MARRUECOS

SECTION 10. Interpretation of a writing according to its legal meaning.  The language of a writing is to be interpreted according to the legal meaning it bears in the place of its execution, unless the parties intended otherwise.

One must apply the legal word in the place where the document was prepared in order to understand what it means. Remember these rules.

Sometimes they are asked in the Bar Exams. For example, if a contract was prepared in Japan and a legal term is being used there, the meaning of such legal term according to Japanese Law will be used, not as we would understand it in the Philippines.

SECTION 11. Instrument construed so as to give effect to all provisions.  In the construction of an instrument where there are several provision or particulars, such a construction is, if possible, to be adopted as will give effect to all.

Q: How does one construe statutes?

A: One has to consider the entire law. One must not interpret every article independently of the others or in isolation from the rest. He must harmonize provisions with each other. The same rule goes for contracts.

SECTION 12. Interpretation according to intention; general and particular provisions.  In the construction of an instrument, the intention of the parties is to be pursued; and when a general and a particular provision are inconsistent, the latter is paramount to the former. So a particular intent will control a general one that is inconsistent with it.

Q: How should a law be interpreted?

A: One must determine the intent of the framers. In a contract, one must determine the intention of the parties. If there is a conflict between general law and special law, the special law prevails. Interpret the law according to the spirit that giveth life, rather than the letters that killeth.

SECTION 13. Interpretation according to circumstances.  For the proper construction of an instrument, the circumstances under which it was made, including the situation of the subject thereof and of the parties to it, may be shown, so that the judge may be placed in the position of those whose language he is to interpret.

If you are to interpret a contract, imagine yourself to be in the judge’s or the parties’ shoes. What would your reaction have been at the time the contract was made? Simulate the situation so that you may understand better how the parties were guided in the execution of the contract.

SECTION 14. Peculiar signification of terms.  The terms of a writing are presumed to have been used in their primary and general acceptation, but evidence is admissible to show that they have a local, technical, or otherwise peculiar signification, and were so used and understood in the particular instance, in which case the agreement must be construed accordingly.

When interpreting words used in a contract, one must apply the general meaning of the words as understood by the public, unless it is shown that the parties intended a technical meaning. If a word carries a general as well as a particular meaning, the presumption is that the parties intended the general meaning.

SECTION 15. Written words control printed.  When an instrument consists partly of written words and partly of a printed form, and the two are inconsistent, the former controls the latter.

In case of inconsistency, written words control the printed ones.

Common example is a rider in an insurance policy.

SECTION 16. Experts and interpreters to be used in explaining certain writings.  When the characters in which an instrument is written are difficult to be deciphered, or the language is not

understood by the court, the evidence of persons skilled in deciphering the characters, or who understand the language, is admissible to declare the characters or the meaning of the language.

EXAMPLE: A is suing for breach of contract. But the contract is entirely written in Chinese. The judge does not know how to read Chinese characters. This section authorizes him to secure the aid of experts.

Otherwise, he may not be able to decide the case.

SECTION 17. Of two constructions, which preferred.  When the terms of the agreement have been intended in a different sense by the different parties to it, that sense is to prevail against either party in which he supposed the other understood it, and when different constructions of a provision are otherwise equally proper, that is to be taken which is the most favorable to the party in whose favor the provision was made.

EXAMPLE: A and B entered into a contract which turned out to be with two possible meanings. A asks for its real meaning. If B tells A what he thinks the meaning is, then they are bound by estoppel. The interpretation to be used should be that which the other party believed and used.

SECTION 18. Construction in favor of natural right.  When an instrument is equally susceptible of two interpretations, one in favor of natural right and the other against it, the former is to be adopted.

We do not interpret the law against a natural right. The natural right must be respected.

SECTION 19. Interpretation according to usage.  An instrument may be construed according to usage, in order to determine its true character.

EXAMPLE: Interpret a bill of lading according to its use and for which it is intended.

Before leaving the subject of parol evidence, we will try to compare these rules with the Statute of Frauds in the Civil Code.

Art. 1403. The following contracts are unenforceable, unless they are ratified:

(1) x x x

(1) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in writing and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without writing, or a secondary evidence of its contents:

(a) an agreement that by its terms is not to be performed within a year from the making thereof;

(b) a special promise to answer for the debt, default, or miscarriage of another;

(c) an agreement made in consideration of marriage, other than a mutual promise to marry; an agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;

(d) an agreement for the leasing for longer period than one year, or for the sale of real property or of an interest therein;

(e) a representation as to the credit of a third person.

