Banico v. Stager

 

Banico v. Stager

G.R. No. 232825

September 16, 2020

FACTS:

Lydia owns real property situated in Brgy. Manoc-Manoc, Boracay Island. The land adjoins the sea on its eastern part and is generally flat at the center but has an elevated rocky northern part. Lydia offered to sell the entire lot to Ulysses but he only agreed to buy an area suitable for building a beach resort. Upon payment of the purchase price, Ulysses took possession of the flat terrain and hired a surveyor. However, Ulysses discovered that the land described in the deed of sale refers to the elevated and rocky portion and not the flat area which he bought and occupied. The parties then entered into a contract to sell the additional portion. Ulysses began constructing the resort and paid the remaining amount. Ulysses then asked Lydia to prepare the amended deed of sale but she refused because he still has an unpaid balance yet Ulysses maintained that he already paid Lydia. Ulysses then filed an action for specific performance and damages before the RTC. Ulysses asked that Lydia be ordered to execute an amended contract reflecting all the stipulations between the parties. Lydia died and was substituted by her heirs. The RTC ordered the heirs of Lydia to reform the deed while Ulysses was ordered to pay the remaining balance for the second lot. On appeal, the CA modified the ruling of the RTC, denying the reformation on the ground of prescription.

ISSUE:

Whether the CA erred in ruling that the party who caused the ambiguity cannot ask to reform the contract.

HELD:

Yes. An action for reformation of instrument may prosper only upon the concurrence of the following: (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. The onus propandi is upon the party who insists that the contract should be reformed. Here, all these requisites are present. First, there was a meeting of the minds between the contracting parties. Second, the written instrument did not express the true intention of the parties. It bears emphasis that Ulysses bought an area suitable for building a beach resort. Lydia promised to rectify the erroneous description in the deed of sale. She did not protest the construction of the resort and instead offered Ulysses an additional portion. Moreover, Lydia acknowledged the transaction before the barangay and presented a notarized deed containing the accurate description of the flat terrain. At this juncture, Lydia never rebutted these acts and even admitted them in her answer. Taken together, Ulysses may validly ask for the reformation of the instrument.