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ART. 1354
- Even if a contract doesn't say why the parties are entering into it (the cause), the law assumes that there is a good and legal reason behind it.
- But — if someone challenges it, like the debtor, they must prove that there's something wrong with the reason (like it's illegal or doesn't exist). Cause : The reason or purpose behind a contract (like why a person agrees to pay or deliver something). Presumed : Assumed to be true unless proven otherwise. Lawful : Legal and not against the law. Debtor : The person who owes something in a contract. EXAMPLE: ● Let’s say Anna signs a contract to pay Ben ₱10,000 , but the contract doesn’t say why. ● According to Article 1354 , the law will assume that Anna has a valid and legal reason to pay Ben, like maybe she bought something from him or owed him money. ● But if Anna claims that she shouldn't have to pay, she has to prove that there was no legal reason for the contract — maybe she was tricked, or there was no real agreement|. EXAMPLE: ● Pedro signs a contract to give Maria ₱20,000, and the contract doesn’t say why. ● Even if the cause (reason) isn't written, the law presumes that Pedro is doing it for a legal reason — like paying for a service, repaying a loan, etc. ● If Pedro says he shouldn’t have to pay, he must prove that the cause doesn't exist or is illegal (maybe the contract was forced or fake). ART. 1355
- Just because something in a contract seems unfair or one-sided , that doesn't automatically make the contract invalid — unless it was made through fraud , mistake , or undue influence .
● Lesion – When a person gets less than what is fair or equal (like a big loss). ● Inadequacy of cause – The cause or reason behind the contract seems too small or unfair (example: selling a car for ₱1,000 when it's worth ₱500,000). ● Fraud – Someone was tricked. ● Mistake – There was a wrong belief or understanding. ● Undue influence – One person pressured the other unfairly (like using power or trust to control someone). EXAMPLE: ● Let’s say Lola sells her land to Juan for only ₱50,000 , but the land is really worth ₱1,000,000. ● This looks unfair (inadequate cause), but the contract is still valid. ● It will only be invalid if Lola can prove that Juan tricked her ( fraud ), she misunderstood the value ( mistake ), or Juan pressured her because she trusted him too much ( undue influence ). @CALA
A contract is still valid even if it seems unfair — unless someone was tricked, confused, or pressured. LESION
- Lesion means a person gets a very bad deal in a contract — like getting way less than what something is worth. EXAMPLE: ● Ana sells her house worth ₱ million to Ben for only ₱300,. ● This is a lesion — Ana got way less than the real value. ● But the contract is still valid. ● It only becomes invalid if Ana can show she was tricked (fraud), made a mistake about the value , or Ben pressured her into agreeing. Unfair deal? Still valid — unless someone was fooled, confused, or forced. **EFFECT OF LESION OR INADEQUACY
- GENERAL RULE:**
- Unfair or unequal contracts (lesion or inadequate cause) are still valid.
- The law does not cancel a contract just because one party got a bad deal. Why? People are free to agree to whatever contract they want, even if it's one-sided. EXAMPLE: ● Maria sells her laptop worth ₱30, to Jose for ₱5,000. ● Even if it looks like a bad deal for Maria (lesion), the contract is still valid under the law — unless an exception applies. 2. EXCEPTIONS: The contract can be invalid if: (A) There is fraud, mistake, or undue influence
- Fraud – One party tricks the other.
- Mistake – A party misunderstands something important.
- Undue Influence – One party pressures or takes advantage of the other. EXAMPLE: ● Juan tricks his grandma into selling her land worth ₱2 million for ₱200,000, saying it’s worthless. This is fraud – so the contract can be canceled. (B) Cases specified by law
- In some special situations, the law itself allows a contract to be canceled due to lesion. EXAMPLE: ● In partition of inheritance among heirs, if one heir gets way less than their rightful share (lesion of more than 1/4), the law allows that contract to be challenged. This is a special case specified by law. SIMPLE TERM: General Rule: Bad deal? Contract still valid. Exceptions: Contract can be canceled if:
Someone was tricked, confused, or pressured The law allows it (special situations) MEANING OF FORM OF CONTRACT The "form" of a contract means how the contract is made or presented. It can be:
- Verbal (spoken)
- Writte
- Written and notarized
- Signed in front of witnesses, etc. @CALA
It’s written down, And signed (with or without a notary) ● If notarized = public ● If just signed = private CLASSIFICATION OF CONTRACTS ACCORDING TO FORM
- INFORMAL (COMMON or SIMPLE) CONTRACTS
- These are contracts that do NOT need a special form.
