08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

482 SUPREME COURT REPORTS ANNOTATED

Abella vs. Court of Appeals

*
G.R. No. 107606. June 20, 1996.

MERCEDES N. ABELLA, petitioner, vs. THE

HONORABLE COURT OF APPEALS, and CONRADO
COLARINA, respondents.

Contracts; It is a cardinal rule in the interpretation of

contracts that “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.”—It is a cardinal rule in
the interpretation of contracts that “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.” The
above-quoted receipt is clear and unequivocal that the disputed
amount is an advance deposit which will answer for any rental
that Colarina may fail to pay. No amount of extrinsic aids are
required and no further extraneous sources are necessary in order
to ascertain the parties’ intent, determinable as it is, from the
receipt itself.
Same; Evidence; Documentary and Oral Evidence; Without
any doubt, oral testimony as to a certain fact, depending as it does
exclusively on human memory, is not as reliable as written or
documentary evidence.—We are, thus, more convinced that the
receipt expresses truly the parties’ intent on the purpose of said
payment as against the oral testimony of the petitioner that said
amount is but only a “goodwill money.” Without any doubt, oral
testimony as to a

________________

* THIRD DIVISION.

483

VOL. 257, JUNE 20, 1996 483

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 1/8
08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

Abella vs. Court of Appeals

certain fact, depending as it does exclusively on human memory,

is not as reliable as written or documentary evidence. “I would
sooner trust the smallest slip of paper for truth,” said Judge
Limpkin of Georgia, “than the strongest and most retentive
memory ever bestowed on mortal man.”
Same; Same; Same; A party, being of age and a business-
woman, is presumed to have acted with due care and to have
signed the receipt in question with full knowledge of its contents
and import.—We also find unmeritorious petitioner’s contention
that the receipt failed to reflect her true intention warranting a
reformation thereof. Petitioner, being of age and a
businesswoman, is presumed to have acted with due care and to
have signed the receipt in question with full knowledge of its
contents and import.
Same; Pleadings and Practice; Appeals; It is a settled rule
that an issue which was not threshed out below may not be raised
for the first time on appeal.—Equally unmeritorious is petitioner’s
insistence that Colarina procured her signature “thru fraud and
any other deceitful means,” an issue which was never raised
below. It is a settled rule that an issue which was not threshed
out below may not be raised for the first time on appeal.
Moreover, no iota of evidence was ever adduced at the trial to
support her allegation of fraud. The reformation of said receipt
simply lacks basis.

PETITION for review on certiorari of a decision of the

Court of Appeals.

The facts are stated in the resolution of the Court.

     Amador Simando for petitioner.
          Casiano Olaso, Jr. and Jaime C. Viola for private
respondent.

RESOLUTION

FRANCISCO, J.:

On May 26, 1987, petitioner Mercedes N. Abella, as lessor,

and private respondent Conrado Colarina, as lessee, signed
a

484

484 SUPREME COURT REPORTS ANNOTATED

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 2/8
08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

Abella vs. Court of Appeals

1
contract of lease of a portion of Juanabel Building situated
at Elias Angeles Street, Naga City. The duration 2
of the
contract is from “July3 1, 1987 until July 1, 1991” or for a
term of four (4) years with a stipulated
4
monthly rental of
Three Thousand Pesos (P3,000.00). Upon the signing of
the contract, Colarina paid an amount of Forty Thousand
Pesos (P40,000.00) to Abella which the 5
latter acknowledged
by issuing the corresponding receipt. Intending to use the
premises for his pawnshop business,
6
Colarina introduced
thereon certain improvements for which he spent Sixty
Eight Thousand Pesos (P68,000.00). Colarina paid the
monthly rental on a regular basis but 7discontinued
payment from November 1987 to April 1988. Thereafter,
Abella then made repeated demands to pay with notice of
extrajudicial
8
rescission pursuant to paragraph thirteen
(13) of the lease contract which were all unheeded. Thus,
Abella took possession of the premises on May 1, 1988,
with the assistance9
of the Naga City 10PNP and some
Barangay officials who made an inventory of all the items
found there-

_______________

1 Annex “A-1,” Rollo, pp. 40-42.

2 Id., p. 40.
3 Both the RTC-Naga and the Court of Appeals’ decisions stated five (5)
years.
4 Annex “A-1,” supra, at p. 40.
5 Annex “A-2”; Rollo, p. 43.
6 Construction of mezzanine, toilet, installation of telephone lines and
electric lights; Rollo, p. 77.
7 Id.; Rollo, p. 77.
8 13. That violation of LESSEE and/or their agents and employees of
any terms and conditions, rules and regulations in this contract or
promulgated by the LESSOR shall automatically cancel this contract
without the need for any previous demand or notice or any court action for
rescission or ejectment, and the LESSOR and/or her agents and employees
shall have the right to enter, take immediate possession of, secure and/or
padlock the premises leased and to exclude LESSEE, their agents and
employees, etc. therefrom, and to retain the contents thereof, including
furnitures, equipments, utensils, goods, stocks, personal belongings,
appliances, x x x.
9 Petition, p. 5, Rollo, p. 11.
10 Exhibit 9.

