Yolanda Rosello-Bentir v. Honorable Mateo M. Leanda

Summary

Leyte Gulf Traders, Inc. filed a complaint for reformation of a 1968 lease contract, seeking to include an alleged verbal agreement granting it right of first refusal when the lessor decided to sell the property. The lessor sold the property to other parties in 1989 without offering it first to the lessee. The Supreme Court held that the action for reformation had prescribed under Article 1144 of the Civil Code, as the 10-year prescriptive period runs from the execution of the original contract in 1968, not from any extension period. The Court emphasized that reformation is an extraordinary remedy that must be exercised sparingly and is subject to legal limitations including prescription. Additionally, reformation cannot be granted after an alleged breach has occurred, as it should be sought before any violation of the contract.