G.R. No. 128991, 12 April 2000

FACTS:

Respondent Leyte Gulf Traders, Inc. filed a complaint about a reformation of an instrument, specific performance, annulment of conditional sale and damages with prayer for a writ of injunction against petitioners Yolanda Rosello-Bentir and the spouses Samuel and Charito Pormida.

Respondent corporation alleged that it entered into a contract of lease of a parcel of land with petitioner Bentir for a period of twenty (20) years starting May 5, 1968. According to respondent corporation, the lease was extended for another four (4) years or until May 31, 1992. On May 5, 1989, petitioner Bentir sold the leased premises to petitioner spouses Samuel Pormada and Charito Pormada. Respondent corporation questioned the sale alleging that it had a right of first refusal. It filed civil case seeking the reformation of the expired contract of lease on the ground that its lawyer inadvertently omitted to incorporate in the contract of lease executed in 1968, the verbal agreement or understanding between the parties that in the event petitioner Bentir leases or sells the lot after the expiration of the lease, respondent corporation has the right to equal the highest offer.

Petitioners filed their answer alleging that the inadvertence of the lawyer who prepared the lease contract is not a ground for reformation. They further contended that respondent corporation is guilty of laches for not bringing the case for reformation of the lease contract within the prescriptive period of ten (10) years from its execution.

ISSUE:

Whether or Not the action for reformation has not yet prescribed.

RULING:

No. The Action for Reformation has prescribed. Prescription is intended to suppress fraudulent claims arising from transactions like the facts had become so obscure from the lapse of time or defective memory. Our law and jurisprudence set such limitations, among which is laches. A suit for reformation of an instrument may be barred by lapse of time. The prescriptive period for actions based upon a written contract and for reformation of an instrument is ten (10) years under Article 1144 of the Civil Code. Respondent corporation had ten (10) years from 1968, the time when the contract of lease was executed, to file an action for reformation. Sadly, it did so only on May 15, 1992 or twenty-four (24) years after the cause of action accrued, hence, its cause of action has become stale, hence, time-barred.

* Case digest by  Neah Hope L. Bato,  LLB-1, Andres Bonifacio Law School, SY 2017-2018