Short answer. When a word in your contract can mean more than one thing, Article 1375 of the Civil Code requires that it be understood in the meaning most in keeping with the nature and object of the contract. The contract's purpose, not a dictionary, determines which reading governs.
What the law says
Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract.
Civil Code, Article 1375 — Words With Several Meanings. Read the full provision →
The rule: purpose controls ambiguity
Article 1375 of the Civil Code states the guiding principle plainly: words with multiple possible meanings must be read in the sense most consistent with what the contract is for and what it is trying to accomplish. This keeps the parties from gaming a dispute by pointing to an obscure secondary meaning that has nothing to do with why they signed the agreement. A contract for the lease of a commercial space uses words in a commercial lease sense; a contract for agricultural tenancy reads the same words in an agricultural sense. The nature of the transaction anchors the reading.
Why this matters in a real dispute
Contract disputes often center on a single word that each side reads differently. One party insists the word means X; the other says it means Y. Article 1375 gives the court — and the parties negotiating before any lawsuit — a concrete tiebreaker: go back to what the contract is fundamentally about and ask which meaning serves that purpose. A reading that would make the contract absurd, commercially pointless, or inconsistent with the deal the parties visibly struck is not the one the statute supports, even if it is technically a valid dictionary definition.
This rule works alongside other interpretation principles
Article 1375 is one of several contract-interpretation rules in the Civil Code. Other provisions direct courts to look at the words in their ordinary sense, to read the contract as a whole rather than clause by clause in isolation, and to resolve doubt in favor of the greatest reciprocity of interests. Article 1375 specifically addresses the situation where a single word carries more than one recognized meaning — it does not resolve a dispute where the word is clear and unambiguous to begin with. If the contested word has only one reasonable reading given the transaction, Article 1375 adds nothing; the plain meaning governs.
What to do if the ambiguity is genuine
If you and the other party genuinely disagree about what a word means, start by identifying what kind of contract you entered into and what it was designed to achieve. Write that down. Then test each competing meaning against that purpose: which reading is more consistent with the transaction as a whole? That is the interpretation Article 1375 points toward. If neither reading clearly serves the contract's object better than the other — a genuinely close call — the broader circumstances of the negotiation, the conduct of the parties after signing, and the other Civil Code interpretation rules will all come into play. A lawyer can help you build or respond to an interpretation argument grounded in Article 1375.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- International Finance Corporation vs. Imperial textile Mills, Inc, G.R. No. 160324, November 15, 2005 — read the decision on LawPhil →