G.R. No. 181855; March 30, 2010
Flordeliza Emilio, Petitioner, vs. Bilma Rapal, Respondent.

FACTS

Petitioner Flordeliza Emilio was the registered owner of a parcel of land in Caloocan City, with a house built on it. Since 1989, respondent Bilma Rapal had been leasing a portion of the house. In early 1996, petitioner borrowed money from respondent. Petitioner claimed she accepted an additional loan under the condition that respondent would not pay monthly rentals from February 1996 to December 1998, with the total loan amount to be treated as advance rentals. On February 2, 1996, a notarized document entitled “Sale and Transfer of Rights over a Portion of a Parcel of Land” was executed, whereby petitioner purportedly sold 27 sq. m. of her lot and the house to respondent for ₱90,000. Petitioner later claimed she signed the deed without its contents being explained to her and that she had no intention to sell, as she could not do so without NHA consent. On July 11, 2002, petitioner filed a complaint for reformation of document with the RTC. Respondent moved to dismiss on grounds of lack of cause of action and prescription, arguing the action was actually for annulment and had prescribed. The RTC denied the motion, declared respondent in default, and ruled in favor of petitioner, declaring the deed null and void as it did not reflect the true intention of the parties, which was a loan. The Court of Appeals reversed the RTC decision, holding that while the action for reformation had not prescribed, petitioner failed to prove fraud or mistake warranting reformation. The appellate court brushed aside petitioner’s claim of not understanding the deed, absent proof of illiteracy or language barrier. Petitioner filed a motion for reconsideration, attaching an affidavit from her daughter, which was denied. Hence, this petition.

ISSUE

Whether the Court of Appeals erred in denying the petition for reformation of the instrument, specifically in finding that petitioner failed to prove that the deed of sale did not express the true intention of the parties due to mistake, fraud, inequitable conduct, or accident.

RULING

The Supreme Court denied the petition. For an action for reformation of instrument to prosper, the following requisites must concur: (1) there must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express the true intention of the parties; and (3) the failure of the instrument to express the true intention is due to mistake, fraud, inequitable conduct, or accident. Petitioner, having admitted the existence and execution of the instrument, bore the burden of proving that the contract did not express the true intention and that this was due to mistake, fraud, inequitable conduct, or accident. The Court held that petitioner failed to discharge this burden. Notarized documents enjoy a presumption of regularity, which can only be overturned by clear, convincing, and more than merely preponderant evidence. Petitioner’s claim of not understanding the contents was not substantiated, as there was no proof she could not read or that the deed was in an unknown language. The affidavit of her daughter submitted during the motion for reconsideration was procedurally improper and hearsay. Petitioner also failed to present the notary public or witnesses to the deed, and the notary public had certified that the deed was one of sale, not a mortgage. Therefore, the Court of Appeals’ decision was affirmed.