FIRST DIVISION
MULTI-REALTY DEVELOPMENT G.R. No. 146726
CORPORATION,
Petitioner,
Present:
PANGANIBAN, C.J.,
-
versus -
Chairperson,
THE
CONDOMINIUM
CORPORATION,
Respondent.
Promulgated:
x-----------------------------------------------------------------------------------------x
CALLEJO, SR., J.:
Before this Court is a petition for review on certiorari of the Decision[1] of
the Court of Appeals in CA-G.R. CV No. 44696 dismissing the appeal of
Multi-Realty Development Corporation on the ground of prescription.
Multi-Realty is a domestic
corporation engaged in the real estate business, and the construction and
development of condominiums. It developed, among others, the Ritz Towers
Condominium, and the former Galeria de Magallanes, both built in the Municipality
(now city) of
In the 1970s, Multi-Realty
constructed a 26-storey condominium at the corner of
According to Multi-Realty, the
intention to allocate only 8 parking slots to the
Pursuant to Republic Act No. 4726,
otherwise known as the Condominium Act, the Makati Tuscany Condominium Corporation
(MATUSCO) was organized and established to manage the condominium units.
In 1975, Multi-Realty executed a
Master Deed and Declaration of Restrictions[2]
(Master Deed, for short) of the
SEC. 5. Accessories to Units. – To be considered as
part of each unit and reserved for the exclusive use of its owner are the
balconies adjacent thereto and the parking lot or lots which are to be assigned
to each unit.
x x x
x
SEC. 7. The Common Areas. – The common elements or
areas of the
x x x x
(d) All driveways, playgrounds, garden areas and
PARKING AREAS OTHER THAN THOSE ASSIGNED TO EACH UNIT UNDER SEC. 5 ABOVE;[3]
The
Master Deed was filed with the Register of Deeds in 1977. Multi-Realty executed a Deed of Transfer in
favor of MATUSCO over these common areas.
However, the Master Deed and the Deed of Transfer did not reflect or
specify the ownership of the 98 parking slots. Nevertheless, Multi-Realty sold
26 of them in 1977 to 1986 to condominium unit buyers who needed additional
parking slots. MATUSCO did not object, and certificates of title were later issued
by the Register of Deeds in favor of the buyers. MATUSCO issued Certificates of
Management covering the condominium units and parking slots which Multi-Realty
had sold.
At a meeting of MATUSCO’s Board of
Directors on P15,000.00
per lot, or some 50% lower than the then prevailing price of P33,000.00
each. The Board agreed to hold in abeyance any decision on the matter to enable
all its members to ponder upon the matter.
In the meantime, the fair market
value of the unallocated parking slots reached P250,000.00 each, or a
total of P18,000,000.00 for the 72 slots.
In
September 1989, Multi-Realty, through its President, Henry Sy, who was also a
member of the Board of Directors of MATUSCO, requested that two Multi-Realty
executives be allowed to park their cars in two of
On
April 26, 1990, Multi-Realty, as plaintiff, filed a complaint, docketed as
Civil Case No. 90-1110, against MATUSCO, as defendant, for Damages and/or
Reformation of Instrument with prayer for temporary restraining order and/or
preliminary injunction. The case was raffled to Branch 59 of the Makati RTC.
Multi-Realty
alleged therein that it had retained ownership of the 98 unassigned parking
slots. Considering, however, that
In its Answer with counterclaim, MATUSCO
alleged that Multi-Realty had no cause of action against it for reformation of
their contract. By its own admission, Multi-Realty sold various parking slots
to third parties despite its knowledge that the parking areas, other than those
mentioned in Sec. 5 of the Master Deed, belonged to MATUSCO. MATUSCO prayed
that judgment be rendered in its favor dismissing the complaint; and, on its
counterclaim, to order the plaintiff to render an accounting of the proceeds of
the sale of the parking slots other than those described in Sec. 5 of the
Master Deed; to pay actual damages equivalent to the present market value of
the parking areas other than those described in Sec. 5 of the Master Deed,
amounting to no less than P250,000.00 per slot plus reasonable rentals
thereon at no less than P400.00 per slot per month from date of sale
until payment by plaintiff to defendant of the market value of these parking
areas.
