885 Phil. 372
LOPEZ, J.:
A portion of land from Lot 199, x x x, on its Northern part, containing a surveyed and plotted area of EIGHT HUNDRED (800) SQUARE METERS, more or less, xxx adjoining the Sibuyan Sea; Bounded on the Northeast by seashore of Sibuyan Sea with a beachfront of 40 meters length, on the Southeast by the remaining portion of Lot 199, the Northwest by Lot 200 of the Heirs of Sabiniano Castro, and the Southwest by the remaining portion of Lot 199 x x x.[3]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. Ulysses confronted Lydia who promised to make necessary corrections. At that time, Lydia convinced Ulysses to buy an additional 400-square meter portion of Lot No. 199 that is adjacent to the flat terrain for P160,000.00 on installment basis. Ulysses agreed on the condition that Lydia will amend the deed of sale reflecting the correct location, area and consideration. On October 19, 1992, the parties entered into a contract to sell over the 400-square meter lot. Ulysses gave initial payment and Lydia issued the corresponding receipt.[4] Meantime, Ulysses began constructing the resort and paid the remaining amount. In 1997, Ulysses asked Lydia to prepare the amended deed of sale but she refused because he still has an unpaid balance of P12,000.00. Yet, Ulysses maintained that he already paid Lydia more than P160,000.00.[5]
That I, Bernadette D. Miguel, xxx, for and in consideration of the sum of EIGHTY THOUSAND PESOS (P80,000.00), xxx from RUDY ULYSSES BANICO, x x x do hereby SELL, TRANSFER and CONVEY by way of Absolute Sale unto the said RUDY ULYSSES, his heirs and assigns a portion, consisting of 800 square meters only of a certain parcel of land xxx described as follows:However, Ulysses did not sign the deed because it failed to state the true consideration.[7] On July 9, 2002, Ulysses filed against Lydia an action for specific performance and damages before the Regional Trial Court (RTC) docketed as Civil Case No. 02-104001.[8] Ulysses asked that Lydia be ordered to execute an amended contract reflecting all the stipulations between the parties. In her answer,[9] Lydia claimed that the contract over the 800-square meter lot is distinct from the additional 400-square meter lot. The first transaction was based on the consummated Deed of Absolute Sale dated February 8, 1992. She even executed a Deed of Absolute Sale dated December 6, 2001, but Ulysses rejected it. In contrast, the second transaction transpired on October 19, 1992, but Ulysses failed to settle the balance of the purchase price.
"A parcel of land (Lot No. 199) with an area of 6100 square meters, more or less, x x x."x x x x
That the portion herein sold constitute part of the bigger parcel of land above-described and is bounded as follows: on North by Lot 199-B; on the East by Proposed Brgy. Road; on the South by Lot 199-A-2; and on the West by Lot 199-C.[6] (Emphasis supplied.)
There is [sic] no qualms anymore on the part of Stager as to the lot that plaintiff originally occupied and built his house on. She did not vigorously contest the same, nor did she ask for the removal of the said structure despite her initial observation and allegation that the lot he occupied was actually not the one that was agreed upon or described in the Deed of Absolute Sale that they have originally executed. All that Stager did after learning about the erroneous occupation was to suggest to plaintiff that he buy another 400 square meters of her property so that she could move to that area which he originally purchased because she would be caught or placed in between the two properties. She also told him that such purchase would allow him to have 1200 square meters of the property which would be adjacent to each other. Thus, by the actions of both parties, it would seem that the lot first occupied by plaintiff is the one that they have actually intended to be the subject of the sale. The problem, though, is that the Deed of Sale did not reflect or state the correct portion of Stager's property. Reformation is thus warranted to reflect the true intention of parties in the subject deed, x x x.Dissatisfied, both parties elevated the case to the CA docketed as CA-G.R. CV No. 104805. The Heirs of Lydia argued that the RTC erred in granting the reformation of the Deed of Absolute Sale dated February 8, 1992 and ordering them to execute another contract of sale in favor of Ulysses.[12] On the other hand, Ulysses insisted that he fully paid the purchase price of P160,000.00 in the contract to sell and that he is entitled to damages.[13]
x x x x
To reiterate, there is no more issue anymore as to the first lot (800 square meters) that plaintiff bought from Stager. She herself has already clarified and admitted to the same. What is left for the parties to do is to amend or reform the deed of sale in order to reflect and state therein to correct the erroneous entries or description pertaining to the subject lot. The mistake is obviously mutual, with both parties expectedly not being well-versed in comprehending the technical description of the property. In Dihiansan v. Court of Appeals, it has been explained that the mistake in designating the lot in the document does not vitiate the consent of the parties, or affect the validity and binding effect of the contract. The reason is that when one sells or buys real property x x x 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.
