002 Limketkai Sons Milling Inc. v. CA, et. al.

,
GR No. 118509, 01 December 1995

National Book Store = NBS; BPI = BankPhilippine Islands

*ang daming issues, di ako sure ano hahanapin ni miss.
Tumingin din ako ibang digests.

FACTS:
1. Philippine Remnants Co., Inc. constituted BPI as its trustee to manage, administer, and sell its real estate property.
One property placed under trust was a 33,056-square meter lot in Pasig
2. Pedro Revilla, Jr., a licensed real estate broker was given formal authority by BPI to sell the lot for P1,000.00 per
square meter. This arrangement was concurred in by the owners of the Philippine Remnants.
3. Broker Revilla contacted Alfonso Lim of petitioner company who agreed to buy the land. Petitioner's officials and
Revilla were given permission by Rolando V. Aromin, BPI Assistant Vice-President, to enter and view the property.
4. Revilla formally informed BPI that he had procured a buyer, herein petitioner.
5. Petitioner's officials, Alfonso Lim and Albino Limketkai, went to BPI to confirm the sale. They were entertained by
Vice-President Merlin Albano and Asst. Vice-President Aromin. Petitioner asked that the price of P1,000.00 per
square meter be reduced to P900.00 while Albano stated the price to be P1,100.00. The parties finally agreed that the
lot would be sold at P1,000.00 per square meter to be paid in cash. Since the authority to sell was on a first come,
first served and non-exclusive basis, it may be mentioned at this juncture that there is no dispute over petitioner's
being the first comer and the buyer to be first served.
6. Notwithstanding the final agreement to pay P1,000.00 per square meter on a cash basis, Alfonso Lim asked if it was
possible to pay on terms. The bank officials stated that there was no harm in trying to ask for payment on terms
because in previous transactions, the same had been allowed. It was the understanding, however, that should the term
payment be disapproved, then the price shall be paid in cash.
7. It was Albano who dictated the terms under which the installment payment may be approved, and acting thereon,
Alfonso Lim, wrote BPI through Merlin Albano embodying the payment initially of 10% and the remaining 90%
within a period of 90 days.
8. Two or three days later, petitioner learned that its offer to pay on terms had been frozen. Alfonso Lim went to BPI on
and tendered the full payment of P33,056,000.00 to Albano. The payment was refused because Albano stated that the
authority to sell that particular piece of property in Pasig had been withdrawn from his unit. The same check was
tendered to BPI Vice-President Nelson Bona who also refused to receive payment.
9. An action for specific performance with damages was thereupon filed by petitioner against BPI.
10. In the course of the trial, BPI informed the trial court that it had sold the property under litigation to NBS. The
complaint was thus amended to include NBS.
11. RTC: rendered in favor of plaintiff. It ruled that there was a perfected contract of sale between petitioner and BPI.
there was mutual consent between the parties; the subject matter is definite; and the consideration was determined.
All the elements of a consensual contract are attendant. It ordered the cancellation of a sale effected by BPI to
respondent NBS while the case was pending and the nullification of a title issued in favor ofNBS.
12. CA: reversed the TC. Dismissed complaint. No contract of sale was perfected because there was no concurrence of
the three requisites enumerated in Article 1318 of the Civil Code.

ISSUE:
(1) Was there a meeting of the minds between petitioner Limketkai and respondent BPI as to the subject matter of the
contract and the cause of the obligation?
(2) Were the bank officials involved in the transaction authorized by BPI to enter into the questioned contract?
(3) Is there competent and admissible evidence to support the alleged meeting of the minds?
(4) Was the sale of the disputed land to the NBS during the pendency of trial effected in good faith?
HELD: CA decision is reversed and set aside.
Profits and the use of the land which were denied to petitioner because of the non-compliance or interference with a
solemn obligation by respondents is somehow made up by the appreciation in land values in the meantime.
There was a perfected contract between BPI and petitioner Limketkai; that the BPI officials who transacted with
petitioner had full authority to bind the bank; that the evidence supporting the sale is competent and admissible; and
that the sale of the lot to NBS during the trial of the case was characterized by bad faith.
RATIO:
The credibility of witnesses is also decisive in this case. The TC directly observed the demeanor and manner of
testifying of the witnesses while the CA relied merely on the transcript of stenographic notes.
In this regard, the court of origin had this to say:

Apart from weighing the merits of the evidence of the parties, the Court had occasion to observe the demeanor of the
witnesses they presented. This is one important factor that inclined the Court to believe in the version given by the
plaintiff because its witnesses, including hostile witness Roland V. Aromin, an assistant vice-president of the bank,
were straightforward, candid and unhesitating in giving their respective testimonies.

