SAPALON, NORMILYN F.

BSBA-FM1A

CHAPTER 5

INTERPRETATION OF CONTRACTS

According to ChanRobles of Virtual Law Library, 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)

Simply put, if a contract’s terms are straightforward and there’s no confusion about what the
parties intended, the exact words of the contract govern. However, if the words seem to go against
what the parties obviously meant, then their intention takes precedence over the literal wording. So, the
parties’ intentions matter more than the strict language of the contract.

According ChanRobles of Virtual Law Library, Art. 1371. In order to judge the intention of the
contracting parties, their contemporaneous and subsequent acts shall be principally considered. (1282)

To simplify this, Article 1371 of the Civil Code of the Philippines states: “The statement of a false
cause in contracts shall render them void, if it should not be proved that they were founded upon
another cause which is true and lawful.”