Cronograma de obras

KAPUNAN April

NATURE

Certiorari with prayer for a writ of preliminary injunction

FACTS

- May 15, 1992- Leyte Gulf Traders, Inc. filed a complaint for reformation of instrument, specific performance, annulment of conditional sale and damages with prayer for writ of injunction against Yolanda Rosello-Bentir and the spouses Samuel and Charito Pormida.

- LGT Inc alleged that it entered into a contract of lease of a parcel of land with Bentir for a period of 20 years starting May 5, 1968.

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- LGT Inc said the lease was extended for another 4years or until May 31, 1992. - May 5, 1989- Bentir sold the leased premises to spouses Samuel and Charito Pormada.

- LGT Inc questioned the sale alleging that it had a right of first refusal. It sought 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 Bentir leases or sells the lot after the expiration of the lease, LGT Inc has the right to equal the highest offer.

- In due time, petitioners filed their answer alleging that the inadvertence of the lawyer who prepared the lease contract is not a ground for reformation.

- They further contended that respondent corporation is guilty of laches for not bringing the case for reformation of the lease contract within the prescriptive period of 10 years from its execution.

- LGT Inc then filed its reply and on November 18, 1992, filed a motion to admit amended complaint. Said motion was granted by the lower court.

- Thereafter, Petitioners filed a motion to dismiss reiterating that the complaint should be dismissed on the ground of prescription.

- Dec. 15, 1995- TC through Judge Pedro S. Espina issued an order dismissing the complaint premised on its finding that the action for reformation had already prescribed.

- Dec. 29, 1995- LGT Inc filed a MR of the order dismissing the complaint.

- Jan 11, 1996, LGT Inc filed an urgent ex-parte motion for issuance of an order directing the petitioners, or their representatives or agents to refrain from taking possession of the land in question.

- March 28, 1996 - the case was re-raffled and assigned to RTC, Tacloban City, presided by herein respondent judge Mateo M. Leanda.

- May 10, 1996 – Leanda reversed the order of dismissal on the grounds that the action for reformation had not yet prescribed and the dismissal was "premature and precipitate", denying LGT Inc of its right to procedural due process.

- June 10, 1996- Leanda issued an order for status quo ante, enjoining petitioners to desist from occupying the property.

- Jan. 17, 1997- CA affirmed the assailed decision of Leanda; denied MR

ISSUE

WON the complaint for reformation has prescribed and has not, WON LGT Inc is entitled to the remedy of reformation sought

HELD

YES, it has prescribed. LGT Inc is no longer entitled to the reformation sought.

Reasoning 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.

- Consequently, the courts, as the agencies authorized by law to exercise the power to reform an instrument, must necessarily exercise that power sparingly and with great caution and zealous care. Moreover, 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 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.

- If, according to LGT Inc., there was an agreement between the parties to extend the lease contract for 4 years after the original contract expired in 1988, then Art. 1670 would not apply as this provision speaks of an implied new lease (tacita

reconduccion) where at the end of the contract, the lessee continues to enjoy the

thing leased "with the acquiescence of the lessor", so that the duration of the lease is "not for the period of the original contract, but for the time established in Article 1682 and 1687." In other words, if the extended period of lease was expressly agreed upon by the parties, then the term should be exactly what the parties stipulated, not more, not less.

- Even if the supposed 4-year extended lease be considered as an implied new lease under Art. 1670, "the other terms of the original contract" contemplated in said provision are only those terms which are germane to the lessee's right of

continued enjoyment 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. Therefore, the right of action for reformation accrued from the date of execution of

the contract of lease in 1968.

- Even if we were to assume for the sake of argument that the instant action for reformation is not time-barred, LGT Inc's action will still not prosper because under Sec 1, Rule 64 of the New Rules of Court, an action for the reformation of an instrument is instituted as a special civil action for declaratory relief.

- Purpose of an action for declaratory relief- to secure an authoritative statement of the rights and obligations of the parties for their guidance in the enforcement or compliance and not to settle issues arising from an alleged breach thereof.

- Here, LGT Inc. brought the present action for reformation after an alleged breach or violation of the contract was already committed by Bentir. Consequently, the remedy of reformation no longer lies.

Disposition Petition is GRANTED. J. Leanda’s decision is reversed and set aside. J.

Espina’s decision dismissing the reformation is reinstated. _____________________

Art. 1144. The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law; (3) Upon a judgment.

