Article 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.

Q1 – D borrowed P5,000 from C. The debt is evidenced by a promissory note executed by D.

On the due date, C informs D that he will no longer be collecting the debt and delivers the
note to D. D accepts C’s generosity. Can there be a reformation of contact?

A1 – There shall be no reformation in simple donations inter vivos wherein no condition is

imposed. This is so because a donation is an act of liberality on the part of donor whose
desire must be respected. However, if the donation is conditional and the condition does
not reflect the true intention of the donor, reformation is allowed so as to show such real
intent. (Art. 1366, par. 1)

Q2 – An agreement whereby X is to render service as a servant to Y without compensation

as long as X has not paid his debt to Y. Can there be a reformation of contract?

A2 – Here, the contract is void as it is contrary to law. Therefore, there shall be no

reformation of contract when the real agreement is void. (Art. 1366, par. 3)
Article 1367. When one of the parties has brought an action to enforce the instrument he
cannot subsequently ask for its reformation.

Q – Anna who is need of money negotiated a contract of chattel mortgage with Ben using
Anna’s car for security. Through machination perpetrated by Ben, Anna signed a document
of sale believing that it was a chattel mortgage. Later Ben filed a case against Anna for
delivery of the car based on the deed of sale. Can Ben ask for the reformation of contract?

A– Ben can no longer seek the reformation of the instrument to consider it a chattel
mortgage. He is estopped for the law has deemed him to have waived the action for
reformation.
Article 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.

Q – B sold his agricultural lot to D. The lot consisted 9,300 square-meters and was part of a
bigger lot owned by B. The written contract executed by the parties, however, showed an
area of 9,800 square-meters. On the other hand, D signed the contract with knowledge that
the area stated was 9,800 but concealed such fact from B because he wanted a bigger area.

a. Can B ask for the reformation of the contract?

b. Suppose in the same example, by mistake, the deed of sale signed by the parties
indicated an area of 9,800 square-meters. Can B or D ask for the reformation of
contract?

A – a. Here, B may ask for the reformation of the instrument so as to show that the area
was only 9,300 square-meters, as long as the other party acted fraudulently or inequitably
in such a way that the instrument does not show their true intention, or had knowledge or
believed that the instrument did not state their real agreement but concealed such fact
from the other party. Either way, the successors in interest of B may also ask for the
reformation of the instrument.

A – b. The contract of sale may be reformed at the instance of either party of his successors
in interest on the ground of mutual mistake.
Article 1369. The procedure for reformation of instruments shall be governed by the rules of
court to be promulgated by the Supreme Court.

Q – (The Rules of Court governs procedure. However, the Supreme Court has not as yet
promulgated the procedure for the reformation of instruments. [See Sec. 7, Rule 130, Rules
of Court])

Article 1370. If the terms of the contract are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of its stipulations shall control.

If the words appear to be contrary to the evident intention of the parties, the
latter shall prevail over the former.

Q1 – X and Y entered into a contract which they denominated as “Contract of Lease”. The
terms of the contract provide that X shall pay a monthly rental of P10,000 to Y for a period
of three years at the end of which he shall become the absolute owner of the property. Is
the contract a lease or sale in installments?

A1 – The contract is a sale on installments which was the evident intention of the parties.
The kind of contract in such a case should be determined not on the name that the parties
give to it, but on the substance thereof which reflect their true intent. (Art. 1370, Par. 1)
Q2 – A and B entered into a written contract which had as heading the words “Sale with
Right to Repurchase”. The contract provides that A sold his lot for P500,000 to B with the
right to repurchase the same at the end of three years. After the execution of the contract,
A continued to possess the land and enjoy its fruits and pay the real property taxes thereon.
At the end of three years, A and B agreed to extend the period for another year within
which A may repurchase the lot. Is the contract a sale with a lot to repurchase or a
mortgage?

A2 – The contract is a mortgage. The intention of the parties can be determined from their
contemporaneous and subsequent acts; namely, the continued possession by A of the lot
and his enjoyment of its fruits and his payment of real property taxes on the lot, and their
act of extending the period to repurchase, all of which indicate a contract of equitable
mortgage. Here, the words of the contract appeared to be contrary to the evident intention
of the parties, hence, the intention of the parties shall prevail. (Art. 1370, Par. 2)

Article 1371. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered.

Q – (Please refer to the Q2 in the preceding article.)

Article 1372. However general the terms of a contract may be, they shall not be understood
to comprehend things that are distinct and cases that are different from those upon which
the parties intended to agree.

Q – S entered into a contract with B, wherein S sold his condominium unit “including all its
contents”. In the unit, there is an antique chair belonging to X. Is the chair to be included in
the sale of the unit?

A – The general term “including all its contents” does not include the antique chair that is
placed inside the condominium unit of S because it doesn’t belong to S instead, it belongs to
X and S has no right to dispose it.

Article 1373. If some stipulation of any contract should admit of several meanings, it shall
be understood as bearing that import which is most adequate to render it effectual.

Q – Joey sold his “cell phone” to Jojo for P5,000. Joey, however, has two cell phones. One
cell phone (cell phone X) is in his possession, while the other (cell phone Y) has been
pledged by him in favor of a pawnshop to secure his loan of P3,000. The loan is due after 6
months. Which of the two cell phones is deemed sold by Joey to Jojo?

A – In this case, the cell phone X is the one which is deemed sold by Joey to Jojo rather than
the cell phone Y which has been pledged by him in a pawnshop to secure his loan. Because
in such a way, it will render the contract effectual since Joey cannot dispose of the cell
phone that has been pledged by him.