- They are valid whether oral or written, as long as: - There is agreement (consent) - There is something to be done or given (object) - There is a reason for the contract (cause) EXAMPLE: ● Ana agrees verbally to sell her shoes to Carla for ₱500. ● No writing needed ● Still a valid informal contract Another example: ● A friend borrows ₱1,000 from you and promises to pay it back. ● Even without a written contract, this is valid.
2. FORMAL (SOLEMN) CONTRACTS - These are contracts that must follow a specific form required by law — usually in writing, sometimes even notarized.
- If you don’t follow the required form, the contract is invalid. EXAMPLE: ● Sale of land – must be in writing and notarized ● Donation of real property – must be in writing and public instrument (notarized) ● Marriage – must follow the formal requirements under law ● Chattel mortgage – must be in writing and registered **SIMPLE TERMS:
Informal contract** = okay even if oral or not notarized > Formal contract = must follow legal form (usually written + notarized), or else it's not valid RULES REGARDING FORM OF CONTRACTS (1) GENERAL RULE:
- Contracts are valid in any form — whether oral, written, or even just implied by actions, as long as the essential elements are present: ○ Consent (both parties agree) ○ Object (what the contract is about) ○ Cause (the reason behind the contract) EXAMPLE: ● You tell your friend: ● “I’ll sell you my watch for ₱1,000.” ● They say, “Deal!” **This is a valid oral contract under the general rule.
- EXCEPTIONS:**
- There are special cases when the law requires a contract to be in a specific form (like written or notarized).
- If this form is not followed, the contract is not valid or enforceable.
- These special contracts are called formal or solemn contracts. A. When the law requires a specific form for validity
- If the form is not followed, the contract is void (has no effect). @CALA
EXAMPLE:
● Sale of land – must be in writing and notarized. If you agree only verbally, the sale is not valid. B. When the law requires a specific form for enforceability or proof
- If the form is not followed, the contract may be valid but cannot be used in court unless the proper form is followed. EXAMPLE: ● A loan of more than ₱500 must be in writing to be enforced in court (under the Statute of Frauds). (C) FOR THE CONVENIENCE OF THE PARTIES OR TO AFFECT THIRD PERSONS
- Sometimes, the law requires a specific form, not to make the contract valid, but:
- To protect the parties
- Or to notify or affect other people (like third parties or the public. The contract is still valid even if the form isn’t followed — but:
- It might not protect the parties well
- It might not affect third parties EXAMPLE: ● Example 1 – Chattel Mortgage (personal property used as loan security): ● It must be in writing and registered to affect third parties. ● If not registered, the contract is still valid between the parties — but third parties won't be bound by it. Example 2 – Partnership with real property. ● If partners contribute real property, the partnership contract must be in a public document and registered. ● If not, the partnership is still valid between the partners, but it won’t affect third parties (like creditors). General rule : Contracts can be oral or written — both are valid. Exception : Some contracts must be written or notarized. If not, they won’t count or can’t be used in court. **FORM FOR REQUIRED OF VALIDITY
- DONATION OF REAL PROPERTY**
- If you donate land or a house, the donation must be:
- In writing, and In a public (notarized) document EXAMPLE: ● Pedro wants to donate a piece of land to his sister Ana. ● If he only tells her verbally, the donation is not valid. ● He must put it in a notarized document. 2. DONATION OF PERSONAL PROPERTY WORTH OVER ₱5,
- If you're donating something like a phone, car, or laptop worth more than ₱5,000:
- It must be in writing
- Otherwise, the donation is invalid EXAMPLE: ● Lisa wants to give her ₱10,000 bike to her cousin as a gift. ● If there’s no written document, the donation is not valid under the law. 3. SALE OF LAND THROUGH AN AGENT
- If you authorize someone to sell land on your behalf, the authority must be:
- In writing, and
- In a public (notarized) document @CALA
● That contract is not enforceable unless it is written and signed.
