CHAPTER 5 INTERPRETATION OF CONTRACTS meaning and ascertain ING the intention of the parties instrument & not from

es instrument & not from particular words, phrases, or

when such intention cannot clearly be ascertained from clauses
the words used in their contract (par. 2, Art. 1370
: all provisions should, if possible, be so interpreted as to
Article 1370 : although Art. 1371 speaks of acts contemporaneous harmonize with each other
and subsequent to the celebration of the contract,
antecedent circumstances under which it was made
may also be considered
Meaning of interpretation of contracts Article 1375

: the determination of the meaning of the terms or words

used by the parties in their written contract Article 1372
Interpretation of words with different significations
: the process of ascertain ING the intention of the parties
from the written words contained in their contract : if a word is susceptible of two or more meanings, it is to
Special intent prevails over a general intent be understood in that sense which is most in keeping with
the nature & object of the contract in line with the
: rule: where in a contract there are general & special cardinal rule that the intention of the parties must prevail
Literal meaning controls when language clear provisions covering the same subject matter, the latter (Art. 1370)
control over the former when the 2 cannot stand
: private laws of the contracting parties, should be together
fulfilled according to the literal sense of their stipulations,
: reason: when the parties express themselves in Article 1376
if terms are clear & unequivocal
reference to a particular matter, the attention is directed
: the parties are bound by such terms to that

- It must be assumed that it expresses their intent; Resort to usage or custom as aid in interpretation
: question is not what existed in the minds of the parties
whereas, a reference to some general matter,
but what intention is expressed in the language used : usage or custom of the place where the contract was
within which the particular matter may be
entered into may be received to explain what is doubtful
included, does not necessarily indicate that
or ambiguous in a contract on the theory that the parties
the parties had that particular matter in mind
entered into their contract with reference to such usage
Evident intention of parties prevails over terms of or custom
contract
Article 1373 : necessary to prove the existence of usage or custom
: words & clauses of a written contract are in conflict with
the manifest intention of the parties, the latter shall : the burden of proof being upon the party alleging it
prevail over the former
Interpretation of stipulation with several meanings : but usage or custom is not admissible to supersede or
: it is cardinal rule in the interpretation of contracts that vary the plain terms of a contract
the intention of the contracting parties should always : when agreement is susceptible of several meanings,
prevail because their will has the force of law between one of which would render it effectual, it should be given
them (Art. 1159) that interpretation
Article 1377
: if one interpretation makes a contract valid and the
other makes it illegal, the former interpretation is one
Article 1371 which is warranted by the rule stated in Art. 1373 Interpretation of obscure words

: written agreement – should, in case of doubt, be

interpreted against the party who has drawn it, or be
Contemporaneous and subsequent acts relevant in the Article 1374
given an interpretation which will be favorable to the
determination of intention other who, upon the faith of which, has incurred an
obligation
: parties have placed an interpretation to the terms
Interpretation of various stipulations of a contract
thereof by their contemporaneous and/or subsequent : reason for the rule in Art. 1377
conduct : contract must be interpreted s a whole and the
intention of the parties is to be gathered from the entire - The party who drafts the contract (e.g.,
: as by acts in partial performance, such interpretation insurance contract the terms of which are
may be considered by the court in determining it’s prescribed by the insurance company in
 printed form), more easily that the other, could Article 1379
have prevented mistakes or ambiguity in
meaning by careful choice of words; and
generally, the party who causes the obscurity
acts with ulterior motives Principles of interpretation in the Rules of Court
applicable
: the rule is generally applied to what are called
contracts of adhesion : the rules in the Rules of Court on the interpretation of
documents are now contained in Rule 130, Sections 8 to
: contracts most of the terms of which do not result from 17 thereof
mutual recognition between the parties as they are
usually prescribed in printed forms prepared by one
party to which the other may “adhere” if he chooses but
which he cannot change

: aside from insurance contracts, the rule also applies to

bill of landings for goods, plane tickets, and contracts
between lawyer and client, and to all other contract
where their provisions have been drafted only by one
party

Article 1378

Rules in case doubts absolutely impossible to settle

: despite the application of the preceding rules (Arts.

1370-1377), certain doubts still exists

: such doubts shall be resolved in accordance with the

supplementary rules stated in the present article

(1) Gratuitous contract – if doubts refer to

incidental circumstances of a GC (Art. 1350),
such interpretation should be made which
would result in the least transmission of rights &
interests
(2) Onerous contract – if the contract in question
is Onerous (Art. 1350), the doubts should be
settled in favor of the greatest reciprocity of
interests
(3) Principal object of the contract – if the doubt
refers to the principal object of the contract
and such doubt cannot be resolved thereby
leaving the intention of the parties unknown,
the contract shall be null & void