After trial, the RTC rendered a
decision, the dispositive portion of which reads:
Premises considered, this case is
dismissed. Defendant’s counterclaim is, likewise,
dismissed, the same not being compulsory and no filing fee having been paid.
Plaintiff is, however, ordered to pay defendant attorney’s fees in the amount
of P50,000.00.
Cost against plaintiff.
SO ORDERED.[4]
The trial court ruled that Multi-Realty
failed to prove any ground for the reformation of its agreement with MATUSCO relative
to the ownership of the common areas. There
is no evidence on record to prove that the defendant acted fraudulently or
inequitably to the prejudice of the plaintiff, and the latter was estopped, by
deed, from claiming that it owned the common areas. It also held that the
defendant was not estopped from assailing plaintiff’s ownership over the disputed
parking slots.
Multi-Realty appealed the decision to the CA via a petition under Rule 41 of the Rules of Court,
contending that:
THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT AND
DISALLOWING THE PLAINTIFF-APPELLANT FROM REFORMING THE MASTER DEED BECAUSE:
I
THERE IS VALID GROUND FOR REFORMATION OF THE MASTER
DEED SINCE THE MASTER DEED DID NOT REFLECT THE TRUE INTENTION OF THE PARTIES
REGARDING THE OWNERSHIP OF THE EXTRA NINETY-EIGHT PARKING [SLOTS] DUE TO
MISTAKE.
II
THE REGISTRATION OF THE MASTER DEED WITH THE REGISTER
OF DEEDS DID NOT MAKE PLAINTIFF-APPELLANT GUILTY OF ESTOPPEL BY DEED.
III
THE TRIAL COURT ERRED IN FINDING THAT
DEFENDANT-APPELLEE IS NOT ESTOPPED FROM QUESTIONING THE OWNERSHIP OF
PLAINTIFF-APPELLANT OVER THE DISPUTED PARKING LOTS.[5]
In support of its appeal, Multi-Realty
reiterated its contentions in the trial court, insisting that it had adduced
evidence to prove all the requisites for the reformation of Section 7(d) of the
Master Deed under Article 1359 of the New Civil Code. It was never its intention to designate the
98 unassigned parking slots as common areas, and, as shown by the evidence on
record, this was known to MATUSCO. Under
Article 1364 of the New Civil Code, an instrument may be reformed if, due to
lack of skill on the part of the drafter, the deed fails to express the true
agreement or intention of the parties therein. Since MATUSCO knew that it
(Multi-Realty) owned the 98 parking slots when the Master Deed was executed,
its registration did not make Multi-Realty guilty of estoppel by deed. In fact, MATUSCO failed to object to the sale
of some of the parking slots to third parties. It was also pointed out that
Multi-Realty remained in possession thereof.
Multi-Realty further claimed that the
trial court erred in not declaring that MATUSCO was estopped from assailing the
ownership over the parking slots, as it not only conformed to the sale of some
of the unassigned parking slots but likewise failed to assail the ownership thereon
for a period of 11 years. It insisted that the sale of the said parking slots was
made in accord with law, morals and public order, and that MATUSCO’s claim of
ownership of the unassigned parking slots was merely an afterthought.
MATUSCO, for its part, appealed the
trial court’s dismissal of its counterclaim.
On Multi-Realty’s appeal, MATUSCO
countered that the 270 parking slots were to be apportioned as follows:
1 parking lot for each ordinary unit - 156
2 parking lots for each of the 4 Penthouse
Apartment
Units -
8
of the remaining 106 parking lots, 34 parking lots
were designated and allocated as part of “common areas” which would be
allocated purely for visitors, while the remaining 72 units would become part
of the Condominium Corporation’s income-earning “common areas” - 106
- - - -
270[6]
====
It was further averred that
Multi-Realty, through Henry Sy, executed the Master Deed in July 1975 and the
Deed of Transfer in 1977, in which the ownership of the common areas was
unconditionally transferred to MATUSCO; Multi-Realty sold 26 of the 34 parking
slots in bad faith, which had been allocated purposely for visitors of unit
owners, amounting to millions of pesos; the action for reformation has no legal
basis because the transfer of the 106 unassigned parking slots which form part
of the common areas is contrary to Section 16[7] of
the Condominium Act.