5. Sale of Goods Worth More Than ₱ Example: ● You agree to buy a TV for ₱10,000, but it’s only a verbal deal. ● The seller later backs out. ● You can’t sue unless there’s a written contract or receipt
Valid? Yes > Enforceable in court? Only if in writing and signed The law wants proof for important contracts so people don’t lie about them later. ART. 1357 - Even if the contract is already valid, if the law says it must be written or notarized. - You can demand the other person to comply with that form. - You can do this even while suing them or enforcing the contract. - Perfected contract: The agreement is already made (consent + object + cause) - Special form: Written, notarized, or registered, as required by law EXAMPLE: ● Ana and Ben agree (verbally) that Ana will sell her land to Ben for ₱500,000. ● The contract is perfected (they both agreed, there is land, and a price). ○ BUT: The law requires land sales to be in a notarized public document. ● Now, if Ana refuses to write and notarize the contract: ● Ben can go to court and force Ana to sign the proper document. ● He can also sue at the same time to make sure the sale pushes through.
Even if both sides already agreed, If the law says “write it down” or “notarize it”, You can demand the other person to do that — Even while filing a case or trying to enforce the deal. FORM FOR THE CONVENIENCE OF THE PARTIES
- Even if a contract is already valid, sometimes the law requires it to be written or notarized —
- Not because it's invalid without it,
- but simply to make it easier for the parties to:
- Prove the contract exists
- Avoid misunderstanding
- Use it in court if needed
- This is called form for the convenience of the parties. It’s not to make the contract valid or enforceable — It’s just to help both parties avoid problems later on. EXAMPLE: ● Nagkasundo sina Juan at Pedro na magtayo ng partnership at mag-invest sila ng tig-₱50,000. ● Kahit verbal lang, valid na 'yan — may consent, object, at cause. ● Pero kung gusto nilang magbukas ng bank account o mag-register sa DTI, ● kailangan nilang isulat at pirmahan ang agreement — maybe even ipapa-notaryo.
Valid na ang usapan niyo kahit verbal lang, pero mas convenient para sa inyo kung isusulat niyo at ipapa-notaryo — para may pruweba, klaro sa lahat, at hindi kayo mahirapan later on. @CALA
ART. 1358
- Some contracts and legal acts should be put in a public document (notarized) — not because they’re invalid without it, but to protect the parties, serve as proof , and sometimes to affect third persons (like other heirs, buyers, or creditors). (1) Creation, Transfer, Change, or Cancellation of Real Rights Over Immovable Property
- If you're dealing with real rights (like ownership or mortgage) on immovable property (like land or a house), the contract should be in a notarized document. EXAMPLE: ● Benta ng lupa, donation ng bahay, or pag-annotate ng mortgage sa title — kailangan notarized para maging official at enforceable. (2) Cession, Repudiation, or Renunciation of Hereditary Rights or Conjugal Partnership Gains
- Pag nagbigay, tumanggi, o nagbitiw ka ng karapatan sa mana or conjugal properties, dapat nakasulat at notarized. EXAMPLE: ● After namatay si Tatay, si Ana tumanggi sa mana niya. ● Kailangan public document para legal ang pag-waive niya. (3) Power to Administer Property or Any Other Power for Acts Needing a Public Document or Affecting Third Persons.
- If you give someone authority to manage your property or do something serious (like sell land), dapat notarized. EXAMPLE: ● Bigay ka ng Special Power of Attorney (SPA) para ibenta ang lupa mo — dapat notarized ‘yan para may bisa sa third parties, like buyers or the registry. (4) Cession (Transfer) of Rights That Came from a Public Document
- If the right or claim came from a notarized contract, dapat notarized din ang pag-transfer nito. EXAMPLE: ● Si Pedro may karapatang tumanggap ng bayad under a notarized loan agreement. ● Kung itatransfer niya ito kay Juan, dapat **notarized din ang cession.
