Go V Bacaron

5.
Go v Bacaron through dacion en pago, giving the land in question to Go for full
GR NO. 159048 payment.
October 11, 2005  Go filed a counterclaim for moral damages brought about by mental
By: Gayares anguish, wounded feelings, and besmirched reputation. He also prayed
Topic: Form of contract; reformation of contract; interpretation of contract for exemplary damages, attorney’s fees, and litigation expenses since he
Petitioners: Benny Go was forced to hire counsel.
Respondents: Eliodoro Bacaron  RTC: Dismissed Bacaron’s complaint; Go’s counterclaim is meritorious.
Ponente: Panganiban, J.  CA: Reversed TC’s ruling. Respondent’s appeal should be recognized and
the contract entered into by the parties is an equitable mortgage because
the consideration was grossly inadequate. Additionally, the Court found
RECIT-READY/SUMMARY: Bacaron conveyed a land to Go for 20k. Bacaron
that respondent still paid for the taxes during the years the land was in
demanded it since it was only a mortgage. Go refused and said their contract is an
Go’s possession. Bacaron also had his workers continue to harvest in said
absolute sale. Hence, the case. Bacaron won and he can reform the contract
land so he still remained in control of the property. Reformation of the
because (1) the consideration is grossly inadequate; and (2) the true intention of
contract is granted since the instrument failed to reflect the true
the parties are not reflected in the contract.
intention of the parties.
DOCTRINE:
ISSUE:
The vendor may ask for the reformation of the instrument, should the case be
W/N the grand of the relief of contract reformation was proper?
among those mentioned in Art. 1602 and 1604.
HELD/RATIO:
FACTS:
NO – The court rules for the respondent. The intention of the parties determines
 Bacaron conveyed a 15-hectare parcel of land in favor of Go for P20k.
whether a contract is one of sale or mortgage. In this case, Bacaron raised an issue
 A year after, Bacaron, seeking to recover his property, demanded from
regarding the fact that their true intention is not reflected in the instrument.
Go the P20k “loan.”
Under this circumstance, parol evidence (integrity of written documents) becomes
 Go refused to pay, saying that the transaction between him and Bacaron
admissible and competent to prove the true nature of the instrument.
is a contract of sale and not mortgage.
 Bacaron filed a complaint for reformation of instrument with damages
Hence, Go’s assertion that the interpretation of the terms of the contract is
and prayer of preliminary injunction with the RTC against Go.
unnecessary and that the parties clearly agreed to execute an absolute deed of sale
 Bacaron stated that in 1993, he suffered business reversals, which forced is wrong. This does not hold, especially in light of Art. 1604 of the CC, under which
him to borrow P20k from Go. Additionally, prior to extending the loan, even contracts purporting to be absolute sales are subject to the provisions of Art.
Bacaron required Go to execute a “transfer of rights” but was told that it 1602.
would only be a formality as he could redeem the unregistered land the
moment he pays the loan. Under Art. 1605, the vendor may ask for the reformation of the instrument, should
 Bacaron explained that he was in a tight financial situation and only the case be among those mentioned in Art. 1602 and 1604. Bacaron has more than
entered the contract because Go assured him that he could redeem his sufficiently established that his contract with Go is an equitable mortgage and not
property. an absolute sale, therefore, he is allowed to avail himself of the remedy of
 Lastly, Bacaron stated that the consideration is merely P20k, which is reformation of contracts.
grossly inadequate as the selling price of a 15-hectare land.
 Go, however, denied Bacaron’s claim. Go explained that Bacaron’s
account, as evidenced by checks, vouchers, PNs, etc. remained unpaid
during his time of financial struggle and the amount totaled to P900k.
Thus, to avoid the filing of cases, Bacaron offered to pay his indebtedness

Go V Bacaron

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