MATUSCO further pointed out that the
unassigned parking slots could be transferred only by the affirmative votes of
all the members of Multi-Realty, and that the Master Deed and the Deed of
Transfer were prepared by the latter with the assistance of its renowned lawyers. If there was a mistake in the drafting of the
Master Deed in 1975, the deed should have been corrected in 1977 upon the execution
of the Deed of Transfer. With the social and economic status of Henry Sy,
Multi-Realty’s President, it is incredible that the Master Deed and the Deed of
Transfer failed to reflect the true agreement of the parties. MATUSCO went on
to state that Multi-Realty failed to adduce a preponderance of evidence to
prove the essential requirements for reformation of the questioned documents.
Even if there was a mistake in drafting the deeds, reformation could not be
given due course absent evidence that defendant-appellee acted fraudulently or
inequitably.
On its claim of ownership over the
unassigned parking slots, MATUSCO averred that it is not estopped to do so
because the sales thereof were illegal, and it had no knowledge that Multi-Realty
had been selling the same. Having acted fraudulently and illegally, Multi-Realty
cannot invoke estoppel against it.
On the RTC decision dismissing its
counterclaim, MATUSCO averred that said decision is erroneous, as it had adduced
evidence to prove its entitlement to said counterclaim.
In reply, Multi-Realty averred that MATUSCO’s
counterclaim had already prescribed because it was filed only in 1990, long
after the period therefor had elapsed in 1981.
On
WHEREFORE, foregoing premises considered, the appeal
having no merit in fact and in law, is hereby ORDERED DISMISSED, and the
judgment of the trial court is MODIFIED by deleting the award of attorney’s
fees not having been justified but AFFIRMED as to its Order dismissing both the
main complaint of plaintiff-appellant and the counterclaim of
defendant-appellant. With costs against
both parties.[8]
The appellate court ruled that it was
justified in dismissing Multi-Realty’s appeal on the ground of prescription as it
was clothed with ample authority to review the lower court’s rulings even those
not assigned as errors on appeal, especially if the consideration of the matter
is necessary to arrive at a just decision of the case, and to avoid dispensing “piecemeal
justice.” The CA cited the rulings of
this Court in Servicewide Specialists,
Inc. v. Court of Appeals,[9]
and Dinio v. Laguesma.[10]
Multi-Realty filed a motion for
reconsideration of the decision, contending that:
THIS HONORABLE COURT VIOLATED SECTION 8 OF RULE 51 OF
THE RULES OF COURT TO MRDC’S SUBSTANTIAL AND UNFAIR PREJUDICE BY RESOLVING
MRDC’S APPEAL ON THE GROUND OF PRESCRIPTION, EVEN THOUGH NEITHER PARTY HAD
ASSIGNED OR ARGUED AS AN ERROR THE TRIAL COURT’S FAILURE TO DISMISS THE ACTION
FILED BY MRDC BELOW AS PRESCRIBED.
THIS HONORABLE COURT ERRED IN COUNTING THE RUNNING OF
THE PRESCRIPTIVE PERIOD FROM THE DATE OF EXECUTION OF THE MASTER DEED IN 1975,
BECAUSE UNDER
ARTICLE 1150 OF THE CIVIL CODE, AND THE SUPREME COURT’S DECISIONS IN TORMON VS. CUTANDA, AND VELUZ VS. VELUZ, MRDC’S PERIOD TO FILE A
SUIT FOR REFORMATION ONLY BEGAN RUNNING IN 1989, AFTER DEFENDANT-APPELLANT
MAKATI TUSCANY CONDOMINIUM CORPORATION’S REPUDIATION OF THE PARTIES’ TRUE
AGREEMENT GAVE RISE TO MRDC’S RIGHT OF ACTION.[11]
Multi-Realty further averred that the
appellate court misapplied Rule 51, Section 8 of the 1997 Rules of Court as
well as the ruling of this Court in the Servicewide
Specialists case. It pointed out that, when it filed its Brief, as
appellee, Rule 51, Section 7 of the 1964 Rules of Court was still in effect,
under which an error which does not affect the jurisdiction over the subject
matter will not be considered unless stated in the assignment of error and
properly assigned in the Brief, as the court may pass upon plain and clerical
errors only. Multi-Realty insisted that
the parties did not raise the issue of whether its action had already
prescribed when it filed its complaint in their pleadings below and in the
respondent’s Brief. It claimed that it was deprived of its right to due process
when the appellate court denied its appeal based on a ruling of this Court
under the 1997 Rules of Civil Procedure. It insisted that the ruling of this
Court in Servicewide Specialist, Inc.
was promulgated when the 1997 Rules of Civil Procedure was in effect.