Kung tungkol sa lupa, mana, conjugal property, or legal powers,** at lalo na kung may epekto sa ibang tao, mas safe at mas malinaw kung naka-notaryo (public document) ang kontrata or kasunduan. > Hindi man ito laging requirement para sa validity , pero ito ay **para sa convenience, protection, at proof. CONTRACTS WHICH MUST APPEAR IN A PUBLIC DOCUMENT
- Creation, Etc., of real rights over immovable property.**
- If you are buying, selling, donating, or changing ownership of land, house, condo, etc., dapat naka-notaryo ang kontrata. EXAMPLE: ● Pedro sells his lot to Juan — the Deed of Sale must be notarized to be accepted by the Registry of Deeds and protect both parties. 2. Cession (Transfer), Repudiation (Refusal), or Renunciation (Waiver) of Hereditary or Conjugal Rights @CALA
- But the written contract doesn’t show what they really agreed on,
- Because of a mistake, fraud, accident, or unfair behavior. So, the reason for reformation is to correct the written contract and make it show the true intention of both parties. Why reformation is needed :
- Because what’s written in the contract is not what they truly agreed on, and that could cause unfair results. Reformation helps fix the document so it reflects the real deal. EXAMPLE: ● Maria agrees to lease her apartment to Lisa for P10,000 a month. ● But the contract mistakenly says P1,000 a month because the secretary typed it wrong. Reason for reformation: ● There was a mistake in writing the contract. ● The contract doesn’t show their true agreement. ● To be fair, the contract should be corrected (reformed) to show the real price: P10, **REQUISITES OF REFORMATION
- There is a meeting of the minds:** The people involved really agreed on something. 2. The written contract does not show the real agreement: What’s written in the contract is different from what they actually agreed on. 3. The difference was caused by a mistake, fraud, unfair action, or accident: Something went wrong (like an error or trickery), which caused the mistake in the contract. 4. The issue is clearly stated in the court documents (pleadings): The parties must explain in court that this is what they’re fighting about. 5. There is clear and strong proof: The person asking to correct the contract must show strong evidence that there was a mistake, fraud, or accident—not just weak or unclear proof. EXAMPLE: ● Ana and Ben agreed that Ana would sell her farm land to Ben for ₱1,000,000. ● They also agreed that Ana would keep the right to harvest mangoes from the land for 2 more years. ● Later, they signed a written contract of sale, but the part about Ana keeping the mango rights was accidentally left out due to the lawyer's mistake when writing the contract. 1. Meeting of the minds:
- Yes. Ana and Ben agreed on the sale and that Ana could harvest mangoes for 2 years. 2. Written contract does not express true agreement:
- Yes. The contract says Ana sold the land, but it does not say anything about her right to harvest mangoes. 3. Mistake, fraud, inequitable conduct, or accident caused the problem:
- Yes. It was a mistake by the lawyer, not intentional. So this counts as a mistake or accident. 4. The issue is raised in the pleadings (court documents):
- Yes. Ana files a case asking the court to reform the contract and include her mango-harvesting right. She clearly states this in her complaint. @CALA
5. There is clear and convincing evidence: - Yes. Ana shows: ○ Text messages and emails between her and Ben agreeing about the mango rights. Witnesses who heard their agreement. Notes from the lawyer’s draft showing the mango clause was originally there. REFORMATION DISTINGUISHED FROM ANNULMENT REFORMATION: - The parties agreed correctly, but the writing is wrong. - Fix the contract - Based on real agreement but bad writing. EXAMPLE: ● Carlo and Dina agreed that Carlo would lease his apartment to Dina for ₱15,000 per month. ● But when they signed the contract, the lawyer wrote ₱5,000 per month by mistake. ○ There was a real agreement: ₱15, ○ But the writing was wrong due to a mistake ○ So Carlo can ask the court to reform (correct) the contract ANNULMENT: - The parties never truly agreed because of a problem (like lack of consent). - Cancel the contract. - Based on no valid agreemen t at all. EXAMPLE: ● Emma signed a contract to sell her land to Fred, thinking it was just a rental agreement. ● Fred tricked her into signing it. ○ There was no real agreement (Emma didn’t agree to sell) ○ Fred used fraud ○ So Emma can ask the court to annul (cancel) the contract
Reformation = “We agreed, but the paper is wrong. Please fix it.” Annulment = “We never really agreed. Please cancel it.” ART. 1360
- This article says that the Philippine Civil Code will follow the general rules (or principles) of reformation of instruments that are accepted in other legal systems (like American or Spanish law) — as long as these rules don’t go against what is written in the Civil Code.
- "We can follow foreign or general legal principles about reformation, but only if they don’t conflict with our own law."
- Sometimes, the Civil Code doesn't explain everything in detail.