Upon the other hand, the witnesses of BPI were evasive, less than candid and hesitant in giving their answers to
cross examination questions. Moreover, the witnesses for BPI and NBS contradicted each other. Fernando Sison III
insisted that the authority to sell issued to Mr. Revilla was merely an evidence by which a broker may convince a
prospective buyer that he had authority to offer the property mentioned therein for sale and did not bind the bank.

On the contrary, Alfonso Zamora, a Senior Vice-President of the bank, admitted that the authority to sell issued to
Mr. Pedro Revilla, Jr. was valid, effective and binding upon the bank being signed by two class "A" signatories and
that the bank cannot back out from its commitment in the authority to sell to Mr. Revilla

While Alfredo Ramos of NBS insisted that he did not know personally and was not acquainted with Edmundo
Barcelon, the latter categorically admitted that Alfredo Ramos was his friend and that they have even discussed in
one of the luncheon meetings the matter of the sale of the Pasig property to NBS.

George Feliciano emphatically said that he was not a consultant of Mr. Ramos nor was he connected with him in any
manner, but his calling card states that he was a consultant to the chairman of the Pacific Rim Export and Holdings
Corp. whose chairman is Alfredo Ramos.

This deliberate act of Mr. Feliciano of concealing his being a consultant to Mr. Alfredo Ramos evidently was done by
him to avoid possible implication that he committed some underhanded maneuvers in manipulating to have the
subject property sold to NBS, instead of being sold to the plaintiff.