On
Multi-Realty, now petitioner, filed the
instant petition for review on certiorari,
alleging that:
THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF
SUBSTANCE IN A MANNER INCONSISTENT WITH LAW, AND DEPARTED WITH UNFAIRLY
PREJUDICIAL EFFECT FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS LAID DOWN IN
SECTION 8 OF RULE 51 OF THE RULES OF COURT WHEN IT DISMISSED MULTI-REALTY’S “APPEAL”
ON THE BASIS OF PRESCRIPTION, EVEN THOUGH NEITHER PARTY RAISED [NOR] DISCUSSED
THE TRIAL COURT’S FAILURE TO ENFORCE THE ALLEGEDLY APPLICABLE TIME BAR AS AN
ERROR IN THEIR BRIEFS.
THE HONORABLE COURT OF APPEALS DECIDED A MATTER OF
SUBSTANCE IN A MANNER PROBABLY NOT IN ACCORD WITH ARTICLE 1150 OF THE CIVIL
CODE, WHEN IT DISREGARDED THIS HONORABLE COURT’S RULINGS IN TORMON V. CUTANDA AND VELUZ V. VELUZ, AND RULED THAT THE
PRESCRIPTIVE PERIOD APPLICABLE TO AN
ACTION FOR REFORMATION
BEGINS TO RUN FROM THE DATE THE INSTRUMENT TO BE REFORMED IS EXECUTED, RATHER
THAN FROM THE DATE ON WHICH THE TRUE AGREEMENT THE REFORMATION IS MEANT TO
EXPRESS IS VIOLATED.
THE HONORABLE COURT OF APPEALS OVERLOOKED RELEVANT
FACTS SUSTAINING A DECISION ALLOWING REFORMATION OF THE MASTER DEED WHEN IT
FAILED TO REVERSE THE TRIAL COURT’S DECISION AND FIND THAT MATUSCO’S CONSISTENT
RECOGNITION OF, AND PARTICIPATION IN, THE SALES OF UNALLOCATED PARKING SLOTS
MADE BY MULTI-REALTY, AND ITS EFFORTS TO BUY THE UNALLOCATED PARKING SLOTS FROM
MULTI-REALTY, ESTOP IT FROM ASSERTING TITLE TO THE UNALLOCATED PARKING SLOTS.[13]
The
Court is to resolve two issues: (1) whether the CA erred in dismissing
petitioner’s appeal on the ground of prescription; and (2) whether petitioner’s
action had already prescribed when it was filed in 1990.
On the issue of prescription, petitioner
asserts that under Article 1150 in relation to Article 1144 of the New Civil
Code, its action for reformation of the Master Deed accrued only in 1989, when
respondent, by overt acts, made known its intention not to abide by their true
agreement; since the complaint below was filed in 1990, the action was filed
within the prescriptive period therefor.
Petitioner cites the rulings of this Court in Tormon v. Cutanda,[14] Veluz v. Veluz,[15] and
Español v. Chairman, Philippine Veterans
Administration[16]
to bolster its claim.
In its comment on the petition,
respondent avers that, as held by this Court in Rosello-Bentir v. Hon. Leanda,[17]
the prescriptive period for the petitioner to file its complaint commenced in
1975, upon the execution of the Master Deed in its favor. Considering that the
action was filed only in 1990, the same, by then, had already prescribed.
On the first issue, we sustain
petitioner’s contention that the CA erred in dismissing its appeal solely on its
finding that when petitioner filed its complaint below in 1990, the action had
already prescribed. It bears stressing that in respondent’s answer to
petitioner’s complaint, prescription was not alleged as an affirmative defense.
Respondent did not raise the issue throughout the proceedings in the RTC. Indeed, the trial court did not base its
ruling on the prescription of petitioner’s action; neither was this matter assigned
by respondent as an error of the RTC in its brief as defendant-appellant in the
CA.