- So courts can look at general legal principles for guidance — like those used in other countries — but only if they're not against our law. EXAMPLE: ● Let’s say the Civil Code doesn’t explain clearly who can ask for reformation if one party is already dead. ● A court might look at general law (for example, in American or Spanish cases) that says the heirs of that person can continue the case. @CALA
● But when they signed the contract, both didn’t notice that it said “January 2024 to December 2024.” ● This was a mutual mistake — they both meant 2025 , but the contract says 2024. ● Since: ● They had a real agreement (January 2025), ● The contract does not reflect that agreement, ● And the mistake was mutual , ● Marco or Liza can ask the court to reform the contract to say “January 2025.” "If both people made the same mistake, and the contract doesn't match what they agreed on, they can fix it through reformation." MUTUAL MISTAKE AS BASIS FOR REFORMATION
- A mutual mistake happens when:
- Both parties agree on something,
- But they both make a mistake when putting that agreement into writing,
- And the written contract ends up being wrong or incomplete. Why is this a basis for reformation?
- Because the real agreement was valid — the only problem is that the written contract does not match i t.
- So, the court can allow the contract to be corrected to show the real intention. EXAMPLE: ● Anna and Bea agreed that Bea will buy Anna’s lot for ₱500,000. ● They sign the contract, but due to a typo that neither of them noticed, it says ₱50,000. ● Later, Anna sees the mistake and tells Bea, and Bea agrees it was wrong — they both thought it said ₱500,000. ○ Since: ○ They both agreed on ₱500,000, ○ The contract says something different, ○ And the mistake was made by both sides , ○ This is a mutual mistake — and under Article 1361 , they can ask the court to reform the contract to show the correct amount. "If both people made the same mistake in writing the contract, they can fix it so it shows what they really agreed on." ART. 1362
- If only one party made a mistake , and the other party took advantage of it by acting fraudulently (used trickery) or inequitably (acted unfairly), then the innocent party can ask the court to fix the contract so it reflects the real agreement.
- Only one party made a mistake.
- The other party acted fraudulently (with trickery) or inequitably (unfairly).
- The written contract is wrong because of this.
- The innocent party can ask for reformation (correction) of the contract. EXAMPLE: ● Leo agreed to sell his motorcycle to Max for ₱100,000. ● Leo is not very good at reading contracts, and when Max prepared the contract, he secretly wrote ₱50,000 instead of ₱100,000. @CALA
● Leo signed it, thinking everything was okay. ● Later, Leo finds out the contract says ₱50,000, not ₱100,000. ○ In this case: ○ Leo made a mistake. ○ Max acted fraudulently by changing the price. ○ The contract does not show their real agreement. ● Under Article 1362, Leo can ask the court to reform the contract and correct the price to ₱100,000. "If one person made a mistake, and the other took advantage of it or tricked them, the innocent person can ask to fix the contract." MISTAKE ON ONE SIDE, FRAUD OR INEQUITABLE CONDUCT ON THE OTHER
- If only one person made a mistake , and the other person acted unfairly or used trickery , and because of that the contract doesn't show their true agreement , the innocent person can ask the court to fix (reform) the contract. - O ne party is mistaken (they didn’t notice the error or were confused), - The other party acted fraudulently (lied or tricked) or inequitably (took advantage) - The contract does not reflect what they really agreed on, - The innocent party can ask to correct the contract. EXAMPLE: ● Ella agrees to sell her land to Rico for ₱2 million. ● Rico, knowing Ella is not good with numbers and contracts, prepares a written contract that says ₱1 million instead — but he doesn’t tell Ella. ● Ella trusts him and signs the contract without checking the amount carefully. ● Later, when she finds out, she’s shocked — it should have been ₱ million. ● This is a case where: ○ Ella made a mistake , ○ Rico acted fraudulently (he tricked her), ○ The contract says something different from what Ella thought. ● So under Article 1362, Ella can ask the court to reform the contract and correct the price to ₱2 million. "If one person made a mistake, and the other person tricked or took advantage of them, the court can fix the contract to show what was really agreed." ART. 1363 CONCEALMENT OF MISTAKE BY THE OTHER PARTY
- If one person made a mistake , and the other person knew that the contract was wrong but said nothing (kept quiet on purpose), the innocent person can ask the court to correct (reform) the contract.
- One party made a mistake.
- The other party noticed it , or believed the contract was wrong.
- But they kept silent instead of fixing it.
- The contract doesn’t show the true agreement. @CALA
- Pledge = A movable item is used as security for a loan.
