TITLE 2 – CONTRACTS
Chapter 3 – Form of Contracts
TITLE 2 – CONTRACTS
Chapter 1 – General Provisions
Chapter 2 – Essential Requisites
General Provisions
Section 1 – Consent
Section 2 – Objects of Contracts
Section 3 – Cause of Contracts
CHAPTER 4
REFORMATION OF INSTRUMENTS (n)
Art. 1359. When, there having been a meeting of the
minds of the parties to a contract, their true intention is
not expressed in the instrument purporting to embody the
agreement, by reason of mistake, fraud, inequitable
conduct or accident, one of the parties may ask for the
reformation of the instrument to the end that such true
intention may be expressed.
If mistake, fraud, inequitable conduct, or accident has
prevented a meeting of the minds of the parties, the
proper remedy is not reformation of the instrument but
annulment of the contract.
Art. 1360. The principles of the general law on the reformation of
instruments are hereby adopted insofar as they are not in conflict
with the provisions of this Code.
Art. 1361. When a mutual mistake of the parties causes the failure
of the instrument to disclose their real agreement, said
instrument may be reformed.
Art. 1362. If one party was mistaken and the other acted
fraudulently or inequitably in such a way that the instrument does
not show their true intention, the former may ask for the
reformation of the instrument.
Chapter 4 – Reformation of Instruments
Chapter 5 – Interpretation of Contracts
Chapter 6 – Rescissible Contracts
Chapter 7 – Voidable Contracts
Chapter 8 – Unenforceable Contracts
Chapter 9 – Void or Inexistent Contracts
REFORMATION
REQUISITES
Reformation is a remedy in equity 1. There must have been a meeting of the
whereby a written instruments is made minds of the parties to the contract;
or construed so as to express or 2. The instrument does not express the true
conform to the real intention of the intention of the parties; and
parties where some error or mistake has 3. The failure of the instruments to express the
been committed. In granting
true intention of the parties is due to
mistake, fraud, inequitable conduct or
reformation, the remedy in equity is not accident.
making a new contract for the parties,
but establishing and perpetuating the In reforming instruments, courts do not make
real contract between the parties which another contract for the parties. They merely
inquire into the intention of the parties and, having
under the technical rules of law, could
found it, reform the written instrument (not the
not be enforced but for such contract) in order that it may express the real
reformation. intention of the parties.
INTERPRETATION REFORMATION
Is the act of making intelligible what Is that remedy in equity by means of
was before not understood, which a written instruments is made or
ambiguous, or not obvious. construed so as to express or conform
to the real intention of the parties.
It is a method by which the meaning
of language is ascertained. The In granting reformation, therefore,
‘interpretation’ of a contract is the equity is not really making a new
determination of the meaning contract for the parties, but is
attached to the words written or confirming and perpetuating the real
spoken which make the contract. contract between the parties which
under the technical rules of law, could
NIA vs Gamit not be enforced but for such
reformation.
 Art. 1363. When one party was mistaken and the other knew or believed 1361 - Notes 1362 - Notes 1363 - Notes
that the instrument did not state their real agreement, but concealed that In an instrument embodying In an instrument embodying In an instrument embodying a
fact from the former, the instrument may be reformed. a contract where both a contract where one party contract where one party was
parties committed mutual was mistaken and the other mistaken and the other knew
mistake which caused the acted fraudulently or or believed that the
Art. 1364. When through the ignorance, lack of skill, negligence or bad instrument did not state their
failure of the instrument to inequitably in such a way
faith on the part of the person drafting the instrument or of the clerk or real agreement, but concealed
disclose their real that the instrument does that fact from the former, the
typist, the instrument does not express the true intention of the parties, agreement, said instrument not show their true instrument may be reformed.
the courts may order that the instrument be reformed. may be reformed. intention. Again, the mistake in this
article is unilateral.
Art. 1365. If two parties agree upon the mortgage or pledge of real or The party who can bring the Only the party who was
action is either party or his mistaken may ask for The party who can bring the
personal property, but the instrument states that the property is sold successors in interest. reformation of the action is the injured party or
absolutely or with a right of repurchase, reformation of the instrument is instrument or his heirs and his heirs and assigns.
proper. assigns.