Settled is the rule that no questions
will be entertained on appeal unless they have been raised below. Points of
law, theories, issues and arguments not adequately brought to the attention of
the lower court need not be considered by the reviewing court as they cannot be
raised for the first time on appeal. Basic considerations of due process impel
this rule.[18]
Truly, under Section 7, Rule 51 of
the 1964 Rules of Court, no error which does not affect the jurisdiction over
the subject matter will be considered unless stated in the assignment of errors
and properly argued in the brief, save as the Court, at its option, may pass
upon plain errors not specified, and clerical errors. Even at that time, the
appellate court was clothed with ample authority to review matters even if not
assigned as errors in their appeal if it finds that their consideration is
necessary in arriving at a just decision of the case.[19] It
had ample authority to review and resolve matters not assigned and specified as
errors by either of the parties on appeal if it found that the matter was essential
and indispensable in order to arrive at a just decision of the case. It has
broad discretionary power, in the resolution of a controversy, to take into
consideration matters on record unless the parties fail to submit to the court
specific questions for determination. Where the issues already raised also rest
on other issues not specifically presented, as long as the latter issues bear
relevance and close relation to the former and as long as they arise from
matters on record, the appellate court has authority to include them in its
discussion of the controversy as well as to pass upon them. In brief, in those
cases wherein questions not particularly raised by the parties surface as necessary
for the complete adjudication of the rights and obligations of the parties and
such questions fall within the issues already framed by the parties, the
interests of justice dictate that the court consider and resolve them.[20]
When the appeals of the petitioner
and that of the respondent were submitted to the CA for decision, the 1997
Rules of Civil Procedure was already in effect.
Section 8, Rule 51 of said Rules,
reads:
SEC. 8. Questions
that may be decided. – No error which does not affect the jurisdiction over
the subject matter or the validity of the judgment appealed from or the
proceedings therein will be considered unless stated in the assignment of
errors, or closely related to or dependent on an assigned error and properly
argued in the brief, save as the court may pass upon plain errors and clerical
errors.
This
provision was taken from the former rule with the addition of errors affecting
the validity of the judgment or closely related to or dependent on an assigned
error.[21] The authority of the appellate court to
resolve issues not raised in the briefs of the parties is even broader.
Nevertheless, given the factual
backdrop of the case, it was inappropriate for the CA, motu proprio, to delve
into and resolve the issue of whether petitioner’s action had already prescribed.
The appellate court should have proceeded to resolve petitioner’s appeal on its
merits instead of dismissing the same on a ground not raised by the parties in
the RTC and even in their pleadings in the CA.
Even
if we sustain the ruling of the CA that it acted in accordance with the Rules
of Court in considering prescription in denying petitioner’s appeal, we find
and so rule that it erred in holding that petitioner’s action had already
prescribed when it was filed in the RTC on
Prescription is rightly regarded as a
statute of repose whose object is to suppress fraudulent and stale claims from
springing up at great distances of time and surprising the parties or their
representatives when the facts have become obscure from the lapse of time or
the defective memory or death or removal of witnesses. The essence of the statute of limitations is
to prevent fraudulent claims arising from unwarranted length of time and not to
defeat actions asserted on the honest belief that they were sufficiently
submitted for judicial determination.[22]
Our laws do not favor property rights hanging in the air, uncertain, over a
long span of time.[23]
Article
1144 of the New Civil Code provides that an action upon a written contract must
be brought within ten (10) years from the time the right of action accrues:
Art.
1144. The following actions must be brought within ten years from the time the
right of action accrues:
(1)
Upon a written contract;
(2)
Upon an obligation created by law;
(3)
Upon a judgment.
In relation thereto, Article 1150 of
the New Civil Code provides that the time for prescription of all actions, when
there is no special provision which ordains otherwise, shall be counted from
the day they may be brought. It is the
legal possibility of bringing the action that determines the starting point for
the computation of the period of prescription.[24]
The term “right of action” is the
right to commence and maintain an action.