- Sale = Property is permanently transferred.
- Sale with right of repurchase = It looks like a sale, but the seller can buy it back.
- If the agreement is just a mortgage or pledge , but the contract says it's a sale, that’s a mistake.
- Reformation is needed so the contract reflects the truth. EXAMPLE: ● Jessa borrows ₱100,000 from Martin, and she mortgages her land as security. ● But Martin prepares a contract that says Jessa sold him the land for ₱100,000 with right to repurchase , and Jessa, not understanding the difference, signs it. ● Later, Jessa realizes the contract makes it seem like she sold the land, when they really agreed it was just a loan with her land as collateral. ● So, under Article 1365 , Jessa can go to court to reform the contract — to change it from a fake sale to the true mortgage agreement. "If both people agreed on a mortgage or pledge, but the contract wrongly says it was a sale, the court can fix the contract to show the real deal. ART. 1366
- In these three cases, the court will not allow reformation (correction) of a written document:
- Simple donations (gifts during the giver’s lifetime) with no conditions — because it’s a voluntary act and the giver gave it freely. EXAMPLE: ● Marco donates his old car to his nephew Ben, and there's no condition — just a gift. ● Later, Marco says he meant to give only the motorcycle, not the car. ● Reformation is not allowed , because it was a simple donation without conditions
- Wills — because wills have special rules and must clearly show the final wishes of the person. EXAMPLE: ● Lola Rosa writes in her will that she leaves her house to Ana. ● Later, someone claims she really meant to give it to Carla instead. ● Reformation is not allowed — wills can't be corrected this way. They must be clear and follow special legal procedures.
- When the real agreement is void (illegal or invalid) — there's nothing to correct since the agreement itself has no legal effect. EXAMPLE: ● If two people agreed to sell illegal drugs and made a written contract, ● even if the wording is wrong, the agreement itself is void (illegal). ● The court won’t reform a void agreement , because there’s nothing legal to fix. "You can’t fix (reform) a contract if it’s a simple gift, a will, or if the real agreement is illegal or invalid." ART. 1367 @CALA
- If a person already went to court to enforce the contract as it is, they can no longer ask to change (reform) the contract later.
- IN SHORT: You can’t first say the contract is correct, and later say it’s wrong. - You have to choose one: either you enforce the contract as written , or you ask the court to fix it (reform it). - You can’t do both. - This avoids inconsistency and confusion in legal actions. EXAMPLE: ● Anna and Bella had a written contract for Anna to lease her land to Bella for 5 years. ● Anna believes it was supposed to be only 3 years , but she still files a case to enforce the 5-year lease in court. ● Later, Anna changes her mind and wants to ask the court to reform the contract to 3 years instead. ● This is not allowed under Article 1367 — because Anna already treated the 5-year contract as correct when she tried to enforce it in court. "If you already told the court the contract is right and tried to use it, you can’t later say it’s wrong and ask to change it." **CASES WHEN REFORMATION NOT ALLOWED
- Simple Donation Inter Vivos (without condition)**
- A gift given during the giver’s lifetime with no condition cannot be reformed.
EXAMPLE:
● Liza gives her cousin a car as a gift. Later, she says she meant to give a bicycle, not a car. ● Reformation is not allowed because it’s a simple gift with no conditions.
2. Wills - A will (last will and testament) cannot be corrected by reformation. EXAMPLE: ● Tito Ben’s will says he leaves his house to Pedro. Someone claims he meant to give it to Ana. ● Reformation is not allowed — wills must follow strict formal rules, and you can't “fix” them this way. 3. When the Real Agreement is Void - If the true agreement is illegal or invalid, you can’t reform the contract. EXAMPLE: ● Two people agree to divide stolen money and write a contract about it. Later, they realize the contract had a mistake. ● Reformation is not allowed because the agreement is void and illegal. 4. When One Party Has Already Filed a Case to Enforce the Contract - If a person already asked the court to enforce the contract as written, they can’t later ask to change it. EXAMPLE: ● Mario files a case to force Carla to follow a contract that says she will lease his land for 10 years. Later, Mario says it was a mistake and should be 5 years. ● Reformation is not allowed because Mario already treated the contract as correct in court. You cannot ask the court to fix a contract if:
- It’s a simple gift without conditions.
