Ulysses Rudi V. Banico vs. Lydia Bernadette M. Stager (Substituted by Her Compulsory Heirs)
### Facts:
In 1991, Lydia Bernadette M. Stager offered to sell a 6,100-square meter property in Boracay Island to Ulysses Rudi Banico, who agreed to purchase an 800-square meter portion suitable for a beach resort. On February 8, 1992, a Deed of Absolute Sale was signed by both parties. However, the deed mistakenly described the property as the elevated and rocky northern part of Lot No. 199, not the flat area actually sold. Despite this error and upon Ulysses’ occupancy and development of the said flat area, Lydia offered an additional sale of a 400-square meter adjacent lot, which Ulysses accepted.
Ulysses, after failing to receive an amended deed of sale from Lydia for the initial 800-square meter purchase, filed an action for specific performance and damages before the Regional Trial Court (RTC) on July 9, 2002. After Lydia’s death, her heirs continued the litigation. On February 18, 2015, the RTC ruled in favor of reformation of the deed to reflect the true description of the property sold and found an unpaid balance owed by Ulysses for the additional 400-square meter portion.
Disagreement with the RTC’s decision led both parties to appeal to the Court of Appeals (CA), which issued a verdict on February 22, 2017. The CA found the action for reformation barred by prescription and amended the unpaid balance for the secondary lot purchase. Both parties filed motions for reconsideration, which the CA subsequently denied.
### Issues:
1. Whether the Deed of Absolute Sale dated February 8, 1992, reflected the true intention of the parties.
2. Whether Ulysses’ action for reformation of the instrument was barred by prescription.
3. The correct remaining balance owed by Ulysses for the additional 400-square meter lot.
### Court’s Decision:
The Supreme Court granted Ulysses’ petition, reversing the CA’s decision, and reinstating the RTC’s decision with modification regarding the unpaid balance for the 400-square meter lot purchase. The Supreme Court found that:
1. A mutual mistake in the deed’s description did not reflect the true agreement between Lydia and Ulysses, meriting reformation of the document.
2. The prescriptive period for the action for reformation was interrupted by Lydia’s acknowledgment of the obligation, making Ulysses’ case timely.
3. Ulysses was found to still owe a balance for the additional lot, revised to P5,860.00, with a 6% annual interest.
### Doctrine:
The Supreme Court reaffirmed the principle that the lawyer’s mistake in drafting the written instrument would not prevent its reformation if the parties’ real intention was clearly evident through their actions. It also highlighted that the prescription of actions is interrupted by any written acknowledgment of the debt, renewing the period for action.
### Class Notes:
– The substantive facts must accurately describe the land in sales transactions to reflect the true intentions of the contracting parties.
– Errors attributable to mutual mistake in the property description warrant the reformation of the sales contract.
– Prescription periods for filing actions can be interrupted by written acknowledgments of obligation, thereby renewing the prescriptive period.
– Reformation of instruments is permissible to express the true agreement of the parties when evidences such as the contemporaneous and subsequent acts, clearly indicate such intention.
### Historical Background:
This case exemplifies the complexities of land sale transactions, particularly in prime tourist destinations such as Boracay Island. It serves as a judicial affirmation of the principles behind reformation of instruments as well as the implications of statutory limitations and acknowledgments on prescriptive periods within Philippine jurisprudence.
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