In the law of pleadings, right of action is distinguished from a cause
of action in that the former is a remedial right belonging to some persons while
the latter is a formal statement of the operational facts that give rise to
such remedial right. The former is a
matter of right and depends on the substantive law while the latter is a matter
of statute and is governed by the law of procedure. The right of action springs from the cause of
action, but does not accrue until all the facts which constitute the cause of
action have occurred.[25]
A cause of action must always consist
of two elements: (1) the plaintiff’s primary right and the defendant’s
corresponding primary duty, whatever may be the subject to which they relate – person,
character, property or contract; and (2) the delict or wrongful act or omission
of the defendant, by which the primary right and duty have been violated.[26]
To determine when all the facts which
constitute a cause of action for reformation of an instrument may be brought
and when the right of the petitioner to file such action accrues, the second
paragraph of Section 1, Rule 63, must be considered because an action for the
reformation of an instrument may be brought under said Rule:
SECTION 1. Who
may file petition. – Any person interested under a deed, will, contract or
other written instrument, whose rights are affected by a statute, executive
order or regulation, ordinance, or any other governmental regulation may,
before breach or violation thereof, bring an action in the appropriate Regional
Trial Court to determine any question of construction or validity arising, and
for a declaration of his rights or duties, thereunder.
An action for
the reformation of an instrument, to quiet title to real property or remove
clouds therefrom, or to consolidate ownership under Article 1607 of the Civil
Code, may be brought under this Rule (emphasis
supplied).
Such a petition is a special civil
action determinative of the rights of the parties to the case. It is permitted on the theory that courts
should be allowed to act, not only when harm
is actually done and rights jeopardized by physical wrongs or physical attack
upon existing legal relations, but also when challenge, refusal, dispute or
denial thereof is made amounting to a live controversy. The uncertainty and insecurity which may
thereby be avoided may hamper or disturb the freedom of the parties to transact
business or to make improvements on their property rights. A situation is thus created when a judicial
declaration may serve to prevent a dispute from ripening into violence or
destruction.[27]
The concept and meaning of the term cause of action in proceedings for declaratory
relief, vis-à-vis an ordinary civil
action, is broadened. It is not, as in
ordinary civil action, the wrong or delict
by which the plaintiff’s rights are violated, but it is extended to a mere denial, refusal or challenge raising at
least an uncertainty or insecurity which is injurious to plaintiff’s rights.[28]
For a petition for declaratory relief
to prosper, the following conditions sine
qua non must concur: (1) there must be a justiciable controversy; (2) the
controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and
(4) the issue involved must be ripe for judicial determination.[29]
To controvert is to dispute; to deny,
to oppose or contest; to take issue on.[30] The controversy must be definite and
concrete, touching on the legal relations of the parties having adverse legal
interests. It must be a real and
substantial controversy admitting of specific relief through a decree of a conclusive
character as distinguished from an opinion advising what the law would be upon
a hypothetical state of facts.[31]
The fact that the plaintiff’s desires are thwarted by its own doubts, or by the fears of others,
does not confer a cause of action.
No defendant has wronged the plaintiff or has threatened to do so.[32] However,
the doubt becomes a justiciable controversy when it is translated into a
claim of right which is actually contested.[33] As explained by this Court, a dispute between
the parties is justiciable when there is an active antagonistic assertion of a
legal right on one side and a denial thereof on the other, concerning a real,
not merely a theoretical question or issue.[34]
In sum, one has a right of action to
file a complaint/petition for reformation of an instrument when his legal right
is denied, challenged or refused by another; or when there is an antagonistic
assertion of his legal right and the denial thereof by another concerning a
real question or issue; when there is a real, definitive and substantive
controversy between the parties touching on their legal relations having
adverse legal interests. This may occur
shortly after the execution of the instrument or much later.[35]
A party to an instrument is under no
obligation to seek a reformation of an instrument while he is unaware that any
opposition will be made to carry out the actual agreement.[36] The statute of limitations does not begin to
run against an equitable cause of action for the reformation of an instrument
because of mistake until the mistake has
been discovered or ought to have been discovered.[37] The mere recording of a deed does not charge
the grantor with constructive notice of a mistake therein, but is to be
considered with other facts and circumstances in determining whether the
grantor be charged with notice actual or constructive.[38]
In State ex rel.
In equitable actions for reformation on the ground of
mistake the rule on the question of when the period of limitation or laches
commences to run is as stated by this Court in State v. Lorenz, 22 Wash.
289, 60 P. 644, 647:
* * * that the statute did not begin to run against
the right of appellant to reform the deed [because of a mistake therein] until
the assertion on the part of respondents of their adverse claim.
In Chebalgoity
v. Branum, 16 Wash.2d 251, 133 P.2d 288, 290, we said:
‘Nor is his right to maintain it [an action for
reformation grounded on mistake] impaired by lapse of time, for the bar of the
statue of limitations does not begin to run until the assertion of an adverse
claim against the party seeking reformation.’