1. Broker was given authority to sell and not merely to look for a buyer
Revilla by himself already had full authority to sell the disputed lot. The note dated 23 June 1988 states, this will serve
as your authority to sell on an as is, where is basis the property located at Pasig Blvd., Bagong Ilog. Revilla testified
that at the time he perfected the agreement to sell the litigated property, he was acting for BPI as if he were the Bank
itself. This notwithstanding and to firm up the sale of the land, Revilla saw it fit to bring BPI officials into the
transaction.
2. BPI Vice Presidents have authority to sell
If BPI could give the authority to sell to a licensed broker, there is no reason to doubt the authority to sell of the two BPI
Vice-Presidents whose precise job in the Bank was to manage and administer real estate property. Rolando Aromin was
BPI Assistant Vice-President and Trust Officer. He directly supervised the BPI Real Property Management Unit. He had
been in the Real Estate Division since 1985 and was the head supervising officer of real estate matters. He had been with
the BPI Trust Department since 1968 and had been involved in the handling of properties of beneficial owners since
1975. He was in charge of Torrens titles, lease contracts, problems of tenants, insurance policies, installment receivables,
management fees, quitclaims, and other matters involving real estate transactions. His immediate superior, VicePresident Merlin Albano had been with the Real Estate Division for only 1 week but he was present and joined in the
discussions with LSM. There is nothing to show that Alfonso Lim and Albino Limketkai knew Aromin before the
incident. Revilla brought the brothers directly to Aromin upon entering the BPI premises. Aromin acted in a perfectly
natural manner on the transaction before him with not the slightest indication that he was acting ultra vires. This shows
that BPI held Aromin out to the public as the officer routinely handling real estate transactions and, as Trust Officer,
entering into contracts to sell trust properties. Further, it must be noted that the authority to buy and sell this particular
trust property was later withdrawn from Trust Officer Aromin and his entire unit. If Aromin did not have any authority to
act as alleged, there was no need to withdraw authority which he never possessed. Everything in the record points to the
full authority of Aromin to bind the bank, except for the self-serving memoranda or letters later produced by BPI that
Aromin was an inefficient and undesirable officer and who, in fact, was dismissed after he testified in this case. But, of
course, Aromins alleged inefficiency is not proof that he was not fully clothed with authority to bind BPI.
4. Bank liable to innocent third persons where representation is made in course of its business even if agent
abused his authority
a banking corporation is liable to innocent third persons where the representation is made in the course of its business
by an agent acting within the general scope of his authority even though, in the particular case, the agent is secretly
abusing his authority and attempting to perpetrate a fraud upon his principal or some other person for his own ultimate
benefit. In the present case, the position and title of Aromin alone, not to mention the testimony and documentary
evidence about his work, leave no doubt that he had full authority to act for BPI in the questioned transaction. There is
no allegation of fraud, nor is there the least indication that Aromin was acting for his own ultimate benefit. BPI later
dismissed Aromin because it appeared that a top official of the bank was personally interested in the sale of the Pasig
property and did not like Aromins testimony. Aromin was charged with poor performance but his dismissal was only
sometime after he testified in court. More than 2 long years after the disputed transaction, he was still Assistant VicePresident of BPI.
5. Meeting of the minds on the price; Manner of payment
Asst. Vice-President Aromin admitted that there was a meeting of the minds between the buyer and the bank in respect to
the price of P1,000.00 per sq.m. The requirements in the payment of the purchase price on terms instead of cash were
suggested by BPI Vice-President Albano. Since the authority given to broker Revilla specified cash payment, the
possibility of paying on terms was referred to the Trust Committee but with the mutual agreement that if the proposed
payment on terms will not be approved by our Trust Committee, Limketkai should pay in cash, the amount was no longer
subject to the approval or disapproval of the Committee, it is only on the terms. The record shows that if payment was
in cash, either broker Revilla or Aromin had full authority. But because LSM took advantage of the suggestion of VicePresident Albano, the matter was sent to higher officials. Immediately upon learning that payment on terms was frozen
and/or denied, Limketkai exercised his right within the period given to him and tendered payment in full. The BPI
rejected the payment.
7. Ang Yu Asuncion; Stages in ordinary contracts (consensual); Real contract: delivery required; Solemn
contract: compliance with formalities prescribe by law
A contract undergoes various stages that include its negotiation or preparation, its perfection and, finally, its
consummation. Negotiation covers the period from the time the prospective contracting parties indicate interest in the
contract to the time the contract is concluded (perfected) The perfection of the contract takes place upon the concurrence
of the essential elements thereof. A contract which is consensual as to perfection is so established upon a mere meeting

