Case Summary (G.R. No. 232825)
Petitioner
Ulysses Rudi Banico, assailing the Court of Appeals’ denial of reformation and contending full payment of the second lot and entitlement to damages.
Respondents
Heirs of Lydia Bernadette M. Stager: Bobby Unilongo I, Prospero Unilongo I & II, Maricon U. Bayog, Glenn Unilongo, Luzviminda Unilongo.
Key Dates
• 1991 – Offer by Lydia to sell entire Lot 199; Banico agrees to purchase only a buildable portion.
• February 8, 1992 – Deed of Absolute Sale executed over an 800 sq m portion for ₱350,000.
• October 19, 1992 – Contract to sell additional 400 sq m for ₱160,000 on installment.
• December 6, 2001 – Lydia presents a notarized amended deed correctly describing the 800 sq m lot; Banico refuses to sign (asserted unpaid balance).
• July 9, 2002 – Banico files for specific performance and damages in the RTC.
• February 18, 2015 – RTC orders reformation of the February 8, 1992 deed and computes a ₱6,600 unpaid balance on the 400 sq m lot; denies damages.
• February 22, 2017 – CA denies reformation (prescription), reduces unpaid balance to ₱5,860, orders deed upon payment, and denies damages.
• September 16, 2020 – Supreme Court decision.
Applicable Law
• 1987 Philippine Constitution
• New Civil Code: Art. 1305 (contract), Art. 1359 (reformation), Art. 1144 (prescription for written contracts, 10 years), Art. 1155 (interruption by written acknowledgment)
• Jurisprudence on reformation (e.g., Dihiansan, Atilano, Sarming) and prescription
Antecedents and Contemporaneous Acts
Banico paid the ₱350,000 purchase price for what he believed was the flat, buildable 800 sq m portion and immediately occupied, surveyed, and developed it. He later discovered the deed described the elevated rocky northerly portion. Lydia did not object to his occupation, promised to correct the deed, and even sold him an adjacent 400 sq m tract under a contract to sell. At a barangay conference in 2001 Lydia acknowledged the correct description of the 800 sq m lot by executing a notarized deed.
Procedural History
RTC (2015):
- Reformed the February 8, 1992 deed to reflect the flat 800 sq m portion.
- Found a ₱6,600 unpaid balance on the 400 sq m contract to sell.
- Denied damages for lack of substantial breach or bad faith.
CA (2017):
- Denied reformation as time-barred (filed beyond 10 years from 1992 deed).
- Reduced unpaid balance to ₱5,860 based on admitted receipts.
- Ordered heirs to execute the 400 sq m deed upon payment.
- Denied damages.
Issues
- Whether the February 8, 1992 deed may be reformed for mutual mistake.
- Whether the action is barred by prescription.
- The correct unpaid balance under the 400 sq m contract to sell.
- Entitlement to damages.
Supreme Court Ruling
Reformation granted. All requisites are met:
• Meeting of the minds on an 800 sq m flat parcel.
• Deed failed to express that intention due to a mutual mistake in technical description.
• Contemporaneous and subsequent acts (possession, promise to amend, December 2001 deed) confirm true intent.
• Lawyer’s drafting error does not preclude reformation when non-expert parties relied on physical metes and bounds.Prescription interrupted. The notarized December 6, 2001 deed constituted a written acknowledgment under Art. 1155, resetting the 10-year period. The Ju
Case Syllabus (G.R. No. 232825)
Facts and Antecedents
- Lydia Bernadette M. Stager owned a 6,100-sq.m. parcel (Lot No. 199) in Barangay Manoc-Manoc, Boracay Island, featuring a flat center and elevated rocky northern part.
- In 1991, Lydia agreed to sell a portion suitable for a beach resort to Ulysses Rudi Banico.
- On February 8, 1992, parties executed a Deed of Absolute Sale covering an “800-sq.m. portion on the Northern part” for ₱350,000, described by technical metes and bounds adjoining the Sibuyan Sea.
- Upon payment, Banico occupied the flat terrain, surveyed it, and discovered the deed’s description referred instead to the elevated rocky part.
- Lydia promised correction and, in October 1992, sold an adjacent 400-sq.m. portion on installment for ₱160,000; Banico paid down and took possession.
- By 1997, Lydia refused to amend the deed for the 800-sq.m. lot, citing an unpaid balance of ₱12,000 on the 400-sq.m. contract. Banico insisted he had paid over ₱160,000.
- In 2001, barangay conciliation prompted Lydia to present a notarized Deed (December 6, 2001) accurately describing the 800-sq.m. flat terrain for ₱80,000; Banico did not sign it due to incorrect consideration.
- On July 9, 2002, Banico filed a complaint for specific performance and damages before the RTC; Lydia countered that the two transactions were distinct and claimed Banico still owed on the 400-sq.m. lot.
- Lydia died in 2012 and her heirs were substituted in the case.
Regional Trial Court Decision (February 18, 2015)
- Ordered reformation of the Deed of Absolute Sale dated February 8, 1992 to reflect the true location of the 800-sq.m. lot.
- Examined receipts for the 400-sq.m. lot and found Banico paid ₱153,400, leaving a balance of ₱6,600.
- Denied both parties’ claims for damages for lack of factual or legal basis.
- Directed Lydia’s heirs (1) to amend the 800-sq.m. deed, (2) to collect ₱6,600 balance on the 400-sq.m. lot, and (3) to execute a deed covering the 400-sq.m. lot or include it in the amended deed once paid.