Case Digest (G.R. No. 128991)
Facts:
On May 15, 1992, Leyte Gulf Traders, Inc. filed Civil Case No. 92-05-88 for reformation of instrument, specific performance, annulment of conditional sale and damages against Yolanda Rosello-Bentir and spouses Samuel Pormida and Charito Pormida in RTC, Tacloban City; the trial court (Br. 7) dismissed the reformation claim as prescribed on December 15, 1995, a subsequent RTC branch set aside that dismissal, and the Court of Appeals affirmed the latter on January 17, 1997.
The complaint alleged a lease dated May 5, 1968 for twenty years (extended allegedly four years) and an oral right of first refusal omitted from the written lease; petitioners sold the lot on May 5, 1989 (with a final deed in December 1991), and the reformation suit was filed in 1992.
Issues:
- Has the action for reformation of an instrument prescribed?
- If not prescribed, is respondent entitled to the remedy of reformation sought?
- Does an implied renewal under Article 1670 revive an option to buy or the prescriptive period for reformation?
- Is a status quo ante order an injunctive relief that must comply with Rule 58 of the Rules of Court?
Ruling:
The petition was GRANTED; the Court reversed the Court of Appeals decision of January 17, 1997 and reinstated the RTC Branch 7 order of December 15, 1995 dismissing the action for reformation as prescribed. The Court held that the reformation claim prescribed under Article 1144 and, in any event, reformation could not lie because the action was brought after the alleged breach; the Court did not need to resolve the remaining issues.
Ratio:
The Court explained that reformation of an instrument is an extraordinary equitable remedy that must be exercised sparingly and is subject to laches and prescription; actions upon a written contract, including reformation, prescribe in ten years under Article 1144, and the right of action accrued at the execution of the lease on May 5, 1968, so the 1992 suit was time-barred. The Court further held that even if prescription were avoided, an action for reformation is a special civil action for declaratory relief under Rule 64 and is proper only before the breach it seeks to prevent, so reformation was unavailable after the alleged sale.
Doctrine:
- Reformation of an instrument is an extraordinary equitable remedy to be exercised sparingly.
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