Contracts-C5

Interpretation of Contracts
ARTICLE 1370: ARTICLE 1373:
If the terms of a contract are clear and leave no doubt upon If some stipulation of any contract should admit of several
the intention of the contracting parties, the literal meaning meanings, it shall be understood as bearing that import which
of its stipulations shall control. is most adequate to render it effectual. (1284)
If the words appear to be contrary to the evident intention
of the parties, the latter shall prevail over the former. Kung ang ilang mga kasunduan sa kontrata ay dapat umamin ng
ilang kahulugan, ito ay dapat intindihin bilang responsibilidad
Kung ang mga napagkasunduan sa kontrata ay malinaw at na ang import na kung saan ay pinaka-sapat upang
hindi nang-iiwan ng pagdududa sa intensyon ng mga partido, magbigay mabunga. (1284)
ang literal na ibig sabihin ng mga napagkusunduan ang
mananaig. ARTICLE 1374:
Kung ang mga termino ay iba sa intensyon ng mga partido, The various stipulations of a contract shall be interpreted
ang intensyon ang mananaig. together, attributing to the doubtful ones that sense which
may result from all of them taken jointly. (1285)
Discussion:
It is a cardinal rule in the interpretation of contracts that if the terms of a Ang iba't ibang mga stipulasyon ng isang kontrata ay
contract are clear and leave no doubt upon the intention of the contracting magkakasamang isinalin, na nauugnay sa mga nagdududa sa
parties, the literal meaning of its stipulation shall control. The Court must not kamalayan na maaaring magresulta mula sa lahat ng mga ito ay
read into any other intention of the contracting parties contradictory to the plain kinuha nang magkasama.
meaning.
ARTICLE 1375:
The terms of an agreement or writing are presumed to have been used in their Words which may have different significations shall be
primary and general acceptation. However, evidence may be admitted to show understood in that which is most inkeeping with the nature
that they are used in a local, technical or otherwise peculiar signification. and object of the contract. (1286)
Legal Meaning
Ang mga salitang maaring may magkakaibang kahulugan ay
In interpreting a writing according to its legal meaning, it is to be interpreted dapat maintindihan ang mas dapat na tandaan ayon sa nature o
according to the legal meaning it bears in the place of its execution, unless the object ng kontrata.
parties intended otherwise (Rule 130, Section 10 of the Rules of Court). Discussion:
The MTC has no jurisdiction of the issue is interpretation, enforcement and/or If a word is susceptible to two or more meanings shall be understood to follow
rescission of the contracts. the eaning which is most in keeping with the nature and object of the
agreement.
Only the laws existing at the time of the execution of the contract applies to the
contract unless the intention is for it to retroact. ARTICLE 1376:
The usage or customs of the place shall be borne in mind in
ARTICLE 1371: the interpretation of the ambiguities of a contract, and shall
In order to judge the intention of the contracting parties, fill the omission of stipulations which are ordinarily
their contemporaneous and subsequent acts shall be established
principally considered.
Ang paggamit o ang kaugaligan ng isang lugar ay dapat na
Upang hatulan ang intensyon ng mga nagkasundo, ang nasasaisip sa pamamagitan ng interpretasyon ng hindi
kaalinsabay at kasunod na kilos ang syang pangunahing maliwanag na kontrata, ay dapat na punan ang istipulasyon kung
ikonsidera. saan ay ordinaryong maitatag.

* When we say contemporaneous this will occur in the same period of time and Effect of Usage or Custom of the Place
the Subsequent Acts is the one which following in time or order of the acts of Examples: A made a contract with B regarding “pesetas.” In the place
the contracting parties. where the contract was made, Mexican pesetas were more
commonly used than Spanish pesetas. The Supreme Court held
ARTICLE 1372: that the term “pesetas” should be construed to mean Mexican
However general the terms of a contract may be, they shall pesetas.
not be understood to comprehend things that are distinct If a contract for a lease of services does not state how much
and cases that are different from those upon which the compensation should be given, the custom of the place where the
parties intended to agree. (1283) services were rendered should determine the amount.

