ObliCon 3rd 64 Bentir Vs Leanda 330 SCRA 591, GR 128991 (April 12, 2000)

Yolanda Rosello-Bentir, Samuel Pormida and Charito Pormida [petitioners]

Vs Honorable Mateo M. Leanda (in his capacity as Presiding Judge of RTC
Tacloban City, Branch 8, and Leyte Gulf Traders, Inc. [respondents], 330
SCRA 591, GR 128991 (April 12, 2000)

Facts:
On May 15 1992, respondent Leyte Gulf Traders Inc., as respondent
corporation, filed a complaint for reformation of instrument, specific
performance, annulment of conditional sale and damages against
petitioners Bentir and spouses Pormida.

Respondent corporation alleged that it entered into a contract of lease of a

parcel of land with petitioner Bentir for a period of 20 yrs starting May 5,
1968, and the lease was extended for another 4 yrs. Or until May 31, 1992.

On May 5, 1989, petitioner Bentir sold the leased premises to spouses

Pormida.

Respondent Corporation questioned the sale alleging that it had a right of

first refusal. It filed a civil case 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
that in the event petitioner Bentir leases or sell the lot after the expiration,
respondent corporation has the right to equal the highest offer.

Petitioner filed their answer alleging that the inadvertence of the lawyer is
not a ground for reformation within the prescriptive period of 10 years
from its execution.

Issue:
Whether or not, the action for reformation of instrument has prescribed?
YES

1
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 parties, an
instrument already executed is allowed by law to be reformed. The
remedy, being an extraordinary one, must be subject to limitations, among
which is laches. The prescriptive period for actions based upon a written
contract and for reformation of an instrument is 10 years under Art 1144.

In this case, respondent corporation had 10 yrs. 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 24 yrs after the cause of action accrued,
hence, its cause of action has become stale, hence, time-barred.

The 10 yrs prescriptive period should not be reckoned from the 4 yr

extension of the lease contract after it expired in 1988 because it was not
an implied new lease that “the other term of the original contract” were
deemed revived in the implied new lease as contemplated under Art 1670.

Art 1670 would not apply because if the extended period of lease was
expressly agreed upon then the term should be exactly what the parties
stipulated, not more, not less. Second, even if the suppose 4 year extended
lease be considered as an implied new lease under Art 1670, “the other
terms of the original contract” are only those terms which are agreement
of the property leased. The prescriptive period of 10-years provided for in
Art.1144 applies by operation of law, not by the will of the parties

Assuming that the action is not time-barred, the action will still not proper.
An action for reformation is instituted as a special civil action for
declaratory relief to secure an authoritative statement of the rights an
obligation of the parties for their guidance in enforcement thereof and it
may be entertained only before the breach or violation of the law or the
contract to which it refers.

In this case, respondent corporation brought the present action for

reformation after an alleged breach or violation of the contract was already
committed by petitioner Bentir. The remedy of reformation no longer lies.

2
Rosello-Bentir vs. Section 1, Rule 63 of the 1997 New Rules of Civil
Leanda, G.R. No. Procedure.
12891, April 12,
2000, 125 SCAD
322, 330 SCRA
591
Rosello-Bentir vs. Thus, an action for reformation instituted after the
Leanda, G.R. No. lessor allegedly breached the contract with the lessee
12891, April 12, giving the lessee a right of first refusal to buy the
2000, 125 SCAD leased premises, and which right of first refusal was
322, 330 SCRA the subject of the action for reformation, cannot
591 prosper.