Sarming vs. Dy

Reformation of an instrument is proper under Article 1359 of the Civil Code when there is a meeting of the minds between the parties, but the written document fails to express their true intention due to a mistake in the designation of the property subject of the sale; the true intention of the parties is determined not merely by the lot number stated in the deed but by their contemporaneous and subsequent acts, such as the actual delivery and possession of the specific parcel of land intended to be conveyed.

The case involves a dispute over two parcels of land—Lot 4163 (covered by OCT 3129-A) and Lot 5734 (covered by OCT 4918-A)—originally owned by Valentina Unto Flores. Following her death, her children Jose, Venancio, and Silveria took possession of Lot 5734, while Lot 4163, though registered solely in Silveria's name, was allegedly subdivided and co-owned with Jose. In 1956, the heirs of Jose sold their one-half share of Lot 4163 to Alejandra Delfino. However, due to Silveria's delivery of the wrong certificate of title, the deed of sale erroneously reflected the conveyance of Lot 5734, leading to a decades-long litigation over the proper reformation of the instrument to reflect the parties' true intent.

• Valentina Unto Flores owned Lot 5734 (covered by OCT 4918-A) and Lot 4163 (covered by OCT 3129-A) in Dumaguete City. Upon her death, her children Jose, Venancio, and Silveria took possession of Lot 5734, each occupying a one-third portion.
• Lot 4163, though registered solely in Silveria's name, was allegedly subdivided between Silveria and her brother Jose, with two rows of coconut trees serving as the boundary line.
• In January 1956, Luisa, Trinidad, Ruperto, and Tomasa—grandchildren of Jose—offered to sell their one-half share of Lot 4163 to Silveria, who declined for lack of money. They then sold it to Alejandra Delfino, with Silveria not objecting to the sale.
• Atty. Deogracias Pinili, Alejandra's lawyer, called a conference where Silveria declared she owned half of the lot and sold three coconut trees on the portion to be sold for P15. When asked for the title, Silveria, through her daughter Cristita Corsame, delivered OCT 4918-A (covering Lot 5734) instead of OCT 3129-A (covering Lot 4163).
• Believing OCT 4918-A was the correct title, Pinili prepared a notarized Settlement of Estate and Sale dated January 19, 1956, which stated the sale was for one-half of Lot 5734. Silveria was present during the preparation and signing and stated that the title covered Lot 4163.
• Alejandra Delfino immediately took possession of one-half of Lot 4163 (not Lot 5734) and introduced improvements thereon. Silveria's son, Michael Corsame, developed the area purchased by Alejandra.
• In 1958, when Alejandra purchased the adjoining portion, she discovered the mistake. She paid fees to release OCT 3129-A to Silveria, who promised to turn it over for reformation of the deed but failed to do so despite repeated demands.
• A spot investigation by a licensed surveyor revealed that Lot 4163 was subdivided into two portions, one belonging to Silveria and the other to the heirs of Jose, and that Silveria was occupying more than her one-third share of Lot 5734.
• Silveria Flores claimed in her answer that she was the sole owner of Lot 4163 and that the contract clearly stated Lot 5734 was the subject of the sale. She prayed for declaration of sole ownership, possession, and damages.

• The Court of Appeals erred in failing to order the dismissal of the case for lack of cause of action against Silveria Flores, who was not a party to the contract of sale involving Lot 5734.
• Silveria Flores, not being a party to the contract, cannot be compelled to execute a conveyance of sale involving Lot 4163, which was registered solely in her name.
• The courts grossly misapprehended the facts in ruling that the object of the contract was Lot 4163, when the undisputed evidence and the document itself showed the subject was Lot 5734.
• There was no mistake in the drafting of the document, which was prepared by Alejandra's lawyer, and the terms of the Settlement of Estate and Sale are clear and leave no doubt as to the intention of the parties under Article 1370 of the Civil Code.
• The grandchildren of Jose Flores were not owners of Lot 4163 and could not sell it, as it was solely owned by Silveria Flores who was paying the real property taxes.
• A public document executed through a notary public is evidence of facts in a clear and unequivocal manner and can only be contradicted by clear and convincing evidence, not merely preponderant evidence.
• The courts erred in substituting, revising, and modifying the agreement of the parties despite the absence of fraud, mistake, inequitable conduct, or accident.
• The Court of Appeals erred in failing to rule on whether the trial court gravely erred in ordering the payment of actual and moral damages and attorney's fees.

• The petition for review is pro forma as it does not raise any new matter worthy of consideration.
• The arguments and issues raised by petitioners have been more than adequately and exhaustively discussed by the trial court and the Court of Appeals.

• Procedural Issues:
  • Whether the petition for review is pro forma for failing to raise substantial questions of law.
  • Whether there is a cause of action against Silveria Flores and her heirs, given that she was allegedly not a party to the contract of sale.
• Substantive Issues:
  • Whether reformation of the instrument is proper by reason of a mistake in designating the correct lot number.
  • Whether the heirs of Alejandra Delfino are entitled to actual damages, moral damages, and attorney's fees.

