CHAPTER 4: REFORMATION

OF INTRUMENTS (1366-1369)
&
CHAPTER 5: INTERPRETATION
OF CONTRACTS (1370-1379)
 ART. 1366 THERE SHALL BE NO REFORMATION IN THE
FOLLOWING CASES: (1) SIMPLE DONATIONS INTER VIVOS
WHEREIN NO CONDITION IS IMPOSED; (2) WILLS; (3) WHEN THE
REAL AGREEMENT IS VOID.

(1) Simple donations inter vivos where no condition is

imposed. — Donation is an act of liberality whereby a person
disposes gratuitously of a thing or right in favor of another,
who accepts it. (Art. 725.) When the donor intends that the
donation shall take effect during his lifetime, it is a donation
inter vivos. It is distinguished from donation mortis causa in
that this kind of donation takes effect after the donor’s death.
 ART. 1366
(2) Wills. — A will is an act whereby a person
is permitted with the formalities prescribed by
law to control to a certain degree the
disposition of his estate, to take effect after
his death. (Art. 783.)

(3) Where the real agreement is void. — If the

real agreement is void, there is nothing to
reform. Reformation would be useless because
the real agreement being void, it is
unenforceable.
EXAMPLE:
Jellybee donated the trademark for his fried
chicken to Mangdo without conditions. In
this case, the act is essentially gratuitous
and Mangdo has no just cause for
complaint.
ART. 1367 WHEN ONE OF THE PARTIES HAS BROUGHT AN ACTION
TO ENFORCE THE INSTRUMENT, HE CANNOT SUBSEQUENTLY ASK
FOR ITS REFORMATION

(4) Where one party has brought an action to enforce the

instrument. — Article 1367 is based on estoppel (Art.
1431.) or ratifi cation. (see Arts. 1392, 1396.) When a
party brings an action to enforce the contract, he admits
its validity and that it expresses the true intention of the
parties. The bringing of the action is thus inconsistent
with reformation. There is no prohibition against joining in
one action the reformation of instrument and its
enforcement as reformation.
EXAMPLE:
Anna who is need of money negotiated a contract of chattel
mortgage with Ben using Anna’s Car for security. Through
machination perpetrated by Ben, Anna signed a document of
sale believing that it was a chattel mortgage. Later Anna filed a
case against Ben for delivery of the car based on the deed of
sale. The action failed. Ben can no longer seek the reformation
of the instrument to consider it a chattel mortgage. He is
estopped for the law has deemed him to have waived the
action for reformation.
ART. 1368. REFORMATION MAY BE ORDERED AT THE INSTANCE OF EITHER
PARTY OR HIS SUCCESSORS IN INTEREST, IF THE MISTAKE WAS MUTUAL;
OTHERWISE, UPON PETITION OF THE INJURED PARTY, OR HIS HEIRS AND
ASSIGNS.

Party
Party entitled
entitled to
to Reformation.
Reformation.

The
The above
above articles
articles enumerates
enumerates thethe person
person
who
who can
can bring
bring an
an action
action to
to reform
reform an
an
instrument.
instrument.
 ART. 1368
(1) Either of the parties, if the mistake is mutual
under Articles 1361, 1364, and 1365;
(2) In all other cases, the injured party, under
Articles 1362, 1363, 1364, and 1365;
Party entitled to Reformation. and
(3) The heirs or successors in interest, in lieu of
the party entitled.
The above (Art. enumerates
articles 1368.) The effect of
the person
reformation
who canisbring
retroactive
an actionfrom the time
to reform an of the
execution of the original instrument.
instrument.
 ART. 1369. THE PROCEDURE FOR THE REFORMATION OF
INSTRUMENTS SHALL BE GOVERNED BY RULES OF COURT
TO BE PROMULGATED BY THE SUPREME COURT.