485

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 3/8
08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

VOL. 257, JUNE 20, 1996 485

Abella vs. Court of Appeals

in.
On May 5, 1988, Colarina filed an action for
“enforcement of contract of lease 11
with preliminary
mandatory injunction and damages” against Abella before
the Regional Trial Court (RTC) of Naga. After trial, the
lower court among others ordered: (1) Abella to return the
amount of Forty Thousand Pesos (P40,000.00) less
Eighteen Thousand Pesos (P18,000.00) representing
unpaid rental from November-December, 1987, to April,
1988 or for a period of six (6) months, or the sum of
TWENTY TWO THOUSAND Pesos (P22,000.00) to
Colarina together with the destroyed and removed
materials and improvements introduced by him in the
premises
12
leased; and (2) the dismissal of the case for lack of
merit.
On appeal, the respondent Court of Appeals reversed the
decision of the trial court and ordered petitioner Abella: (1)
to restore to Colarina the possession of the leased premises
under the same terms and conditions stated in the contract
of lease; (2) to restore in the premises the improvements
introduced by Colarina which were demolished or removed
by Abella or to pay the value thereof in the sum of
P68,000.00, with 13interest until fully paid; and (3) to pay the
costs of the suit. Aggrieved, Abella filed this petition for
review on certiorari faulting the respondent Court of
Appeals with five assigned errors which basically dwell on
the following issues, to wit: (1) whether or not respondent
Colarina violated the contract of lease warranting its
extrajudicial rescission; and (2) whether or not possession
of the premises may properly be restored to Colarina.
Anent the first issue. It is not disputed that petitioner
received the sum of forty thousand pesos (P40,000.00) from

________________

11 Annex “A”; Rollo, pp. 36-39.

12 Decision dated April 1, 1991, RTC-Naga Branch 25, Presided by
Judge Jose D. Pajarillo, p. 8; Rollo, p. 65.
13 Decision promulgated on September 30, 1992, Court of Appeals, First
Division, penned by Associate Justice Jainal D. Rasul with Justices
Emeterio C. Cui and Segundino G. Chua, concurring pp. 6-7; Rollo, pp. 80-
81.

486

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 4/8
08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

486 SUPREME COURT REPORTS ANNOTATED

Abella vs. Court of Appeals

14
Colarina. Petitioner and Colarina, however, are at
loggerheads with respect to the purpose of such payment.
The trial court agreed with the petitioner that the amount
represents only a “goodwill money” given to the latter by
Colarina in payment for the privilege
15
to occupy the vacant
portion of Juanabel Building. On the other hand, the
respondent Court of Appeals sided with Colarina and held
that the same is an “advance deposit to16 answer for any
rental which Colarina may fail to pay.” We uphold the
findings of the respondent Court of Appeals.
Our careful review of the record reveals that Colarina
did not violate the subject contract of lease with respect to
his rental obligation in view of his payment of forty
thousand pesos. Reproduced hereunder are the contents of
the receipt acknowledging the acceptance by the petitioner
of the said amount of forty thousand pesos:

“RECEIVED FROM MR. CONRADO O. COLARINA THE SUM

OF FORTY THOUSAND PESOS (P40,000.00) AS ADVANCE
DEPOSIT, TO ANSWER FOR ANY RENTAL WHICH MR.
CONRADO COLARINA MAY FAIL TO PAY DURING THE
TERM OF THE LEASE AS PER CONTRACT, DATED 26TH
DAY OF MAY, 1987 NOTARIZED BEFORE NOTARY PUBLIC
OSCAR VILLAMORA, DOC. NO. 398; PAGE NO. 80; BOOK NO.
9, SERIES OF 1987, THIS 26TH DAY OF MAY, 1987, AT NAGA
CITY. (Italics supplied.) 17
(Sgd.) MERCEDES N. ABELLA”

It is a cardinal rule in the interpretation of contracts that

“if the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, 18
the literal
meaning of its stipulations shall control.” The above-
quoted receipt is

________________

14 Pre-trial Order dated August 31, 1989, p. 1; Rollo, p. 56.

15 RTC Decision, supra, at p. 63; Petition, supra, at p. 16.
16 Court of Appeals Decision, supra, at p. 79.
17 Annex “A-2”; Rollo, p. 43.
18 Article 1370, Civil Code of the Philippines; Syquia v. Court of

487

VOL. 257, JUNE 20, 1996 487

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 5/8
08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

