Fraud as basis for reformation

Reformation is remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when some error or mistake has been committed.[1] Articles 1362 and 1363 of the Civil Code of the Philippines provide:

ART. 1362. If one party was mistaken and the other acted fraudulently or inequitably in such a way that the instrument does not show their true intention, the former may ask for the reformation of the instrument

ART. 1363. When one party was mistaken and the other knew or believed that the instrument did not state their real agreement, but concealed that fact from the former, the instrument may be reformed.

Under Article 1362, the right to ask for reformation is granted only to the party who was mistaken in good faith. Here, the mistake is not mutual.[2] If one party was mistaken and the other acted fraudulently, the injured party or the mistaken party can ask for the reformation of the contract. Moreover. in Article 1363, the remedy of reformation may be availed of only by the party who acted in good faith. The concealment of the mistake by the other party constitutes fraud.[3]

[1] Reyes and Puno. Obligations and Contracts. 

[2] De Leon. (2014). Obligations and Contracts.

[3] Id.

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