Gayunpaman ang pangkalahatang tuntunin ng kontrata ay ARTICLE 1377:

maaari, hindi sila dapat intindihin upang unawain ang mga The interpretation of obscure words or stipulations in a
bagay na naiiba at mga kaso na iba mula sa mga contract shall not favor the party who caused the obscurity.
pinagkasunduan ng mga partido. (1283) (1288)

Discussion: Ang interpretasyon ng mga malabong salita o nakasaad sa

- Can the general terms used in a contract can comprehend things that are kontrata ay hindi papaburan ang partido na responsable sa
distinct and different from those agreed upon by the parties? kalabuan nito.
- No, no matter how general the terms used in a contract, they do not
comprehend things that are distinct and different from those agreed upon Dicussion:
by the parties. It is fair, logical and sensible not to favor that one who caused the ambiguity in
the contract because he should not benefit from it. Therefore, drafters of
Illustrative case: contract must be very careful and cautious in the choice of words or term they
Carrot man built s house on a lot containing an area of 350 sqm. Cabbage man are going to use. The terms should be clear and should leave no room for doubt
protested to the construction alleging that their agreement was that Carrot man regarding the true intention of the parties.
could occupy only that space where the house was constructed. This
interpretation is erroneous because if that was the intention they could have
used the words “portion” or “part” and not the word “lot”.
 Contracts-C5
Interpretation of Contracts
The same article applies to contracts of adhesion where the terms are prepared Illustration:
by only one party while the other merely makes a choice whether he wants to Mr. A is a businessman and he really want to buy the rice field of Mr. B for
take it or leave it. Contracts of adhesion become void when the weaker party is the construction of his commercial building. He issued a written contract to
reduced to the alternative of taking ir or leaving it, and is absolutely deprived of Mr. B who is a farmer and the owner of 15 hectares of rice field, since Mr.
the opportunity to bargain on equal footing. B doesn’t know how to read and right, Mr. A should interpret first the
written contract that he issued to Mr. B before the latter agreed and signed
ARTICLE 1378: upon it because according to art. 1379 The interpretation stated in Rule
When it is absolutely impossible to settle doubts by the 123 of the Rules of Court shall likewise be observed in the construction of
rules established in the preceding articles, and the doubts contracts which stated in “Sec.10 Interpretation of a writing according to
refer to incidental circumstances of a gratuitous contract, its legal meaning – that the language of a writing is to be interpreted
the least transmission of rights and interests shall prevail. If according to the legal meaning it bears in the place of its execution, unless
the contract is onerous, the doubt shall be settled in favor of the parties intended otherwise.”.
the greatest reciprocity of interests.
If the doubts are cast upon the principal object of the
contract in such a way that it cannot be known what may
have been the intention or will of the parties, the contract
shall be null and void.

Kung talagang imposibleng pagkasunduan ang pagdududa

gamit ang mga probisyon sa nakaraang artikulo, at ang
pagdududa ay napapatungkol sa mga incidental na pangyayari
sa gratuitous na kontrata, ang may pinakakukonti ang
paglilipat ng karapatan at interes ang masusunod. Kung ang
kontrata ay onerous, ang pagdududa ay isasaayos na ang
pabor ay sa dalawang may interes.
Kung may pagdududa sa mga principal na dahilan ng kontrata
sa pamamaraan na hindi na maaring malaman kung ano ang
intensyon at lakas ng loob ng mga partido, ang kontrata ay
magiging labag sa batas.

Discussion:
If Articles 1370 to 1377 cannot apply, this article will be considered as the last
resort.

In case of doubts on the incidental circumstances of the contract, and the

contract is gratuitous, the least transmissible of rights and interest shall
prevail.

Example:
A pacto de retro sale should be interpreted as providing for the least
transmissible of rights. The construction favoring the right to redeem should
be adopted which right is considered a natural right.
In case of doubts on the incidental circumstances of the contract, and the
contract is onerous, the doubt shall be construed in favor of the greatest
reciprocity of interests.

Example:
When there is doubt as to whether the contract is a loan or a sale, to hold that
the land was conveyed as security for a loan would afford greater reciprocity
of interest.
If there is doubt on the principal object of the contract and it cannot be
determined what might have been the intention or will of the contracting
parties, the contract shall be void. This is in line with Article 1409, par. 6.

ARTICLE 1379: (NI)

The principles of interpretation stated in Rule 123 of the
Rules of Court shall likewise be observed in the
construction of contracts.

Ang mga prinsipyo ng interpretasyon na nakasaad sa Rule 123

ng Rules of Court ay dapat ding ma-obserbahan sa
konstruksiyon ng kontrata.

These are the classifications of defective contracts:

1. Rescissible contracts
2. Voidable or annullable contracts
3. Unenforceable contracts
4. Void or inexistent contracts

Note: There is no case indicated on this article.