The rule is also stated in 53 C.J. 1003, reformation
of instruments, as follows:
‘[§ 155] C.
Time for Bringing Action. An
action to reform an instrument may be brought as soon as the cause of action
accrues. * * * On the other hand, a
party to an instrument is under no obligation to seek its correction before his
cause of action is finally vested or while he is unaware that any opposition
will be made in carrying out the actual agreement, where for a long time the
rights and duties of the parties are the same under the writing and under the
terms which it is alleged were intended, and the failure to take any action
toward reformation until his right vests or opposition is manifest does not
prejudice his suit.’[40]
In this case, before
petitioner became aware of respondent’s denial of its right under their true
contract, petitioner could not be expected to file an action for the
reformation of the Master Deed. As Justice Jose BL Reyes, ratiocinated in Tormon v. Cutanda:[41]
It
follows that appellant’s cause of action arose only when the appellees made
known their intention, by overt acts, not to abide by the true agreement; and
the allegations of the complaint establish that this happened when the
appellees executed the affidavit of consolidation of the title allegedly
acquired by appellees under the fictitious pacto
de retro sale. It was then, and only
then, that the appellant’s cause of action arose to enforce the true contract
and have the apparent one reformed or disregarded, and the period of extinctive
prescription began to run against her.
Since the consolidation affidavit was allegedly made only in September
1960, and the complaint was filed in Court the following November 1960, just
two months afterward, the action of appellant had not prescribed.[42]
The Court’s ruling in the Tormon case was reiterated in Veluz v. Veluz.[43]
In the more recent case of Naga Telephone Co., Inc. v. Court of Appeals,[44]
the Court made the following declaration:
Article 1144 of the New Civil Code provides, inter alia, that an action upon a
written contract must be brought within ten (10) years from the time the right
of action accrues. Clearly, the ten (10)
years period is to be reckoned from the
time the right of action accrues which is not necessarily the date of
execution of the contract. As correctly
ruled by respondent court, private respondent’s right of action arose “sometime
during the latter part of 1982 or in 1983 when according to Atty. Luis General,
Jr. x x x, he was asked by (private respondent’s) Board of Directors to study
said contract as it already appeared disadvantageous to (private respondent)
(p. 31, tsn, May 8, 1989). Private
respondent’s cause of action to ask for reformation of said contract should
thus be considered to have arisen only in 1982 or 1983, and from 1982 to
This ruling was reiterated in Pilipinas Shell Petroleum Corporation v.
John Bordman Ltd. of Iloilo, Inc., [46] where the Court declared that the cause of action of
respondent therein arose upon its discovery
of the short deliveries with
certainty, since prior thereto, it had no indication that it was not
getting what it was paying for. The Court declared that before then, there was
yet no issue to speak of, and as such, respondent could not have brought an
action against petitioner. It was stressed that “it was only after the
discovery of the short deliveries that respondent got into position to bring an
action for specific performance.” Thus, the Court declared that the action was
brought within the prescriptive period.[47]
In the present case, petitioner
executed the Master Deed in 1975. However,
petitioner had no doubt about its ownership of the unassigned parking lots, and
even sold some of them. Respondent did
not even object to these sales, and even offered to buy some of the parking slots.
Respondent assailed petitioner’s ownership only in 1989 and claimed ownership
of the unassigned parking slots, and it was then that petitioner discovered the
error in the Master Deed; the dispute over the ownership of the parking slots thereafter
ensued. It was only then that petitioner’s
cause of action for a reformation of the Master Deed accrued. Since petitioner
filed its complaint in 1990, the prescriptive period had not yet elapsed.
The
CA erred in relying on the ruling of this Court in Rosello-Bentir v. Hon. Leanda.[48] In
that case, the Leyte Gulf Traders, Inc. leased a parcel of land owned by Yolando
Rosello-Bentir. The lease agreement was entered into on
“4. IMPROVEMENT. The lessee shall have the right to
erect on the leased premises any building or structure that it may desire
without the consent or approval of the Lessor x x x provided that any
improvements existing at the termination of the lease shall remain as the
property of the Lessor without right to reimbursement to the Lessee of the cost
or value thereof.”[49]
On
In his answer to the complaint, the
lessor alleged that the corporation was guilty of laches for not bringing the
case for reformation of the lease contract within the prescriptive period of 10
years from its execution. On
On appeal to the CA, the lessor
alleged that the RTC committed grave abuse of discretion amounting to excess or
lack of jurisdiction in setting aside the
However, we reversed this CA decision
and declared that the action for reformation of the lease contract was
inappropriate because petitioner had already breached the deed.[50]
Even supposing that the four-year extended lease could be considered as an
implied new lease under Article 1670 of the New Civil Code, the “other terms”
contemplated therein were only those terms which are germane to the lessee’s right
of continued enjoyment of the leased property.