When a mutual mistake of the parties causes the failure of the instrument to disclose their real agreement, said instrument may be reformed. Thus, the Deed of Sale covering the first real estate transaction between the parties should be amended or reformed. It should be noted that Stager even executed a second Deed of Sale that is duly notarized covering the first lot which actually already reflected the correct description thereof.
With regard to the second lot (400 square meters), the issue that needs to be resolved is whether or not full payment has already been made by plaintiff therefor. It is worth to note that from the outset, Stager has already made it clear that she has no more issues with regard to the 800 square meter lot that she sold to plaintiff and that what she is actually just complaining about is the 400 square-meter lot that the latter has fenced despite the fact that he has yet to complete payment therefor.
x x x x
While the court gives value and credence to the receipts proffered by plaintiff, not all of them will be credited to the obligation in question for lack of proof that the purpose thereof was for the payment for the 400 square-meter lot. Thus, Exhibit "C-3" cannot be taken into consideration for it does not state the purpose of the payment or amount reflected therein. On the other hand, Exhibits "C-9" and "C-19" states [sic] a different purpose. Exhibits "C-7" and "C-12" were signed by different persons and stated no purpose therefor, while Exhibits "C-10" and "C-24" bears [sic] no signature at all. The rest of the receipts are all signed by Stager and sufficiently refers [sic] to the payment of the 400 square-meter lot. Thus, as per the Court's own computation, the total amount that plaintiff was able to pay Stager is P153,400.00 leaving a balance of P6,600.00.x x x x
WHEREFORE, premises considered, judgment is hereby rendered ordering:SO ORDERED.[11] (Emphases supplied; citations omitted.)
- The Heirs of Lydia Bernadette M. Stager x x x to amend/reform the Deed of Absolute Sale dated February 8, 1992 so as to reflect the exact location of the 800 square-meter lot that plaintiff has purchased from Lydia Bernadette M. Stager;
- Plaintiff to pay the Heirs of Lydia Bernadette M. Stager x x x the sum of P6,600.00 representing the unpaid balance of the purchase price of the subject 400 square-meter lot;
- The Heirs of Lydia Bernadette M. Stager x x x to execute in favor of plaintiff another Deed of Absolute Sale covering the 400 square- meter lot, or to include the 400 square-meter lot in the Deed of Absolute Sale meant for the 800 square-meter lot.
WHEREFORE, premises considered, the Decision dated February 18, 2015 of the Regional Trial Court x x x in Civil Case No. 02-104001 is hereby MODIFIED. Accordingly, judgment is hereby rendered:Undaunted, both parties sought reconsideration. The Heirs of Lydia prayed that the contract to sell as to the 400-sq m lot be declared ineffective given the long period of time that Ulysses failed to pay the purchase price.[16] Conversely, Ulysses maintained that he paid more than P160,000.00 pursuant to the contract to sell. With regard to the filing of an action for reformation, Ulysses argued that the prescriptive period is tolled when Lydia acknowledged her obligation and executed a Deed of Absolute Sale dated December 6, 2001 containing the accurate description of the 800-sq m lot.[17]
(1) DENYING the REFORMATION of the Deed of Absolute Sale dated February 8, 1992 x x x, on the ground of prescription;
(2) ORDERING Plaintiff-Appellant Ulysses Rudi V. Banico to PAY the heirs of Defendant Lydia Bernadette M. Stager x x x, the balance of Php5,860.00, with 6% interest per annum from the finality of this Decision until full payment thereof;
(3) Upon full payment of the balance in the aforementioned amount, DIRECTING the heirs of Defendant Lydia Bernadette M. Stager x x x, to EXECUTE the necessary deed of sale of the 400 square-meter lot in favor of Plaintiff-Appellant Ulysses Rudi V. Banico; and
(4) DISMISSING Plaintiff-Appellant Ulysses Rudi V. Banico's claims for damages.