Art. 1670. If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time

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established in articles 1682 and 1687. The other terms of the contract shall be revived.

ATILANO V ATILANO

;

21, 1969

MAKALINTAL May

Appeal from the decision of the Court of First Instance

FACTS

- In 1916, Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot No. 535 of the then municipality of Zamboanga. The vendee thereafter obtained transfer certificate of title No. 1134 in his name. In 1920 he had the land subdivided into five parts. On May 18 of the same year, after the subdivision had been effected, Eulogio Atilano I, for the sum of P150.00, executed a deed of sale covering lot No. 535-E in favor of his brother Eulogio Atilano II, who thereupon obtained transfer certificate of title No. 3129 in his name. Three other portions, namely lots Nos. 535-B, 535-C and 535-D, were likewise sold to other persons, the original owner, Eulogio Atilano I, retaining for himself only the remaining portion of the land, presumably covered by the title to lot No. 535-A. Upon his death the title to this lot passed to Ladislao Atilano, defendant in this case, in whose name the corresponding certificate (No. T-5056) was issued.

- On December 6, 1952, Eulogio Atilano II and his children obtained transfer certificate of title No. 4889 over lot No. 535-E in their names as co-owners. Then, on July 16, 1959, desiring to put an end to the co-ownership, they had the land resurveyed so that it could properly be subdivided; and it was then discovered that the land they were actually occupying on the strength of the deed of sale executed in 1920 was lot No. 535-A and not lot 535-E, as referred to in the deed, while the land which remained in the possession of the vendor, Eulogio Atilano I, and which passed to his successor, defendant Ladislao Atilano, was lot No. 535-E and not lot No. 535-A.

- On January 25, 1960, the heirs of Eulogio Atilano II, who was by then also deceased, filed the present action in the CFI of Zamboanga, alleging, that they had offered to surrender to the defendants the possession of lot No. 535-A and demanded in return the possession of lot No. 535-E, but that the defendants had refused to accept the exchange. The plaintiffs' insistence is quite understandable, since lot No. 535-E has an area of 2,612 sq m, 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 of May 18, 1920 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; that since 1916, when he acquired the entirety of lot No. 535, and up to the time of his death, Eulogio Atilano I had been possessing and had his house on the portion designated as lot No. 535-E, after which he was succeeded in such possession by the defendants herein; and that as a matter of fact Eulogio Atilano I even increased the area under his possession when on June 11, 1920 he bought a portion of an adjoining lot, No. 536, from its owner Fruto del Carpio. 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 for the plaintiffs since the property was registered under the Land Registration Act the defendants could not acquire it through prescription. There can be no dispute as to the correctness of this legal proposition; but the defendants, aside from alleging adverse possession in their answer and counterclaim, also alleged error in the deed of sale of May 18, 1920

ISSUE

WON the trial court rendered proper judgment for the plaintiffs since the property was registered under the Land Registration Act the defendants could not acquire it through prescription

HELD

NO. The court erred in granting the plaintiffs the lot.

Reasoning When one sells or buys real property, one sells or buys the property as

he sees it, in its actual setting and by its physical metes and bounds, and not by the mere lot number assigned to it in the certificate of title. The portion correctly referred to as lot No. 535-A was already in the possession of the vendee, Eulogio Atilano II, who had constructed his residence therein, even before the sale in his favor even before the subdivision of the entire lot No. 535 at the instance of its owner, Eulogio Atillano I. In like manner the latter had his house on the portion correctly identified, after the subdivision, as lot No. 535-E, even adding to the area thereof by purchasing a portion of an adjoining property belonging to a different owner. The two brothers continued in possession of the respective portions the rest of their lives, obviously ignorant of the initial mistake in the designation of the lot subject of the 1920 until 1959, when the mistake was discovered for the first time. - The real issue here is not adverse possession, but the real intention of the parties to that sale. From all the facts and circumstances we are convinced that the object thereof, as intended and understood by the parties, was that specific portion where the vendee was then already residing, where he reconstructed his house at the end of the war, and where his heirs, the plaintiffs herein, continued to reside thereafter: - The new Civil Code provides a remedy for such a situation by means of reformation of the instrument. This remedy is available when, there having been a meeting of the funds 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 on accident (Art. 1359, et seq.) In this case, the deed of sale executed in 1920 need no longer 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 deeds of conveyance.

Disposition WHEREFORE, 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. 595-A, in favor of the plaintiffs. Costs against the latter.

SARMING V DY

;

6, 2002