1364 - Notes
Reformation may be
ordered at the instance of
either party or his
successor in interest, if the
mistake was mutual;
Otherwise, the party who
can bring the action is the
injured party or his heirs
and assigns.
1365 - Notes
Reformation may be
ordered at the instance of
either party or his
successors in interest, if
the mistake was mutual;
otherwise, the party who
can bring the action is the
injured party or his heirs
and assigns.
1366 - Notes Art. 1366. There shall be no reformation in the following cases:
(1) Simple donations inter vivos wherein no condition is imposed;
Instrument that cannot be
reformed: (2) Wills;
1. Simple donations inter (3) When the real agreement is void.
vivos wherein no condition
is imposed; Donations are
Art. 1367. When one of the parties has brought an action to enforce the
essentially acts of pure
instrument, he cannot subsequently ask for its reformation.
liberality.
2. Wills; A will may be revoked
at any time Art. 1368. Reformation may be ordered at the instance of either party or his
3. When the real agreement successors in interest, if the mistake was mutual; otherwise, upon petition of
is void; A void agreement in the injured party, or his heirs and assigns.
essence, is an agreement
that did not exist from the
very beginning. Hence, Art. 1369. The procedure for the reformation of instrument shall be governed by
there is nothing to be rules of court to be promulgated by the Supreme Court.
reformed.

MEANING OF INTENTIION OF THE PARTIES SHALL BE ACCORDED

CHAPTER 5
INTERPRETATION OF CONTRACTS
Interpretation is the act of
making intelligible what was
Art. 1370. If the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the before not understood,
ambiguous or not obvious. It
literal meaning of its stipulations shall control.
is a method by which the
meaning of language is
If the words appear to be contrary to the evident intention of ascertained.
the parties, the latter shall prevail over the former. (1281) The “interpretation” of a contract
is the determination of the
meaning attached to the words
Art. 1371. In order to judge the intention of the contracting
written or spoken which make the
parties, their contemporaneous and subsequent acts shall be contract.
principally considered. (1282)
INTERPRETATION
Is the act of making intelligible
what was before not
understood, ambiguous, or not
obvious. It is a method by
which the meaning
language is ascertained.
The “interpretation” of a
contract is the determination
of the meaning attached to the
words written or spoken which
make the contract.
PRIMORDIAL CONSIDERATION
The rule is that where the language of a contract is plain and
unambiguous, its meaning should be determined without reference
to extrinsic facts or aids. The intention of the parties must be
gathered from that language alone.
of Stated differently, where the language of a written contract is clear
and unambiguous, the contract must be taken to mean that which,
on its face, it purports to mean, unless some good reason can be
assigned to show that the words should be understood in a different
sense.
Courts cannot make for the parties better or more equitable
agreements than they themselves have been satisfied to make or
rewrite contracts because they operate harshly or inequitably as to
one of the parties, or alter them for the benefit of one party and to
the detriment of the other, or by construction, relieve one of the
parties from the terms which he voluntarily consented to, or impose
on him those which he did not.
 PLAIN MEANING RULE
The cardinal rule in the interpretation of
contracts is embodied in the first paragraph
of Article 1370 pf NCC; if the terms of a
contract is clear and leave no doubt upon
the intention of the contracting parties, the
literal meaning of its stipulation shall
control.
“This provision is akin to the “PLAIN
MEANING RULE” applied by Pennsylvania
courts, which assumes that the intent of the
parties to an instrument is “embodied in the
writing itself, and when the words are clear
and unambiguous the intent is to be
discovered only from the express language of
the agreement.”
FOUR CORNER RULE
A principle which allows courts in some cases to search
Art. 1372. However general the terms of a contract may be, they
beneath the semantic surface for clues to meaning. A shall not be understood to comprehend things that are distinct and
court’s purpose in examining a contract is to interpret the cases that are different from those upon which the parties intended
intent of the contracting parties, as objectively
manifested by them. The process of interpreting a
to agree. (1283)
contract requires the court to make a preliminary inquiry
as to whether the contract before it is ambiguous. Art. 1373. If some stipulation of any contract should admit of
A contract provision is ambiguous if it is susceptible of
several meanings, it shall be understood as bearing that import
two reasonable alternative interpretations. Where the which is most adequate to render it effectual. (1284)
written terms of the contract are not ambiguous and can
only be read one way, the court will not interpret the
contract as a matter of law. If the contract is determined
Art. 1374. The various stipulations of a contract shall be interpreted
to be ambiguous, then the interpretation of the contract together, attributing to the doubtful ones that sense which may
is left to the court, to resolve the ambiguity in the light of result from all of them taken jointly. (1285)
the intrinsic evidence.

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)
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)
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. (1289)

Art. 1379. The principles of interpretation stated in Rule 123 of the

Art. 1377. The interpretation of obscure words or stipulations in Rules of Court shall likewise be observed in the construction of
a contract shall not favor the party who caused the obscurity. contracts. (n)
(1288)

END

Reference:
Obligations and Contract authored by:
Atty. Andrix Domingo, CPA
Atty. Hector De Leon
New Civil Code