(3) x x x

Even if the Statute of Frauds is not part of the Rules on Evidence, it is considered as ANALOGOUS to the Rules on Evidence. In Statute of Frauds, oral evidence is also excluded. The only evidence allowed is the written agreement. As a matter of fact, in the 1940 Rules, the Statute of Frauds could be found. But when the Civil Code took effect, the Statute of Frauds was transferred to it. When the lawmakers revised the old Rules in 1964, they altogether removed from it the Statute of Frauds. That is why there were some Bar Examinations in the past in Remedial Law where questions on the Statute of Frauds were asked.

The history of the Statute of Frauds is explained by the Supreme Court in the 1991 case of Claudel vs. CA. It was later amplified by Gimik Gang, Inc. in the treatise The Philippine Law on Trusts. The Supreme Court explained that: The provisions of the Statute of Frauds originally appeared in the old Rules of Evidence; however, when the Civil Code was rewritten in 1949, the Statute of Frauds was taken out in order to be included under the Title on Unenforceable Contracts of the Civil Code. The transfer was not only a matter of style but to show that the Statute of Frauds is also a substantive law.

CLAUDEL vs. CA 199 SCRA 113

Facts: As early as December 28, 1942, Cecilio Claudel acquired from the Bureau of Lands a parcel of land. Thereafter, he secured a Transfer Certificate of Title issued by the Registrar of Deeds. He dutifully paid the real estate thereon until his death in 1987. His widow, and later her son, continued paying the taxes.

The heirs of Cecilio composed of his legitimate children and the brothers and sisters of Cecilio claim survivorship over the land. The heirs of Cecilio partitioned among themselves the land and obtained the corresponding TCT. But the brothers and sisters of Cecilio filed a complaint for the cancellation of titles and reconveyance alleging that 46 years earlier, their parents had purchased from the late Cecilio certain portions of the said land for the sum of P30.00. They admitted that the transaction was verbal. As proof of sale, they presented a subdivision plan of the land. The CFI of Rizal dismissed that the sale involves real property. Not only that, but the action also has prescribed since more than 30 years have elapsed since the sale.

However, the CA reversed the decision of the lower court contending that the Statute of Frauds applies only to executory contracts and not to consummated sales. The CA further reasoned out that the defense of prescription cannot be set against the brothers and sisters because the action was not for the recovery of possession of real property, but for cancellation of titles and reconveyance.

Issue: Is the verbal contract of sale covered by the Statute of Frauds?

Has the action prescribed?

Holding: The CFI decision was reinstated.

As to the first issue, clearly the verbal contract of sale is precluded by the Statute of Frauds, pursuant to Art. 1403 of the Civil Code. As much, it cannot be proven orally. The sale in this case is valid, but it cannot be enforced until reduced into writing. The subdivision plan presented by the brothers and sisters in the lower court carries no weight. The Torrens title in the possession of the heirs of Cecilio is more conclusive evidence of ownership than the subdivision plan.

As to the second issue, the belated claims of the brothers and sisters who filed a complaint in court only in 1976 to enforce a right acquired allegedly as early as 1930 is difficult to

comprehend. Art. 1145 of the Civil code prescribes that an action upon an oral contract must be commenced within 6 years. Therefore, the action has already prescribed.

Q: Define the Statute of Frauds.

A: According to American jurisprudence, cited by Tolentino, the term Statute of Frauds is descriptive of statutes which require certain classes of contracts to be in writing, and regulate the formalities of contracts to make them enforceable.

Q: What is the purpose of the above law?

A: According to the Supreme Court: To prevent fraud and perjury in the enforcement of obligations, depending for their evidence, upon unassisted memory of witnesses.

Meaning, if a party is allowed to sue for alleged breach of contract --where is the contract? What did you really agree upon? Then the other party disagrees -- it is so confusing. This is an invitation for people to lie in court. So, in order to avoid this situation, the law requires for certain types of contracts to be in writing, and signed by the parties. At least, one can rely on this rather than on the memory of people.

In a suit, one cannot present oral evidence in court to prove the contents of a contract. Such contract must be proved in writing. A contract need not be typewritten. It could be in any form. A note or memorandum may even be written on mere pad paper. These are considered as valid contracts; provided, all the elements of a contract are present -- no matter how informal the writing seems to appear.

What should appear on these contracts? The names of the parties, the terms and conditions of the contract, the obligations of the parties, a description of the property sufficient to identify such property, the signature of the parties sought to be charged, etc. Then they sign. There is here compliance with the Statute of Frauds.