Abella vs. Court of Appeals  

clear and unequivocal that the disputed amount is an

advance deposit which will answer for any rental that
Colarina may fail to pay. No amount of extrinsic aids are
required and no further extraneous sources are necessary
in order to ascertain the 19parties’ intent, determinable as it
is, from the receipt itself.
We are, thus, more convinced that the receipt expresses
truly the parties’ intent on the purpose of said payment as
against the oral testimony of the petitioner that said
amount is but only a “goodwill money.” Without any doubt,
oral testimony as to a certain fact, depending as it does
exclusively on human memory, 20
is not as reliable as written
or documentary evidence. “I would sooner trust the
smallest slip of paper for truth,” said Judge Limpkin of
Georgia, “than the strongest and 21
most retentive memory
ever bestowed on mortal man.” This is especially true in
this case where such oral testimony is given by the
petitioner himself, a party to the case who has an interest
in its outcome, and by Jesus Hipolito, a witness who
claimed to 22
have received a commission from the
petitioner. In addition, the trial court itself has found that
this receipt is genuine when it brushed aside the
petitioner’s
23
claim that her signature appearing thereon was
a forgery. The authenticity of the receipt further enhances
its probative value as against the oral testimony of the
petitioner and of her witness.
We also find unmeritorious petitioner’s contention that
the receipt failed to reflect her true intention warranting a
reformation thereof. Petitioner, being of age and a
business-woman, is presumed to have acted with due care
and to have

________________

Appeals, 217 SCRA 624 (1993); Lufthansa German Airlines vs. Court of
Appeals, 208 SCRA 708 (1992); Cachola, Jr. v. Court of Appeals, 208
SCRA 496 (1992).
19 Honrado, Jr. v. Court of Appeals, 198 SCRA 326 (1991).
20 See De Leon v. Court of Appeals, 205 SCRA 612 (1992).
21 Miller v. Cotten, 5 Ga. 341, 349.
22 Petition, supra, at p. 19.
23 RTC Decision, supra, at p. 64.

488

488 SUPREME COURT REPORTS ANNOTATED

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 6/8
08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

Abella vs. Court of Appeals

signed the receipt in24 question with full knowledge of its

contents and import. Equally unmeritorious is petitioner’s
insistence that Colarina procured 25
her signature “thru fraud
and any other deceitful means,” an issue which was never
raised below. It is a settled rule that an issue which was
not threshed out below may not be raised for the first time
on appeal. Moreover, no iota of evidence was ever adduced
at the trial to support her allegation of fraud. The
reformation of said receipt simply lacks basis.
Hence, we rule that respondent Colarina was not yet in
arrears with his rental payment when petitioner took
possession of the leased premises on May 1, 1988.
Accordingly, petitioner’s rescission of the subject contract of
lease was improper.
The second issue, however, has been rendered moot and
academic by the timely expiration26of the term of the subject
contract of lease on July 1, 1991. Colarina, therefore, has
no more right to be restored to the possession of the leased
premises, said right being coterminous with the term of the
contract.
WHEREFORE, the decision of the Court of Appeals is
MODIFIED. Petitioner Mercedes N. Abella is hereby
ordered to:

1. return to private respondent Conrado Colarina the

amount of Forty Thousand Pesos (P40,000.00) less
Eighteen Thousand Pesos (P18,000.00) (unpaid
rental from November, 1987 to April, 1988 or for a
period of six (6) months), or the sum of TWENTY
TWO THOUSAND Pesos (P22,000.00);
2. pay private respondent Colarina the sum of Sixty
Eight Thousand Pesos (P68,000.00), representing
the value of the improvements demolished, with
legal interest reckoned from May 1, 1988, the date
when petitioner took possession of the

_______________

24 See BA Finance Corporation v. Intermediate Appellate Court, 217

SCRA 261 (1993); Sierra v. Court of Appeals, 211 SCRA 785 (1992); Tan
Tua Sia v. Yu Biao Santua, 56 Phil. 707 (1932).
25 Memorandum for the Petitioner, p. 15; Rollo, p. 127.
26 Annex “A-1”; supra, at p. 40.

489

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 7/8
08/05/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 257

VOL. 257, JUNE 20, 1996 489

People vs. Salvatierra

premises, until fully paid.

SO ORDERED.

          Narvasa (C.J., Chairman), Davide, Jr., Melo and

Panganiban, JJ., concur.

Judgment modified.

Notes.—Evident intention of the parties prevail over

the language of the contract. (Nadal vs. Court of Appeals,
230 SCRA 699 [1994])
Interpretation by the arbitrators which was a faithful
application of the provisions of the Agreement did not have
the effect of creating a new contract. (Adamson vs. Court of
Appeals, 232 SCRA 602 [1994])

——o0o——

© Copyright 2021 Central Book Supply, Inc. All rights reserved.

www.central.com.ph/sfsreader/session/000001794a2f86a59ae0a6ab003600fb002c009e/t/?o=False 8/8