MANILA — The Supreme Court (SC) has ruled that a sale of land remains valid even if the deed of sale contains an incorrect property description, provided the parties’ true agreement can be clearly established, allowing the document to be corrected to reflect their actual intent.

In a decision penned by Associate Justice Henri Jean Paul B. Inting, the SC’s Third Division reinstated a Regional Trial Court (RTC) ruling recognizing the sale of a 491-square-meter property in Cebu City between spouses Genara and Felipe Abay Sr. and sellers Crispin Caballes and the heirs of Trinidad Caballes-Gallardo.

The property formed part of the estate of Margarita Lopez, whose children included Crispin and Trinidad.

According to the Court, before the sale, Crispin and Tomas Gallardo, one of Trinidad’s heirs, personally showed the Abays the property’s boundaries. Tomas also later assisted in constructing a concrete fence around the land.

The Abays occupied the property for about two decades until workers of spouses Jacinto and Chiok Ngo Lim Young entered the area, demolished the fence, and installed their own boundary markers.

The dispute arose after the Abays discovered that the property had been titled in the Youngs’ name, prompting them to file a case before the RTC seeking the cancellation of the title.

The Gallardos argued that the deeds presented by the Abays referred to Lot No. 6036-B rather than Lot No. 7, the property they occupied. They also questioned the authenticity of the 1982 Extrajudicial Settlement and Sale and maintained that the controlling document was a 1999 Extrajudicial Settlement and Deed of Absolute Sale executed in favor of the Youngs.

The Youngs, for their part, insisted they purchased the property in good faith.

The RTC ruled for the Abays, holding that the earlier sale involving the shares of Crispin and his siblings was valid and that the Youngs should have investigated the property’s condition before purchasing it, noting the presence of existing structures.

The Court of Appeals later reversed the RTC, ruling that the deeds cited by the Abays referred to a different property, Lot No. 6036-B, rather than Lot No. 7.

The Supreme Court, however, disagreed and restored the RTC’s decision.

Citing the Civil Code, the SC said a written contract may be reformed if, because of a mistake, it fails to reflect the parties’ actual agreement.

The Court reiterated that previous rulings have consistently recognized the validity of land sales even when deeds incorrectly identify the property, so long as the parties’ true intention is clearly established.

It also stressed that buyers ordinarily identify property based on physical boundaries, landmarks, and existing improvements rather than technical lot numbers or survey descriptions.

The SC said a contract may be corrected when the parties agreed to the transaction, the written document does not accurately express that agreement, and the discrepancy resulted from mistake, fraud, accident, or inequitable conduct.

The Court found all of these elements present in the case.

It noted that the parties’ agreement to sell the property was evident from the 1979 Contract to Sell, the 1981 Absolute Deed of Sale, and the 1982 Extrajudicial Settlement and Sale.

The Court also found that the deeds did not accurately reflect the intended property, pointing out that the Abays took possession of the land, enclosed it first with a bamboo fence and later with a concrete fence, paid real property taxes, and continuously exercised ownership over it.

The SC gave weight to the fact that Tomas Gallardo personally helped construct the concrete fence, saying such action demonstrated the sellers recognized the Abays’ ownership.

It further ruled that the incorrect lot number resulted from a mistake because the property had not yet been individually titled at the time of the sale and remained part of a larger estate under settlement.

The Court also observed that the property sold measured 491 square meters, exactly matching the combined shares of Crispin and the Gallardos, while Lot No. 6036-B measured 4,450 square meters, making it inconsistent with the parties’ intended transaction.

Based on these circumstances, the SC ruled that the reference to Lot No. 6036-B was merely a clerical error and that the parties had intended to sell Lot No. 7.

The Court likewise ruled that the Youngs could not be considered buyers in good faith, saying the Abays’ long-standing and visible possession of the property, including the concrete fence, should have prompted further inquiry before the purchase. It held that the Youngs’ failure to inspect the property or verify its status prevented them from claiming good faith over the Abays’ earlier rights.