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.
If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former.
Kung ang mga napagkasunduan sa kontrata ay malinaw at hindi nang-iiwan ng pagdududa sa intensyon ng mga partido, ang literal na ibig sabihin ng mga napagkusunduan ang mananaig.
Kung ang mga termino ay iba sa intensyon ng mga partido, ang intensyon ang mananaig.
Discussion:
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 stipulation shall control. The Court must not read into any other intention of the contracting parties contradictory to the plain meaning.
The terms of an agreement or writing are presumed to have been used in their primary and general acceptation. However, evidence may be admitted to show that they are used in a local, technical or otherwise peculiar signification.
Legal Meaning
In interpreting a writing according to its legal meaning, it is to be interpreted according to the legal meaning it bears in the place of its execution, unless the parties intended otherwise (Rule 130, Section 10 of the Rules of Court).
The MTC has no jurisdiction of the issue is interpretation, enforcement and/or rescission of the contracts.
Only the laws existing at the time of the execution of the contract applies to the contract unless the intention is for it to retroact.
Case Illustration: Labasan vs Lacuesta G.R. No. L-25931 (1978)
Obligations and Contracts 