SO ORDERED.[15] (Emphasis in the original.)
xxx For an action for reformation of instrument to prosper, the following requisites must concur: (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 second requisite is not present in this case. As borne out by the records of this case, what Stager sold to Banico was at the side of her property, and not at the center as Banico claims.Aggrieved, Ulysses filed this petition on the ground that the CA erred in ruling that the party who caused the ambiguity cannot ask to reform the contract. Ulysses also argued that the CA erred in appreciating the receipts and in finding that he has still unpaid balance to Lydia.[20]
Banico had only himself to blame. Admittedly, it was only after the consummation of the sale of the first lot that he decided to visit the same. It was also Banico's lawyer who prepared the said Deed of Absolute Sale. Stager verbally agreed to amend the Deed of Absolute Sale after its execution only as an accommodation to Banico, but not because the said deed failed to express their true intent. Worse, Banico refused to afix his signature to the amended and already notarized deed of sale of the first lot dated December 6, 2001 prepared by Stager herself. The second requisite for reformation being absent, it is futile to discuss further whether the prescriptive period therefor had been tolled.
As for Banico's allegation of full payment of the purchase price of the second lot, it is worth reiterating that he, as the debtor, has the burden of showing with legal certainty that the obligation has been discharged by payment. Banico may not validly claim that Stager admitted to have received additional payments because aside from her institution of an earlier action for collection, her consistent denial thereof during trial belies such allegation. The receipts produced by Banico do not likewise suggest full payment.x x x x
WHEREFORE, premises considered, Plaintiff-Appellant's Motion for Reconsideration and Defendants-Appellants' Partial Motion for Reconsideration are hereby DENIED.
SO ORDERED.[19] (Emphases supplied.)
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.The rationale is that it would be unjust to allow the enforcement of an instrument which does not reflect or disclose the parties' real meeting of the minds.[23] In an action for reformation, the court does not attempt to make another contract for the parties[24] but the instrument is made or construed to express or conform to their real intention.[25] Hence, we determine whether the Deed of Absolute Sale dated February 8, 1992 between Lydia and Ulysses failed to reflect the true intention of the parties allowing reformation of the instrument.
Banico's receipts, marked as Exhibits "C" to "C-30[,"] show payments of a total of PhP 167,840.00 - an amount more than the consideration of PhP 160,000.00 for the sale of the second lot. The RTC, however, rejected Exhibits "C-3[,"] "C-7[,"] "C-9[,"] "C-10[,"] "C-12[,"] "C-19" and "C-24" for various reasons.Applying Nacar v. Gallery Frames, et al.,[38] the amount of P5,860.00 shall earn interest at the rate of 6% per annum from the date of the RTC's Decision on February 18, 2015 until full payment. Similarly, the CA is correct in requiring the Heirs of Lydia to execute the corresponding deed of absolute sale over the 400-sq m lot upon satisfaction of the unpaid balance. As the CA aptly ruled, Ulysses had paid considerable amount to Lydia under the contract to sell. Absent substantial breach of the contract, the rescission is not allowed and Ulysses must be permitted to complete the payment.
We agree with the RTC that Exhibits "C-10" for the amount of PhP3,500.00 and "C-24" for the amount of PhP 1,200.00 were not signed by Stager and do not sufficiently prove payment to her. We likewise share the RTC's view that Exhibit "C-9" for the amount of PhP1,000.00 is totally unrelated to this case since the same was issued as payment for pawned earrings. Exhibit "C-19" evidencing the receipt of PhP500.00 from Banico "for credit" to Stager was also correctly disregarded, especially since the latter denied having executed the same. Exhibit "C-12" for the amount of PhP500.00 was also signed only by Stager's son, Bobby Unilongo, without stating any purpose.
Although Exhibits "C-3" evidencing Stager's receipt of the amount of PhP2,000.00 as "downpayment[,"] and "C-7" showing the receipt by Stager's nephew of PhP5,000.00 "charged to Stager[,"] were not denied by Stager in her testimony, they do not establish payment specifically for the sale of the second lot.
As a general rule, one who pleads payment has the burden of proving it. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. Banico failed to prove payment in the case of the aforementioned exhibits, totaling PhP13,700.00.
The RTC, however, committed an error in computing Banico's balance. The receipts marked as Exhibits "C" to "C-30" show payment of a total of PhP167,840.00. We subtract from this amount the amounts of the rejected receipts worth PhP 13,700.00, yielding a total payment of [PhP 154.140.00]. Thus, Banico should be ordered to pay Stager's heirs the balance of only PhP5,860.00, and not PhP6,600.00 as ordered by the RTC.[37] (Emphases supplied; citation omitted.)