We concluded that the prescriptive period of 10 years, as provided for
in Article 1144 of the Civil Code, applies by operation of law and not by the
will of the parties, and that, therefore, the right of action for reformation
accrues from the date of the execution of the contract of lease in 1968.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of Appeals in
CA-G.R. CV No. 44696 is SET ASIDE. The Court of Appeals is directed to resolve
petitioner’s appeal with reasonable dispatch.
No costs.
ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE
CONCUR:
Chief Justice
Chairperson
CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
Associate Justice
Associate Justice
Pursuant to Section 13, Article VIII of the
Constitution, it is hereby certified that the conclusions in the above decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
ARTEMIO V. PANGANIBAN
Chief Justice
[1] Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices Ramon Mabutas, Jr. (retired) and Martin S. Villarama, Jr., concurring; rollo, pp. 93-100.
[2] Records, pp. 55-61.
[3] Rollo, p. 174.
[4] Records, p. 544.
[5] CA rollo, pp. 52-53.
[6] Rollo, p. 174.
[7] Section 16. A condominium corporation shall not, during its existence, sell, exchange, lease, or otherwise dispose of the common areas owned or held by or in the condominium project unless authorized by the affirmative vote of a simple majority of the registered owners: Provided, That prior notifications to all registered owners are done: and Provided, further, That the condominium corporation may expand or integrate the project with another upon the affirmative vote of a simple majority of the registered owners, subject only to the final approval of the Housing and Land Use Regulatory Board.
[8] Rollo, p. 17.
[9] 327 Phil. 431, 443 (1996).
[10] 339 Phil. 309 (1997).
[11] Rollo, p. 198.
[12] 386 Phil. 802, 812 (2000).
[13] Rollo, pp. 64-65.
[14] 119 Phil. 84 (1963).
[15] 133 Phil 459 (1968).
[16] G.R.
No. L-44616,
[17] Supra note 12.
[18]
[19] Korean Air Lines,
[20] Insular Life Assurance Co. Ltd. Employees
Association-NATU v. InsularLife Assurance
Co., Ltd., No. L-25291,
[21] J.Y. Feria, 1997 rules of civil procedure, annotated (1997 ed.,) 209.
[22] Yuchengco v. Republic of the
[23] Ochagabia v. Court of Appeals, G.R. No. 125590, March 11, 1999, 304 SCRA 587, 593.
[24] Tolentino v. Court of Appeals, L-41427,
[25] De Guzman, Jr. v. Court of Appeals, G.R.
Nos. 92029-30, December 20, 1990, 192 SCRA 507, 508.
[26] Consolidated Dairy Products, Co. v. Court of
Appeals, G.R. No. 100401,
[27] Moran, comments on the rules of court, vol 3. (1970
ed.), 149.
[28]
[29] Caltex (
[30] In Re Pittsburgh’s City Charter, 297
[31] Aetna Life Ins. Co. of
[32] Willing v.
[33] Tolentino v. Board of Accountancy, 90 Phil. 83, 88 (1951).
[34] Caltex (
[35] See Banco Filipino Savings
and Mortgage Bank v. Court of Appeals, 388 Phil. 27 (2000).
[36] Stewart v.
[37] See Johnson v.
[38] American Mining Co. v. Basin
& Bay State Mining Co., 39
[39] 29
[40] 29 Wash.2d 37, 44, 185 P.2d 134, 137.
[41] Supra note 14.
[42]
[43] Supra note 15.
[44] G.R.
No. 107112,
[45]
[46] Pilipinas Shell Petroleum Corporation v.
John Bordman Ltd. of Iloilo, Inc., G.R. No. 159831, October 14, 2005, 473
SCRA 151.
[47]
[48] Supra note 12.
[49]
[50]