REFORMATION OF INSTRUMENTS

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.

Reformation is a remedy by means of which a written instrument (contract) is amended or

rectified so as to express or conform to the real agreement or intention of the parties when by
reason of mistake, fraud, inequitable conduct, or accident, the instrument fails to express such
agreement or intention. It connotes a valid written contract. It also presupposes a meeting of the
minds, only that the instrument does not refer to the true intention of the parties by reason of
mistake, fraud, inequitable conduct, or accident.

Requisites of reformation.

In order that reformation may be availed of as a remedy, the

following requisites must be present:

(1) There is a meeting of the minds of the parties to the contract;

(2) The written instrument does not express the true agreement or intention of the parties;

(3) The failure to express the true intention is due to mistake, fraud, inequitable conduct, or
accident;

- However, if such fraud, inequitable conduct, mistake, or accident prevented a meeting of

the minds, the remedy is annulment of the contract, not reformation

(4) The facts upon which relief by way of reformation of the instrument is sought are put in issue
by the pleadings; and (5) There is clear and convincing evidence1 (which is more than mere
preponderance of evidence) of the mistake, fraud, inequitable conduct, or accident.

Both parties must have executed a writing that does not reflect their actual agreement.
Reformation is thus not available where no writing exists, or a writing exists, but the parties do
not intend it to express their final agreement, or no attempt is made to show any vice of consent
therein.
REFORMATION VS ANNULMENT

REFORMATION ANNULMENT
There is meeting of the
minds between the There is no meeting of the
parties as to the object, minds. Consent is vitiated.
cause of the contract
The instrument failed to
The meeting of the minds was
express the true intention
prevented by reason of mistake,
of the parties due to
fraud, inequitable conduct or
mistake, fraud,
accident perpetrated by one party
inequitable conduct or
against the other
accident.
The purpose of
reformation is to
The purpose of annulment is to
establish the true
render inefficacious the contract
agreement of the parties
in question
and not to create a new
one

The determination whether a contract may be reformed is a two-step process:

a. It must be shown that the instrument embodying the contract does not reveal the true intention
of the parties

b. The existence of a real and an actual contract must be shown.

The Basis of reformation is equity. The courts by reformation do not attempt to make a new
contract for the parties, but tries to make the instrument express their real agreement. The
rationale for such doctrine is that it would be unjust and inequitable to allow the enforcement of
a written instrument which does not reflect the parties’ meeting of the minds.

Burden of proof is upon the party who insists the party should be reformed based on some legal
ground. It is also a right in personam.

The Prescriptive period is within ten years from the time the cause of action accrues. (The action
may also be barred by laches.) Note that the cause of action accrues upon:

- the knowledge of the ground for reformation, or

- from the date of the execution of the instrument embodying the contract if the causes for
reformation was already known at the time of the execution of the contract

The action for reformation is called a special civil action for declaratory relief under the Rules
of
Court, and its purpose is to secure an authoritative statement of the rights and obligations of the
parties for their guidance in the enforcement thereof.
WHEN IS REFORMATION PROPER?

1. THERE IS A MISTAKE.

a. There is a mutual mistake of the parties which involves factual matters

(generally).

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.

- To prove that the mistake was mutual and involved factual matters which caused the failure of
the expression of the parties’ true intent, more than a mere preponderance of evidence is
required.

- There may be no need for reformation even though there was mistake when the parties executed
the contract according to their true intent without need of court intervention (Atilano v. Atilano)

b. One party is mistaken, and the other acted fraudulently or inequitably in such a way to
conceal the parties’ true intention.

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.

c. One party is mistaken, and the other knew or believed that the instrument did not state
their real agreement

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.

d. The clerk, typist, or person drafting the instrument commits an error through
negligence, lack of skill, ignorance, or bad faith.

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.

2. IT IS A MORTAGE OF REAL OR PERSONAL PROPERTY, but the instrument

says it is an absolute sale with a right of repurchase.

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.
WHEN IS REFORMATION NOT PROPER?

1. Simple donations inter vivos where no condition is imposed

- These donations are acts of liberality, and do not involve any meeting of the minds (there
is no negotiation or agreement)

2. Wills
- Similar to simple donations

3. When the real agreement is void

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.

4. When the party seeking reformation has already brought an action to enforce the
instrument.

- Such party is stopped already

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.

WHO MAY ORDER REFORMATION?

1. In mutual mistake: either party or their successors in interest

2. Not mutual mistake: upon petition of the injured party, his/her heirs or assigns

Art. 1369. The procedure for the reformation of instrument shall be governed by
rules of court to be promulgated by the Supreme Court.