Kho v. Court of Appeals
REITERATIONFacts
The Antecedents: The underlying dispute concerns the erroneous sale and subsequent construction on adjacent lots in Maria Teresa Village, Cebu City. Ricardo Inocian, the owner, through his broker Roberto Osmeña, sold Lot 1 to Mariano Suson and Lot 2 to Jesus Kho in 1971. However, Suson built his house on Lot 2, believing it to be Lot 1, while Kho built on Lot 3, believing it to be Lot 2. A prior sale of Lot 3 to Marilyn Ong complicated matters. When these errors were discovered in 1975, attempts to resolve the issue failed, leading to legal action. Procedural History: Jesus Kho initiated a complaint for recovery and damages against Inocian, Osmeña, and Suson. Suson filed a cross-claim against Inocian and Osmeña. The Regional Trial Court of Cebu ruled in favor of Kho, ordering Inocian and Osmeña to pay damages and Suson to remove his house and pay rentals. The decision also granted Suson's cross-claim against Inocian and Osmeña. Upon appeal by the defendants, the Court of Appeals modified the decision, ordering Inocian and Osmeña to pay Kho substantial damages and reimbursement, and also to pay Suson for moral damages and attorney's fees. The appellate court also ordered the cancellation and transfer of titles to reflect the intended ownership, specifically Suson's ownership of Lot 2 and Kho's intended ownership of Lot 3, subject to Ong's prior rights. The Petition: Jesus Kho filed a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals' decision. He argued that the appellate court erred in its presumptions and conclusions, particularly regarding his intention to buy Lot 3 and his knowledge of its prior sale to Suson. Kho contended that the transfer certificates of title should be the definitive evidence of ownership. The Supreme Court denied the petition, holding that the issues raised were primarily factual, which are generally not reviewable under Rule 45. The Court affirmed the findings of the appellate court, which were substantially based on evidence, and applied the principle that the evident intention of the parties in a contract prevails over the literal wording when there is a mistake in the designation of the property.
Issue(s)
Whether the Court of Appeals erred in presuming that Kho intended to buy Lot 3 and not Lot 2, considering the conflicting sales and the intention of the parties. Whether Kho's knowledge of Suson's purchase of the property negates the sale of Lot 2 to him. Whether Suson should be liable for damages to Kho despite the latter's own misdirection in building his house, and the relevance of builder in bad faith argument.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that the issues raised were primarily factual and not reviewable in a petition for certiorari. The findings of fact of the CA, which affirmed those of the RTC, were based on substantial evidence and thus would not be disturbed. The Court applied the doctrine that if the words in a contract are contrary to the evident intention of the parties, the intention shall prevail, leading to the conclusion that Suson bought Lot 2 and Kho bought Lot 3, despite the erroneous registration.
Ratio Decidendi
On the nature of the issues, the scope of review, and the conflicting sales: The Supreme Court reiterated that a petition for certiorari under Rule 45 is limited to questions of law. The Court found that the issues raised by Kho were primarily factual. The Court clarified that Lot 2 had already been sold to Suson. The Court applied Article 1370 of the Civil Code, stating that the evident intention of the parties shall prevail. The Court concluded that Suson intended to buy Lot 2 and Kho intended to buy Lot 3. Kho's purchase of Lot 3 was subject to the superior right of Marilyn Ong. On the conflicting sales and the intention of the parties: The Court addressed Kho's contention that he could not have bought Lot 3 because it was already sold to Ong, which was true, and that he bought Lot 2. However, the Court clarified that Lot 2 had already been sold to Suson. The Court applied the principle that the evident intention of the parties shall prevail over the literal wording of a contract when the words appear contrary to that intention, as provided in Article 1370 of the Civil Code. Despite the erroneous registration of their respective lots, the Court concluded, consistent with the lower courts, that Suson intended to buy Lot 2 and Kho intended to buy Lot 3. Kho's purchase of Lot 3 was subject to the superior right of Marilyn Ong, who had bought and registered it earlier. On the liability for damages and the builder in bad faith argument: The Court noted that Kho himself testified that he pointed out where to build the house. This testimony refuted Kho's claim that Suson's mistake solely led him to build on the wrong lot. Furthermore, the Court found that Kho built his house on Lot 3, not Lot 2. The Court found it unnecessary to discuss whether Suson was a builder in bad faith given its conclusion regarding the intended purchases.
Main Doctrine
Where the words in a contract appear to be contrary to the evident intention of the parties, the latter shall prevail over the former, even if it results in the rectification of registered titles.