AGUANTA, PRINCESS NICOLE ALLYSON

A-236

REFORMATION OF INSTRUMENTS
p. 404 – Problems

1. S sold his horse “X” to B under a written contract of sale. What B thought S was
selling him is horse “Y.” Can S ask for the reformation of the contract against the
objection of B who is agreeable to the sale of horse “X?”

Answer:
As Article 1359 Par 1 expressly states: 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 the parties may ask for the reformation of the instrument to the end that such true
intention may be expressed.

In the case of parties S and B, there is a mutual mistake of fact where in the contract, or
instrument, failed to express the true intention of the contracting parties, which is the specific
horse to be sold. Therefore, S can still ask for the reformation of the contract notwithstanding
the objection and agreement of B to receive the horse X.

2. Suppose in the same example, S was intending to sell his horse “Y.” Give three (3)
cases when he can ask for the reformation of the contract.

Answer:
S can ask for the reformation of the contract in the following cases: 1. When S made a
mistake in good faith (Article 1361), 2. When S or B made a mistake and the other knew that
the contract did not state the real intention but concealed that fact from thr former (Article
1363), and lastly 3. When the true intention of the parties was mistakenly expressed as a
result of the ignorance, lack of skill, negligence, or bad faith on the part of the clerk or typist
drafting the contract (Article 1364).

In the first case, reformation may only be granted if the mistake was made only by one party,
not mutual.

RESCISSIBLE CONTRACTS
p. 430 - Problems

1. D owes C P100,000. Since D fails to pay, C expressed its willingness to accept the
car of D, with the same value, more or less, in payment of his debt. D, in bad
faith, sold the car to X. Has C the right to ask for the rescission of the sale?

Answer:
YES. C, has the right to ask for the recission of the sale in accordance with the
provisions of Article 1381 paragraphs 3 and 4. It is stated that contracts undertaken in
fraud of creditors when the latter cannot in any other manner collect the claims due
them are rescissible (Art. 1381, par. 3). Also, paragraph 4 of of the same article states
that contracts which refer to things under litigation if they have been entered into by
the defendant without the knowledge and approval of the litigants or of competent
judicial authority.

The car is under litigation because C expressed and agreed to receive it in place of the
original P100,000 debt, which D failed to pay. The selling of the car to X is a
fraudulent act on the part of D because he sold it without the knowledge of C.

2. F, guardian of M (minor), sold to B a property of M with a market value of

P50,000 for only P37,000, or a difference of more than ¼ (P12,500) of the value.
If recission of the sale is demanded what possible defense under the law can B
present to avoid rescission?

Answer:
To avoid rescission, B may present the following defenses: 1. The property is now in
his legal possession and he acted in good faith. This means that he acquired the
property legally and registered it under the Torrens System in the Registry of
Property unaware of the flaw in his title or mode of acquisition; and 2. The person
who demanded the rescission (M or F) cannot return what he or she is obliged to
restore under the contract. In this case, the P37,000 pesos and legal interests, if any.

For the first case, the remedy would be to demand indemnity for damages form the
person who caused the loss - which is F, the guardian of M.