La pesadilla que no da tregua

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.

LECTURE NOTES ON CIVIL LAW

Professor Ruben F. Balane

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.

 Once the minds of the contracting parties meet, a valid contract exists, whether the agreement is reduced to writing or not. There are instances however, where in reducing their agreements to writing, the true intention of the contracting parties are not correctly expressed in the document, either by reason of mistake, fraud, inequitable conduct or accident. It is in such cases that reformation of instruments is proper. The action for such relief rests on the theory that the parties came to an understanding, but in reducing it to writing, through mutual mistake, fraud or some other reason, some provision was omitted or mistakenly inserted, and the action to change the instrument so as to make it conform to the contract agreed upon.

 Reformation Distinguished from Annulment

 The action for reformation of instruments presupposes that there is a valid existing contract between the parties, and only the document or instrument which was drawn up and signed by them does not correctly express the terms of their agreement. On the other hand, if the minds of the parties did not meet, or if the consent of either one was vitiated by violence or intimidation or mistake or fraud, so that no real and valid contract was made, the action is for annulment.

 Annulment involves a complete nullification of the contract while reformation gives life to it upon certain corrections.

 Operation and Effect of Reformation

 Upon reformation of an instrument, the general rule is that it relates back to, and takes effect from the time of its original execution, especially as between the parties.

 Requisites of Reformation

1. There must have been a meeting of the minds upon the contract

LECTURE NOTES ON CIVIL LAW

Professor Ruben F. Balane

2. The instrument or document evidencing the contract does not express the true agreement between the parties

3. The failure of the instrument to express the agreement must be due to mistake, fraud, inequitable conduct or accident

 Requisites of Mistake

a. That the mistake is one of fact

 Whenever an instrument is drawn with the intention of carrying an agreement previously made, but which, due to mistake or inadvertence of the draftsman or clerk, does not carry out the intention of the parties, but violates it, there is a ground to correct the mistake by reforming the instrument.

b. That it was common to both parties

 A written instrument may be reformed where there is a mistake on 1 side and fraud or inequitable conduct on the other, as where 1 party to an instrument has made a mistake and the other knows it and conceals the truth from him.

 The mistake of 1 party must refer to the contents of the instrument and not the subject mater or the principal conditions of the agreement. In the latter case, an action for annulment is the proper remedy.

 If 2 parties agree upon the mortgage or pledge of real property or personal property, but the instrument states that the property is sold absolutely or with a right of repurchase, reformation is proper.

c. The proof of mutual mistake must be clear and convincing

 Limitations of Reformation

1. Reformation is not proper in the following cases:

a. Simple donations inter vivos wherein no condition is imposed b. Wills

c. When the real agreement is void 2. Who may ask for reformation

a. If the mistake is mutual

 Reformation may be ordered at the instance of either party or his successors in interest

b. If the mistake is not mutual

 Reformation may be ordered upon petition of the injured party or his heirs and assigns

3. Effect of enforcing an action

 When one of the parties has brought an action to enforce the instrument, he cannot subsequently ask for its reformation.

LECTURE NOTES ON CIVIL LAW

Professor Ruben F. Balane