Article 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.

Kung ang mga napagkasunduan sa kontrata ay malinaw at hindi nang-iiwan ng pagdududa sa intensyon ng mga partido, ang literal na ibig sabihin ng mga napagkusunduan ang mananaig.

Kung ang mga termino ay iba sa intensyon ng mga partido, ang intensyon ang mananaig.

Discussion:

It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. The Court must not read into any other intention of the contracting parties contradictory to the plain meaning.

The terms of an agreement or writing are presumed to have been used in their primary and general acceptation. However, evidence may be admitted to show that they are used in a local, technical or otherwise peculiar signification.

Legal Meaning

In interpreting a writing according to its legal meaning, it is to be interpreted according to the legal meaning it bears in the place of its execution, unless the parties intended otherwise (Rule 130, Section 10 of the Rules of Court).

The MTC has no jurisdiction of the issue is interpretation, enforcement and/or rescission of the contracts.

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.

Case Illustration: Labasan vs Lacuesta G.R. No. L-25931 (1978)

Article 1371

In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered.

Upang hatulan ang intensyon ng mga nagkasundo, ang kaalinsabay at kasunod na kilos ang syang pangunahing ikonsidera.

* When we say contemporaneous this will occur in the same period of time and the Subsequent Acts is the one which following in time or order of the acts of the contracting parties.

Case Illustration: Jose Matienzo vs. Martin Servidad

Article 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)

Gayunpaman ang pangkalahatang tuntunin ng kontrata ay maaari, hindi sila dapat intindihin upang unawain ang mga bagay na naiiba at mga kaso na iba mula sa mga pinagkasunduan ng mga partido. (1283)

Discussion:

Can the general terms used in a contract can comprehend things that are distinct and different from those agreed upon by the parties?

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 by the parties.

Illustrative case:

Carrot man built s house on a lot containing an area of 350 sqm. Cabbage man protested to the construction alleging that their agreement was that Carrot man 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”.