Short answer. Yes. Article 1365 specifically covers this mismatch: when two parties actually agree on a mortgage or pledge, but the instrument they sign states the property is sold absolutely or with a right of repurchase, reformation of that instrument is proper so the document is corrected to reflect the true agreement.
What the law says
If two parties agree upon the mortgage or pledge of real or personal property, but the instrument states that the property is sold absolutely or with a right of repurchase, reformation of the instrument is proper.
Civil Code, Article 1365 — Mortgage/Pledge Stated as Sale. Read the full provision →
Reformation exists for exactly this mismatch
Reformation is the remedy the law provides when a written instrument fails to express what the parties actually agreed to. Article 1365 names your precise situation: if two parties agree upon the mortgage or pledge of real or personal property, but the instrument states that the property is sold absolutely or with a right of repurchase, reformation of the instrument is proper. If what you and the other party actually intended was security for a debt, a mortgage, but what got written down and signed reads as an outright sale, the law does not simply hold you to the words on the page.
Why the mismatch matters so much here
The difference between a mortgage and an absolute sale is not a minor drafting detail. A mortgage leaves ownership with the debtor, who can redeem the property by paying the debt; an absolute sale transfers ownership outright to the buyer, with no debt left to repay. If a document meant to secure a loan is instead worded as a sale, the party who put up the property risks losing it entirely if the true nature of the transaction is not corrected, since the paper would otherwise say ownership already changed hands.
What reformation actually does to the document
Reformation does not create a new agreement between the parties; it corrects the written instrument so that it matches the agreement that was actually reached. The underlying transaction, in this case a mortgage or pledge, is not being changed. What is being fixed is the mismatch between what the document says and what the parties genuinely agreed to at the time they signed it. Once reformed, the instrument should read as the security arrangement it was always meant to be, rather than as an absolute transfer of ownership.
What this means for pursuing reformation
Because Article 1365 applies specifically to this kind of mismatch, the core question in a reformation dispute is what the parties actually agreed to, not merely what the signed paper says. That makes evidence of the true intention behind the document central to the case, since the written instrument itself is exactly what is being challenged as inaccurate. Anyone in this position should gather whatever proof exists of the real arrangement, communications, the circumstances of the transaction, or anything else showing a mortgage or pledge was intended, before relying on reformation to correct the deed.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Sps. Firmo S. Rosario and Agnes Annabelle Dean-Rosario vs. Priscilla P. Alvar, G.R. No. 212731, September 6, 2017 — read the decision on LawPhil →
- Benjamin G. Navalta vs. Marcelo S. Muli, G.R. No. 150642, October 23, 2006 — read the decision on LawPhil →
- Alfonso D. Zamora vs. Court of Appeals, et al, G.R. No. 102557, July 30, 1996 — read the decision on LawPhil →