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Reformation of Property Agreement Case

The case involved a dispute over inheritance of land between petitioners and respondent. They reached an amicable settlement documented in a "Paknaan" agreement, but it failed to include a sufficient description of the inherited property. While the lower court refused to enforce the agreement, the Supreme Court ruled that this was an error that called for reformation of the agreement, not nullification, as there was a meeting of the minds between the parties. Reformation is an equitable remedy used to amend a written instrument to reflect the actual intent of the parties when there was a mistake in documenting that intent. As long as the principal object is determinable, even without a precise description, reformation is appropriate rather than voiding the entire agreement

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117 views1 page

Reformation of Property Agreement Case

The case involved a dispute over inheritance of land between petitioners and respondent. They reached an amicable settlement documented in a "Paknaan" agreement, but it failed to include a sufficient description of the inherited property. While the lower court refused to enforce the agreement, the Supreme Court ruled that this was an error that called for reformation of the agreement, not nullification, as there was a meeting of the minds between the parties. Reformation is an equitable remedy used to amend a written instrument to reflect the actual intent of the parties when there was a mistake in documenting that intent. As long as the principal object is determinable, even without a precise description, reformation is appropriate rather than voiding the entire agreement

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Sarah Jane Usop
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VILLEGAS V.

ARJONA 425 SCRA 57 (2004)


1359-1369 – Reformation of Instruments

FACTS: In December 1996, Quiros and Villegas filed with the office of the Barangay Captain of Labney, Pangasinan, a complaint for
recovery of ownership and possession of a parcel of land.

Petitioners sought to recover from their uncle Marcelo Arjona, one of the respondents herein, their lawful share of the inheritance from
their late grandmother Rosa Arjona Quiros.

In 1997, an amicable settlement was reached between the parties. By reason thereof, respondent Arjona executed a document
denominated as "PAKNAAN" ("Agreement", in Pangasinan dialect). Petitioners filed a complaint with the MCTC with prayer for the
issuance of a writ of execution of the compromise agreement which was denied because the subject property cannot be determined with
certainty.

The RTC reversed the decision of the municipal court on appeal and ordered the issuance of the writ of execution. Respondents appealed
to the CA, which reversed the decision of the RTC and reinstated the decision of the MCTC

ISSUE: WON failure to include in Paknaan a sufficient description of the property to convey calls for reformation.

RULING: Although both parties agreed to transfer one-hectare real property, they failed to include in the written document a sufficient
description of the property to convey. This error is not one for nullification of the instrument but only for reformation.

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.

Reformation is a remedy in equity whereby a written instrument is made or construed so as to express or conform to the real intention of
the parties where some error or mistake has been committed. In granting reformation, the remedy in equity is not making a new contract
for the parties but establishing and perpetuating the real contract between the parties which, under the technical rules of law, could not be
enforced but for such reformation.

REQUISITES OF REFORMATION:

1. There must have been a meeting of 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 due to mistake, fraud, inequitable conduct or accident.

Here, the inability of the municipal court to identify the exact location of the inherited property did not negate the principal object of the
contract.

This is an error occasioned by the failure of the parties to describe the subject property, which is correctible by reformation and does not
indicate the absence of the principal object as to render the contract void. It cannot be disputed that the object is determinable as to its
kind and can be determined without need of a new contract or agreement.

Atty. Alabastro’s Discussion: With regards to the PAKNAAN, there is this issue on its validity on the account that it did not
describe, in certainty, the nature of the object, specific location of the property, which is the subject matter of the contract.

Does that fact render the agreement as void? Or, should it be corrected through reformation?
- The Court said that it is only correctible by reformation. With respect to the object, one of its characteristics is that is should be
determinate or, at least, determinable.

In Civil Procedure, there is this judgment upon a compromise. That is a judgment rendered by the court based on a compromise
agreement between the parties.

Here, the Court held that, even though there is an issue on the determinability of the object, the compromise agreement is still valid.

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