- It’s a will. @CALA
- If the words of the contract are clear , then what is written will be followed as it is.
- But if the words do not match the real intention of the parties, and the true intention is clear, then the true intention is more important than the exact words.
- What the parties really meant is more important than just the words, **if there's a conflict. EXAMPLE:
- Clear Contract — Follow the Words** ● A contract says: ● “Pedro will deliver 100 sacks of rice on July 1, 2025.” ● The words are clear, so the court will follow the literal meaning — Pedro must deliver 100 sacks on that exact date. 2. Words Don’t Match True Intention — Intention Prevails ● Anna and Ben agreed that Ben will lease Anna’s land for 3 years. ● But due to a mistake, the contract says “sell” instead of “lease.” ● Even though the contract says “sell,” it’s clear that both parties meant it to be a lease. ● In this case, the real intention (lease) will be followed. "If the contract is clear, follow the words. But if the words are wrong and don’t match what both sides really meant, follow what they really agreed on." LITERAL MEANING CONTROLS WHEN LANGUAGE CLEAR
- When the words in a contract are clear , and there is no confusion about what they mean, the court will follow the literal meaning — exactly what is written.
- The court will not look into hidden meanings or try to guess intentions if the contract is already clear. EXAMPLE: ● "Carla will deliver 50 bags of cement to Ana on April 30, 2025, for ₱10,000." ● This is clear: ○ What: 50 bags of cement ○ When: April 30, 2025 ○ Price: ₱10, ● The court will follow this as written — no need to ask what the parties "really meant." "If what’s written in the contract is clear, follow it exactly as it is." EVIDENT INTENTION OF PARTIES PREVAILS OVER TERMS OF CONTRACT
- If the words in the contract do not match what both parties really intended, and their true intention is clear , then the court will follow the real intention — not the exact words written in the contract. WHY? Because what's more important is what the parties agreed on, not just what’s written. EXAMPLE: ● Anna and Ben agreed that Anna will rent her house to Ben for 1 year. ● But due to a typing error, the contract says: ○ “Anna sells her house to Ben for ₱10,000.” ○ That’s a big mistake — and both of them c learly meant it to be a lease , not a sale. ● So, th e true intention (renting) will prevail over the wrong words (“sells”). "If the contract says something wrong, but both sides clearly meant something else — the court will follow what they really meant." @CALA
ART. 1371
- To understand what the parties really meant in a contract, the court will look at: - What they did at the time of the contract (contemporaneous acts), and - What they did after signing it (subsequent acts). - Their actions help show what they really agreed on — not just the words in the contract.
- Actions speak louder than words. What the parties did before, during, and after signing can help clarify what they meant. EXAMPLE: ● A contract says Carla will "give" a car to Diana — which sounds like a donation. ● But: ○ Carla asked Diana to pay ₱300,000, ○ Diana paid it, ○ And both treated the deal like a sale (not a gift). ● Even if the contract says "give," their actions show it was a sale, so the court will interpret it as a sale — not a donation. "To know what both sides really meant in the contract, the court looks at what they actually did before and after signing it." CONTEMPORANEOUS AND SUBSEQUENT ACTS RELEVANT IN THE DETERMINATION OF INTENTION
- When the court is trying to understand what both parties really meant in a contract,
- it will look at:
- Contemporaneous acts — what the parties did at the time they made the contract, and
- Subsequent acts — what the parties did after signing the contract.
- These actions help the court know their true intention , especially if the words in the contract are unclear or seem wrong. EXAMPLE: ● Luis and Tina sign a contract that says “Luis will lease the land to Tina.” ● But: ○ At the time of signing, Tina paid the full price of the land (not rent). ○ After signing, Luis gave full ownership documents to Tina. ○ Tina paid taxes like an owner , not like a renter. ● Even though the contract uses the word “ lease ,” their actions clearly show it was really a sale. ● So, the court will interpret the contract as a sale, based on their contemporaneous and subsequent acts. "To understand what both sides really meant, the court looks at what they did during and after the contract — not just what the paper says." ART. 1372
- Even if the contract uses broad or general words, it should only cover what the parties really agreed on — not other things that are different or unrelated.
- Don’t assume that general words include everything.
- Only include what the parties actually meant to include. EXAMPLE: ● The contract says: ● “Marco will sell all his tools to Diego. @CALA
