conference where Silveria declared that she owned half of
the lot while the other half belonged to the vendors; and that she was
selling her three coconut trees found in the half portion offered to Alejandra
Delfino for P15. When Pinili asked for the title of the land, Silveria Flores,
through her daughter, Cristita Corsame, delivered Original Certificate of
Title No. 4918-A, covering Lot No. 5734, and not the correct title covering
Lot 4163. At that time, the parties knew the location of Lot 4163 but not the
OCT Number corresponding to said lot.
Believing that OCT No. 4918-A was the correct title corresponding to Lot
4163, Pinili prepared a notarized Settlement of Estate and Sale (hereinafter
"deed") duly signed by the parties. As a result, OCT No. 4918-A was
cancelled and in lieu thereof, TCT No. 5078 was issued in the names of
Silveria Flores and Alejandra Delfino, with one-half share each. Silveria
Flores was present during the preparation and signing of the deed and she
stated that the title presented covered Lot No. 4163. Alejandra Delfino
immediately took possession and introduced improvements on the
purchased lot, which was actually one-half of Lot 4163 instead of Lot 5734
as designated in the deed.
Two years later, when Alejandra Delfino purchased the adjoining portion of
the lot she had been occupying, she discovered that what was designated
in the deed, Lot 5734, was the wrong lot. She sought the assistance of Pinili
who approached Silveria and together they inquired from the Registry of
Deeds about the status of Lot 4163. They found out that OCT No. 3129-A
covering Lot 4163 was still on file. Alejandra Delfino paid the necessary fees
so that the title to Lot 4163 could be released to Silveria Flores, who
promised to turn it over to Pinili for the reformation of the deed of sale.
However, despite repeated demands, Silveria did not do so, prompting
Alejandra and the vendors to file a complaint against Silveria for
reformation of the deed of sale.
Issue: Whether or not a reformation of the contract can take place
Ruling:
The Supreme Court Held that reformation is that remedy in equity by
means of which a written instrument is made or construed so as to express
or conform to the real intention of the parties. As provided in Article 1359
of the Civil Code:
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.

An action for reformation of instrument under this provision of law may

prosper only upon the concurrence of the following requisites: (1) there
must have been a meeting of the minds of the parties to the contact; (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.

All of these requisites, in our view, are present in this case. There was a
meeting of the minds between the parties to the contract but the deed did
not express the true intention of the parties due to mistake in the
designation of the lot subject of the deed. There is no dispute as to the
intention of the parties to sell the land to Alejandra Delfino but there was a
mistake as to the designation of the lot intended to be sold as stated in the
Settlement of Estate and Sale.