The Rules of Court govern

procedure. However, the Supreme
Court has not as yet promulgated
the procedure for the reformation
of instruments...
 Meaning of interpretation of

CHAPTER 5 contracts. Interpretation of a

contract is the determination
INTERPRETA- of the meaning of the terms
or words used by the parties
TION OF in their contract.
Determining the intent of the
CONTRACTS parties is usually what courts
say it is when they interpret a
(1370-1379) contract’s language in
particular cases.
Interpretation of a contract, a
question of law.
Interpretation of a contract involves
a question of law since a contract is
in the nature of law as between the
parties and their successors
 ART. 1370. IF THE TERMS OF A CONTRACT ARE CLEAR AND LEAVE NO
DOUBT UPON THE INTENTION OF THE CONTRACTING PARTIES, THE
LITERAL MEANING OF ITS STIPULATIONS SHALL CONTROL. IF THE WORDS
APPEAR TO BE CONTRARY TO THE EVIDENT INTENTION OF THE PARTIES,
THE LATTER SHALL PREVAIL OVER THE FORMER. (1281)

Weight of evidence to justify disregard of contracts.

Party
(1) Terms entitled
presumed to Reformation.
to embody will of parties. — It is to be
presumed that every contracting party knows the contents of
the contract befor
The above articles enumerates the person
he signs and delivers it and that the words used embody the
will of who can bring an action to reform an
the parties.
instrument.
(2) Clear and convincing evidence required to impugn a contract.
 ART. 1371. IN ORDER TO JUDGE THE INTENTION OF THE
CONTRACTING PARTIES, THEIR CONTEMPORANEOUS AND
SUBSEQUENT ACTS SHALL BE PRINCIPALLY CONSIDERED. (1282)

Contemporaneous and subsequent acts to be

principally considered
Antecedent circumstances relevant in determination
of intention.
Courts not bound by name given to contract by the
parties.
True nature of contract defined by law.
ART. 1372. HOWEVER GENERAL THE TERMS OF A CONTRACT MAY BE,
THEY SHALL NOT BE UNDERSTOOD TO COMPREHEND THINGS THAT
ARE DISTINCT AND CASES THAT ARE DIFFERENT FROM THOSE UPON
WHICH THE PARTIES INTENDED TO AGREE. (1283)

Special intent over general intent.

Even if the terms used in the
contract/agreement may be general, the
interpretation should NOT ever be far from the
intention of the parties; that intention to be
determined accd. to circumstances.
 ART. 1372
GENERAL RULE | Where in a contract there are
general and special provisions covering the
same subject matter that are inconsistent,
special provisions prevail over general
provisions when the two CANNOT stand
together.
EXAMPLE:
Charlie is building a house on a 350 sqm. lot with an
existing structure that was less than 350 sqm. in area. Ben
protested alleging that Charlie could occupy ONLY the
space where the existing structure lies. Charlie, however,
argued that according to their agreement, he could occupy
the lot. Ben’s interpretation is erroneous because if that
was the intention, they could have used the words
“portion” or “part” and not the word “lot”.
 ART. 1373. IF SOME STIPULATION OF ANY CONTRACT SHOULD ADMIT
OF SEVERAL MEANINGS, IT SHALL BE UNDERSTOOD AS BEARING THAT
IMPORT WHICH IS MOST ADEQUATE TO RENDER IT EFFECTUAL. (1284)

Interpretation of stipulation with several meanings.

When an agreement is susceptible of several
meanings, one of which would render it effectual, it
should be given that interpretation.
Thus, if one interpretation makes a contract valid or
effective and the other makes it illegal or
meaningless, the former interpretation is onewhich
is warranted by the rule stated in Article 1373.
EXAMPLE:
Sabit Singson owns two lands, one he owns exclusively
and one he co-owns with Irap Estrada. Without specifying,
Sabit sells “his parcel of land” to Ate Glow. Irap did not
give his consent to the sale.

In this case, the sale should refer to the land owned by

Sabit Singson alone as this would make the contract
effectual.
ART. 1374. THE VARIOUS STIPULATIONS OF A CONTRACT SHALL BE
INTERPRETED TOGETHER, ATTRIBUTING TO THE DOUBTFUL ONES
THAT SENSE WHICH MAY RESULT FROM ALL OF THEM TAKEN
JOINTLY. (1285)

A contract must be interpreted as a whole and

the Party
intention of the
entitled to parties is to be gathered from
Reformation.
the entire instrument and not from particular
words,
The phrases, or clauses,
above articles having in
enumerates mind
the the
person
intention of the
who can parties
bring and to
an action thereform
purposean to be
achieved, consistent with their contemporaneous
instrument.
and subsequent acts.
 ART. 1374
Interpretation of various stipulations/separate
writings of a contract.

(1) Conflicting provisions of contract.

