Our contract is silent on a particular point — can the usage or custom of the place fill in that gap?

Two roles for custom under Article 1376

Article 1376 of the Civil Code assigns local custom two distinct functions in contract disputes. First, it serves as a tool for interpretation: when the contract's existing terms are ambiguous, the usage or custom of the place helps clarify what the parties most likely meant. Second, it serves as a gap-filler: where the contract is silent on something that is ordinarily stipulated in contracts of that type or in that place, custom supplies the missing term. Both functions are recognized, but the second is the one more likely to be disputed.

The limit: ordinarily established stipulations only

Article 1376 does not allow custom to add any term the parties forgot to discuss. It fills only the omission of stipulations which are ordinarily established — meaning terms that parties in that business, locality, or type of contract typically include as a matter of course. A custom that is well-established, consistent, and generally known in the relevant trade or community stands a much better chance of being recognized as a gap-filler than one that is merely alleged by one party after a dispute arises.

Custom in interpretation versus gap-filling

When used for interpretation, custom helps resolve what an existing clause means rather than adding a new one. For example, a trade term used without definition in a contract may be interpreted by reference to what that term means in the relevant industry. When used as a gap-filler, custom supplies a term the parties did not write at all — more contentious territory, since each side may disagree on whether the alleged custom is genuine, widespread, and applicable to their situation.

Proving local custom

A party who argues that custom fills a contractual gap must be prepared to demonstrate that the custom exists and is sufficiently established. Mere assertion that something is customarily done is not enough. Witness testimony from people in the industry, written trade practices, course of dealing between the same parties in prior transactions, and other objective evidence all contribute to establishing custom. The opposing party may challenge whether the alleged custom is genuinely followed, whether it applies to the specific type of contract, and whether the parties were aware of it when they signed.

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.

• Tomas K. Chua vs. Court of Appeals, et al, G.R. No. 119255, April 9, 2003 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1376 — Usage and Custom