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NIA vs. ESTANISLAO GAMIT [G.R. No. 85869. November 6, 1992.] Fa !

s" On 23 January 1985, the Plaintiff Estanislao Gamit (private respondent herein filed !ith the "#$ of "o%as, &sa'ela, a (omplaint a)ainst the defendant *ational &rri)ation +dministration for reformation of (ontra(t, re(overy of possession and dama)es, alle)in), amon) others that in the (ontra(t of lease entered into, the real a)reement or intention of the parties !as only for the lease of the t!enty five (25,,,, thousand s-uare meters 'y defendant at the rate of P,.1, (entavos per s-uare meter, for a period of ten (1, years from date of e%e(ution !ith the ri)ht of defendant to pur(hase the area upon the termination of the lease, on a pri(e (ertain or (onsideration to 'e ne)otiated and a)reed upon, 'y and 'et!een the parties after the lapse of the ten (1, year period/ #hat it !as not the real a)reement or intention of the parties, at least that of herein plaintiff, to have the rentals paid as formin) part of the pur(hase pri(e later to 'e ne)otiated or a)reed upon, mu(h less !as it their intention at least on the part of herein plaintiff, that the pri(e shall not e%(eed P25,,,,.,,, other!ise, there !ill 'e a )ross inade-ua(y of the pur(hase pri(e, enou)h to sho(0 the (ons(ien(e of man and that of the (ourt/ that it !as not also the intention or a)reement of the parties, at least that of herein plaintiff, that in (ase the lease (ontra(t is not rene!ed after the lapse of the ten (1, year period, for failure of the parties to ma0e 'ilateral (ommuni(ation, the lessor or his su((essors or assi)ns are deemed to have allo!ed (ontinued use of the land in suit !ithout any additional (ompensation !hatsoever (see stipulation no. 8, (ontra(t of lease and neither !as it the true a)reement or real intention of the parties, at least on the part of herein plaintiff, that upon payment of the rental amount of P25,,,,.,,, herein plaintiff shall 'e deemed to have (onveyed and (eded all his ri)hts and interest on the su'1e(t property, in favor of herein defendant. "#$ ruled in favor of plaintiff and a)ainst herein defendant. $+ affirmed. 2en(e, the present petition for revie!. Iss#e" 3hether or not the (ourt of appeals has properly interpreted the (ontra(t. $e%&" *O + perusal of the (omplaint at 'ar and the relief prayed for therein sho!s that this is (learly a (ase for reformation of instrument &n order that an a(tion for reformation of instrument as provided in +rti(le 1359 of the $ivil $ode may prosper, the follo!in) re-uisites must (on(ur4 (1 there must have 'een a meetin) of the minds of the parties to the (ontra(t/ (2 the instrument does not e%press the true intention of the parties/ and (3 the failure of the instrument to e%press the true intention of the parties is due to mista0e, fraud, ine-uita'le (ondu(t or a((ident. Other!ise stated, the (omplaint at 'ar alle)es that the (ontra(t of lease !ith ri)ht to pur(hase does not e%press the true intention and a)reement of the parties thereto due to mista0e on the part of the plaintiff (private respondent and fraud on the part of the defendant (petitioner , i.e., 'y unla!fully insertin) the stipulations (ontained in para)raphs 5, 8 and 9 in said (ontra(t of lease. +s a )eneral rule, parol eviden(e is not admissi'le for the purpose of varyin) the terms of a (ontra(t. 2o!ever, !hen the issue that a (ontra(t does not e%press the intention of the parties and the proper foundation is laid

therefor 6 as in the present (ase 6 the (ourt should hear the eviden(e for the purpose of as(ertainin) the true intention of the parties. 7rom the fore)oin) premises, !e hold that the trial (ourt erred in holdin) that the issue in this (ase is a -uestion of la! and not a -uestion of fa(t 'e(ause it merely involves the interpretation of the (ontra(t 'et!een the parties. #he lo!er (ourt erred in not (ondu(tin) a trial for the purpose of determinin) the true intention of the parties. &t failed to appre(iate the distin(tion 'et!een interpretation and reformation of (ontra(ts. 3hile the aim in interpretation of (ontra(ts is to as(ertain the true intention of the parties, interpretation is not, ho!ever, e-uivalent to reformation of (ontra(ts. 8in(e the (omplaint in the (ase at 'ar raises the issue that the (ontra(t of lease does not e%press the true intention or a)reement of the parties due to mista0e on the part of the plaintiff (private respondent and fraud on the part of the defendant (petitioner , the (ourt a -uo should have (ondu(ted a trial and re(eived the eviden(e of the parties for the purpose of as(ertainin) the true intention of the parties !hen they e%e(uted the instrument in -uestion. 'AROL E(I)EN*E R+LE/ E9$EP#&O*/ "E:E;< 32E* +G"EE:E*# 7+&=8 #O E9P"E88 #">E &*#E*# +*; +G"EE:E*# O7 P+"#&E8. 6 3hen the terms of an a)reement have 'een redu(ed to !ritin), it is (onsidered as (ontainin) all the terms a)reed upon and there (an 'e, 'et!een the parties and their su((essors in interest, no eviden(e of su(h terms other than the (ontents of the !ritten a)reement, e%(ept !hen it fails to e%press the true intent and a)reement of the parties thereto, in !hi(h (ase, one of the parties may 'rin) an a(tion for the reformation of the instrument to the end that su(h true intention may 'e e%pressed. 32E"E7O"E, the de(ision of the trial (ourt dated 2, :ar(h 198? as !ell as the de(ision of the $ourt of +ppeals dated 15 *ovem'er 1988 are here'y 8E# +8&;E and the (ase should 'e, as it is here'y, "E:+*;E; to the (ourt of ori)in for further pro(eedin)s in a((ordan(e !ith this de(ision. 3ithout (osts.