Party entitled to Reformation. — As in
statutes, the provisions of a contract should not
be read
Theinabove
isolation fromenumerates
articles the rest ofthe
theperson
instrument
who canbut, on the
bring contrary,
an action interpreted
to reform an in
the light of other related provisions.
instrument.
 ART. 1374
(2) Contract contained in several documents. — Where
the contract is contained in several documents or in
two or more separate writings all of them must be
taken together to determinethe intention of the
Party entitled to Reformation.
parties.Applying the “complementary-contracts-
construed-together’’ doctrine, they should be read and
The above articles enumerates the person
interpreted together in such a way as to eliminate
who
seeming can bring an action
inconsistencies to reform
and render an
the parties’
instrument.
intention effective.
 ART. 1374
(3) Business forms. — Business forms, e.g.,
order slip, delivery charge invoice and the
like, which are issued by the seller in the
Party entitled to Reformation.
ordinary course of business are not always
fully accomplished to contain all the
The above articles enumerates the person
necessary information describing in
who can bring an action to reform an
detail
the whole business transaction.
instrument.
 ART. 1374
(4) Titles/separability clause in contract. — Titles
given to sections of a contract may be resorted to for
the purpose of determining the scope of the
provisions and their relation to other portions thereof.
Party entitled to Reformation.
But two separate sections or articles of a contract
cannot be correlated with each other where the
The above articles enumerates the person
parties have expressly provided for a separability
who can bring an action to reform an
clause, i.e., that one article cannot have a restrictive
effectinstrument.
upon the meaning of another article.
ART. 1375. WORDS WHICH MAY HAVE DIFFERENT SIGNIFICATIONS
SHALL BE UNDERSTOOD IN THAT WHICH IS MOST IN KEEPING
WITH THE NATURE AND OBJECT OF THE CONTRACT. (1286)

Interpretation of words with different significations.

If a word is susceptible of two or more meanings, it
is to be understood in that sense which is most in
keeping with the nature and object of the contract
in line with the cardinal rule that the intention of the
parties must prevail. (Art. 1370.)
EXAMPLE:
R leased to E a roof for the purpose of erecting an advertising
sign.
The contract provides for the termination of the lease by E if
a “building” should be constructed on an adjoining property
of such height as to obscure the view of E’s sign. There was
erected on the roof of an adjoining building a sign which
obstructed the view of E’s sign.
In this case, the term “building” as the term is used in the
contract may be interpreted to include the obstructing sign
ART. 1376. THE USAGE OR CUSTOM OF THE PLACE SHALL BE BORNE IN
MIND IN THE INTERPRETATION OF THE AMBIGUITIES OF A CONTRACT,
AND SHALL FILL THE OMISSION OF STIPULATIONS WHICH ARE
ORDINARILY ESTABLISHED. (1287)

This article explains the effect of usage or custom of

the place. It is necessary to know if the contract was
entered into may be received to explain the theory to
parties in the contract with reference to such usage
or custom. But if the custom is general in character,
it is presumed to be known by the parties.
EXAMPLE:
A. Ronalyn made a contract with Ferdy regarding
“pesetas.” In the place where the contract was made,
Mexican pesetas were more commonly used than Spanish
pesetas. The Supreme Court held that the term “pesetas”
should be construed to mean Mexican pesetas. To make it
comprehensible, the custom from that place must be used
to avoid confusion or to make it clearer in the contract.
EXAMPLE:
B. If a contract for a lease of services does not state how
much compensation should be given, the custom of the
place where the services were rendered should determine
the amount.
 ART. 1377. THE INTERPRETATION OF OBSCURE WORDS OR
STIPULATIONS IN A CONTRACT SHALL NOT FAVOR THE PARTY WHO
CAUSED THE OBSCURITY.

A written agreement should, in case of doubt

or ambiguity, be taken contra proferentem,
i.e., be interpreted strictly against the party
who has drawn it, or be given an interpretation
which will be favorable to the other who, upon
the faith of which, has incurred an obligation.
 1377
Contracts of adhesion.