(a) an agreement that by its terms is not to be performed within a year from the making thereof

EXAMPLE: A enters into a contract with B to sell his (A’s) car for P10,000.00, but which is to be implemented within more than 1 year from date of execution. A year and six months later, B gives to A the money to purchase the car. However, this time A refuses to sell the car. A says he decided to back out of their agreement. So B sues A for specific performance. How will B prove the oral agreement? B cannot prove the oral agreement because the prestation was supposed to take place within a period longer than 1 year.

But suppose, in the above example, B was able to give a partial payment of P2,000.00 upon the execution of the contract, and the sale was actually supposed to take place in 2 more years. After the second year, A

decides to back out of the agreement. A claims the contract is unenforceable. Can he raise this as a proper defense? No. The Statute of Frauds is applicable only to executory contracts. It is not applicable to contracts that have already been partially executed.

According to the Supreme Court: This rule applies only on agreements not to be performed within one year on either side. Thus, when one side is to be fulfilled immediately or within the year, the rule does not apply. So, partial performance may take the case out of the operation of the Statute of Frauds. The reason: it would be fraud upon a party not to perform his part after he induced the other party to enter into the contract.

(b) a special promise to answer for the debt, default or miscarriage of another

When one promises to answer for the debt of another, this is a contract of guaranty . EXAMPLE: C promised A that he (C) would pay if B failed to pay to A. When B failed to pay, A sued him. B contended that A should run after C because of the assurance C gave A. However, C refused to acknowledged such fact. C, in fact, actually acted as a guarantor for the debt of B. But this should have been put into writing. A is made the mistake of just leaving it verbally. That was a contract of guaranty. Otherwise, B cannot prove C’s promise to pay for B’s debt.

But suppose the agreement is that A would lend B money, and C would be the one to pay to A. C said that A should collect the debt from him. but this was oral. C defaults in payment and A now sues him. C contends that A cannot go after him because their agreement was not reduced into writing and evidence of such oral agreement is in violation of the Statute of Frauds. Is C’s contention correct? In this case, C is a SURETY for B. In a contract of guaranty, the liability of a guarantor is SECONDARY; in a contract of surety, the liability of the surety is PRIMARY. Therefore, an ORAL CONTRACT OF SURETY IS NOT COVERED BY THE STATUTE OF FRAUDS.

The Supreme Court says: When the promissor becomes primarily liable for the payment of a debt, the promise is not within the Statute of Frauds. But if the promise is merely collateral to the agreement of another, and the promissor becomes only the guarantor, the agreement is covered by the Statute.

TAKE NOTE: A guarantor’s liability is secondary and attaches only when the principal debtor defaults in payment of the obligation. On the other hand, if a person pays for the debt of another, that is not a guaranty. The promissor is now acting as a surety, whose liability is primary. The case of suretyship is not the one that is contemplated in this provision of the Statute of Frauds. Therefore, the latter case may be proved in court by oral evidence.

(c) an agreement made in consideration of marriage, other than a mutual promise to marry

This provision refers to ante-nuptial agreements in the Family Code.

Such agreements must be in writing.

Q: What do ante-nuptial agreements include?

A: Any kind of agreement about marriage, such as the marriage settlement. For example, before the marriage, the parent s of the woman ask for a dowry -- land, cows, armalites, etc. Some people really have this in their custom. The family of the groom agrees but the problem is that they did not reduce into writing the agreement. The marriage takes place, and then the man’s father-in-law now asks for the dowry. The man refuses to give the dowry. Can the father-in-law sue the man to compel him to give the dowry that he promised? No, if there is no writing to prove it. This is covered by the Statute of Frauds.

(d) agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action, or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;

So, this contemplates the sale of goods or chattel when the price or consideration is beyond P500.00, which cannot be proved orally when there is no written evidence of such contract. But if the price or consideration is below P500.00, this can be proved orally.

In order to be covered, the subject matter (goods or chattels) must not have been yet delivered, and the purchase price must not have been yet paid. Otherwise, the Statute of Frauds cannot be applied. The partial performance of an obligation or prestation takes it out of the coverage of the Statute. The Statute applies only to EXECUTORY contracts, and not to PARTIALLY PERFORMED AGREEMENTS.

(e) an agreement for the leasing for a longer period than one year, or for the sale of real property or an interest therein

Contracts of lease. If the duration is one year or less, the contract

Contracts of lease. If the duration is one year or less, the contract