• Procedural:
  • The Court held that the petition was not pro forma as it raised substantial questions of law regarding the propriety of reformation and the existence of a cause of action.
  • The Court ruled that a cause of action exists against Silveria Flores. The existence of a cause of action is determined by the allegations in the complaint, not by one's involvement in the contract per se. The test is whether, admitting the facts alleged, the court can render a valid judgment in accordance with the prayer.
  • Silveria was a party to the contract: she sold coconut trees on the property, delivered the title (albeit the wrong one), and physically delivered possession of Lot 4163 to Alejandra. Through her actions, she made the parties believe that the lot described in the deed was the same as the one intended to be sold, thus she could not deny involvement in the transaction requiring reformation.
• Substantive:
  • Reformation is proper under Article 1359 of the Civil Code when: (1) there is a meeting of the minds; (2) the instrument does not express the true intention of the parties; and (3) the failure is due to mistake, fraud, inequitable conduct, or accident. All requisites are present here.
  • The true intention of the parties was to sell and buy Lot 4163, not Lot 5734. This is evidenced by: (a) Alejandra's immediate possession of one-half of Lot 4163 since 1956 without objection from Silveria; (b) the survey showing Lot 4163 was subdivided between Silveria and Jose's heirs; (c) Silveria's recognition of Jose's grandchildren's rights; and (d) Silveria's possession of more than her one-third share of Lot 5734, contradicting her claim that it was the one sold.
  • Following Atilano v. Atilano, when one sells or buys real property, he sells or buys it as shown and seen at its actual setting and physical metes and bounds, not by the mere lot number assigned in the certificate of title.
  • The award of actual damages (P5,000) was set aside for lack of evidentiary support. The award of moral damages (P10,000) was set aside absent a specific finding that petitioners acted in bad faith or with malice.
  • The award of attorney's fees (P2,000) was affirmed under Article 2208(2) of the Civil Code, as petitioners' unjustified refusal to reform the document compelled respondents to litigate to protect their interest.

• Reformation of Instrument (Article 1359, Civil Code) — A remedy in equity by which a written instrument is made to conform to the real intention of the parties when, due to mistake, fraud, inequitable conduct, or accident, the instrument does not express the true agreement. The requisites are: (1) meeting of minds; (2) instrument fails to express true intention; and (3) failure due to mistake, fraud, inequitable conduct, or accident. Applied here to correct the erroneous designation of Lot 5734 to Lot 4163.
• Sale of Real Property by Physical Description — Following Atilano v. Atilano, a buyer purchases the property as physically shown and delineated by metes and bounds, not merely by the lot number stated in the certificate of title. This doctrine was applied to determine that the true object of the sale was Lot 4163, which was actually delivered and possessed, despite the deed stating Lot 5734.
• Determination of Cause of Action — The existence of a cause of action is determined solely by the allegations in the complaint, not by extraneous facts or by one's participation in the contract. The test is whether, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer.
• Public Document as Evidence — While a public document executed through a notary public is evidence of the facts stated therein in a clear and unequivocal manner, it may be contradicted by clear and convincing evidence (not merely preponderant evidence) when reformation is sought on the ground of mistake.

• "When one sells or buys real property, he sells or buys the said property as is shown to her and as he sees it, at its actual setting and by its physical metes and bounds, not by the mere lot number assigned to it in the certificate of title."
• "Reformation is that remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties."
• "The test of sufficiency of the facts found in a complaint as constituting a cause of action is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer in the complaint."
• "While intentions involve a state of mind which may sometimes be difficult to decipher, subsequent and contemporaneous acts of the parties as well as the evidentiary facts as proved and admitted can be reflective of one’s intention."

• Atilano v. Atilano (G.R. No. L-22487, 28 SCRA 231) — Established the doctrine that property is bought and sold based on physical metes and bounds, not merely by lot number; applied to determine the true object of the sale.
• Capitol Insurance & Surety Co. Inc. v. Central Azucarera del Davao (221 SCRA 98) and Ozaeta v. CA (228 SCRA 350) — Cited by petitioners regarding principles of cause of action and parties to contracts; distinguished or applied by the Court in ruling on Silveria's status as a necessary party.
• Viewmaster Construction Corporation v. Roxas (G.R. No. 133576, 335 SCRA 540) — Cited for the procedural rule that the existence of a cause of action is determined solely by the allegations in the complaint.
• NIA v. Gamit (G.R. No. 85869, 215 SCRA 436) and Huibonhoa v. CA (G.R. Nos. 95897 & 102604, 320 SCRA 625) — Cited for the definition of reformation of instrument and its requisites under Article 1359.
• Lorenzana v. People (G.R. No. 138666) and Ong v. CA (G.R. No. 95386, 272 SCRA 725) — Cited for the principle that factual findings of the trial court, when affirmed by the Court of Appeals, are binding upon the Supreme Court and entitled to utmost respect.
• Fuentes, Jr. v. CA (G.R. No. 111692, 253 SCRA 430) — Cited for the rule that actual damages, if not supported by evidence on record, cannot be granted.

• Article 1359, Civil Code — Governs the reformation of instruments when there is a meeting of minds but the instrument does not express the true intention due to mistake, fraud, inequitable conduct, or accident; basis for the grant of reformation.
• Article 1370, Civil Code — Referenced by petitioners regarding the interpretation of contracts based on clear terms; the Court applied principles of interpretation to determine the true intent of the parties from their conduct.
• Article 2208(2), Civil Code — Basis for the award of attorney's fees when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.