These contracts are so-called because almost

all their provisions have been drafted by one
party, and the only participation of the other
party is the signing of his signature or his
“adhesion’’ thereto on the “take it or leave it’’
basis, without the right to modify it.
ART. 1378. When it is absolutely impossible to settle doubts by
the rules established in the preceding articles, and the doubts
refer to incidental circumstances of a gratuitous contract, the
least transmission of rights and interests shall prevail. If the
contract is onerous, the doubt shall be settled in favor of 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.
 ART. 1378
Rules in case doubts are impossibleto settle.
When, despite the application of the preceding rules
(Arts. 1370-1377.), certain doubts still exist, such doubts
shall be resolved in accordance with the supplementary
rules stated in the present article.
(1) Gratuitous contract. — If the doubts refer to incidental
circumstances of a gratuitous contract (see Art. 1350.),
such interpretation should be made which would result in
the least transmission of rights and interests.
EXAMPLE:
Ana gave her car to Ben. It is not clear in the contract
whether it is commodatum or a pure donation.

The Contract should be presumed as a mere

commodatum because it would transmit lesser rights than
a donation since Ana retains ownership of her car.
 ART. 1378
(2) Onerous contract. — If the contract in
question is onerous the doubts should be
resolved in favor of the greatest reciprocity
of interests.
 EXAMPLE:
Ana borrowed from Ben P 5,000.00 at 12% interest. It cannot
be determined from the terms of contract whether the loan is
payable in six months or in one year.

It must be assumed that the period agreed upon is one year

which results in a greater reciprocity of interests since Ana
can use the money for one year, and Ben, on the other hand,
can earn interest due for one year instead of only six months.
 ART. 1378
(3) Principal object of 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 and void.
EXAMPLE:
Ana sold her land to Ben. Ana has many lands. It
cannot be determined which land was intended by the
parties to be the subject of the sale.

Therefore, the contract shall be null and void and it is

as if the parties have not entered into any contract at
all.
 ART. 1379. THE PRINCIPLES OF INTERPRETATION STATED IN
RULE 123 OF THE RULES OF COURT SHALL LIKEWISE BE
OBSERVED IN THE CONSTRUCTION OF CONTRACTS.
(1) The language of a writing shall have the legal meaning it
bears in the place of execution, unless the parties intended
otherwise. (Sec. 10; see Art. 1370.)
Party entitled
(2) An instrument to Reformation.
with several provisions or particulars shall
be construed so as to give effect to all. (Sec. 11; see Art.
1373.) The above articles enumerates the person
(3) In case of confl ict between a general and a particular
who can bring an action to reform an
provision, the latter shall prevail; so a particular intent will
instrument.
control a general one that is inconsistent with it. (Sec. 12; see
Arts. 1370, 1372.)
 ART. 1379
(4) The circumstances under which the instrument was
made, including the situation of the subject thereof and of
the parties to it, may be considered in its interpretation.
(Sec. 13; see Art. 1371.)
Party
(5) Terms areentitled
presumed to to
Reformation.
have been used in their
ordinary and generally accepted meaning unless intended
to have been
The used articles
above in a different sense. (Sec.
enumerates the 14; see Art.
person
1375.) who can bring an action to reform an
(6) In case of conflict,
instrument. the written words prevail over the
printed form. (Sec. 15.)
 ART. 1379
(7) Experts and interpreters may be asked to declare the
characters or the meaning of the language when such characters
are difficult to decipher or the language is not understood by
the court. (Sec. 16.)
(8) Of two constructions, that sense is to prevail against the
party inParty
which entitled to Reformation.
he understood it or which is most favorable to
the party in whose favor the provision was made. (Sec. 17; see
Art. 1377.)
The above articles enumerates the person
(9) Of two constructions, one in favor and the other against
who can bring an action to reform an
natural right, the former is to be adopted. (Sec. 18.)
instrument.
(10) Usage may be the basis to determine the true character of
an instrument. (Sec. 19; see Art. 1376.)
 ART. 1379
These are the classifications of
defective contracts:
Rescissible contracts
Voidable or annullable
Party entitled contracts
to Reformation.
Unenforceable contracts
The above articles enumerates the person
Void or inexistent contracts
who can bring an action to reform an
instrument.
MEMBERS:
ALBINO, ANDREI LLOYD B.
ACALA, JAMIR
BUHAY, EZEKIEL S.
DELA CRUZ, MAC JORDAN D.
MARAÑA, AXEL
OBENZA, MARY JAMESLYN L.
ORENSE, JAN MICHAEL
PACUT, KENT EDZEL G.
PORTILLO, JOHN TYRONE M.
VILLANUEVA, STEVEN
VILLAR, ANDREW ISAAC
ZABAY, GERALD