of minds, i.e., the concurrence of offer and acceptance, on the object and on the cause thereof. A contract which requires,
in addition to the above, the delivery of the object of the agreement, as in a pledge or commodatum, is commonly
referred to as a real contract. In a solemn contract, compliance with certain formalities prescribed by law, such as in a
donation of real property, is essential in order to make the act valid, the prescribed form being thereby an essential
element thereof. The stage of consummation begins when the parties perform their respective undertakings under the
contract culminating in the extinguishment thereof.
9. Stages of the contract in the present case
The negotiation or preparation stage started with the authority given by Philippine Remnants to BPI to sell the lot,
followed by the authority given by BPI and confirmed by Philippine Remnants to broker Revilla to sell the property, the
offer to sell to Limketkai, the inspection of the property and the negotiations with Aromin and Albano at the BPI offices.
The perfection of the contract took place when Aromin and Albano, acting for BPI, agreed to sell and Alfonso Lim with
Albino Limketkai, acting for LSM, agreed to buy the disputed lot at P1,000.00 per sq.m.. Aside from this there was the
earlier agreement between LSM and the authorized broker. There was a concurrence of offer and acceptance, on the
object, and on the cause thereof.
10. Villonco Realty v. Bormaheco; Perfected contract of sale
The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts. (Art. 1475 Ibid). Consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and
the acceptance absolute. A qualified acceptance constitutes a counter-offer (Art. 1319, Civil Code). An acceptance may
be express or implied (Art. 1320, Civil Code). An acceptance may contain a request for certain changes in the terms of
the offer and yet be a binding acceptance. So long as it is clear that the meaning of the acceptance is positively and
unequivocally to accept the offer. whether such request is granted or not, a contract is formed.
13. Requisite form under Article 1458 merely for greater efficacy or convenience
The fact that the deed of sale still had to be signed and notarized does not mean that no contract had already been
perfected. A sale of land is valid regardless of the form it may have been entered into (Claudel vs. Court of Appeals,
[1991]). The requisite form under Article 1458 of the Civil Code is merely for greater efficacy or convenience and the
failure to comply therewith does not affect the validity and binding effect of the act between the parties. If the law
requires a document or other special form, as in the sale of real property, the contracting parties may compel each other
to observe that form, once the contract has been perfected. Their right may be exercised simultaneously with action upon
the contract (Article 1359, Civil Code).
14. Abrenica Rule: Contracts infringing the Statute of Frauds ratified when defense fails to object or asks
questions on cross-examination
In Abrenica vs. Gonda (34 Phil. 739 [1916]) it was held that contracts infringing the Statute of Frauds are ratified when
the defense fails to object, or asks questions on cross-examination. The reason for the rule is that if the answers of those
witnesses were stricken out, the cross-examination could have no object whatsoever and if the questions were put to the
witnesses and answered by them, they could only be taken into account by connecting them with the answers given by
those witnesses on direct examination. Under said rule (reiterated in a number of cases, among them Talosig vs. Vda. de
Nieba, 43 SCRA 472 [1972]), even assuming that parol evidence was initially inadmissible, the same became competent
and admissible because of the cross-examination, which elicited evidence proving the evidence of a perfected contract.
The cross-examination on the contract is deemed a waiver of the defense of the Statute of Frauds. In the present case,
counsel for respondents cross-examined petitioners witnesses at length on the contract itself, the purchase price, the
tender of cash payment, the authority of Aromin and Revilla, and other details of the litigated contract.
15. Written note or memorandum an exception to the unenforceability of contracts pursuant to Statute of
Frauds
Under Article 1403 of the Civil Code, an exception to the unenforceability of contracts pursuant to the Statute of Frauds
is the existence of a written note or memorandum evidencing the contract. The memorandum may be found in several
writings, not necessarily in one document. The memorandum or memoranda is/are written evidence that such a contract
was entered into. Thus, the existence of a written contract of the sale is not necessary so long as the agreement to sell real
property is evidenced by a written note or memorandum, embodying the essentials of the contract and signed by the
party charged or his agent. Such note or memorandum suffices to make the verbal agreement enforceable, taking it out of
the operation of the statute. In the present case, while there is no written contract of sale of the Pasig property executed
by BPI in favor of LSM, there are abundant notes and memoranda extant in the records of this case evidencing the

elements of a perfected contract.

16. Form of memorandum or note
No particular form of language or instrument is necessary to constitute a memorandum or note in writing under the
statute of frauds; any document or writing, formal or informal, written either for the purpose of furnishing evidence of
the contract or for another purpose, which satisfies all the requirements of the statute as to contents and signature is a
sufficient memorandum or note. A memorandum may be written as well with lead pencil as with pen and ink. It may also
be filled in on a printed form. (37 C.J.S., 653-654). The note or memorandum required by the statute of frauds need not
be contained in a single document, nor, when contained in two or more papers, need each paper be sufficient as to
contents and signature to satisfy the statute. Two or more writings properly connected may be considered together,
matters missing or uncertain in one may be supplied or rendered certain by another, and their sufficiency will depend on
whether, taken together, they meet the requirements of the statute as to contents and the requirements of the statutes as to
signature.
17. Demeanor of witnesses as factor for Court to incline to the version of the case by one party
The demeanor of the witnesses the parties presented is one important factor that inclined the trial court to believe in the
version given by LSM because its witnesses, including hostile witness Roland V. Aromin, an assistant vice-president of
the bank, were straight forward, candid and unhesitating in giving their respective testimonies. Upon the other hand, the
witnesses of BPI were evasive, less than candid and hesitant in giving their answers to cross examination questions.
Moreover, the witnesses for BPI and NBS contradicted each other.
19. NBS not an innocent purchaser for value
(NBS) is not an innocent purchaser for value, as it acted in bad faith. NBS ignored the notice of lis pendens annotated on
the title when it bought the lot. It was the willingness and design of NBS to buy property already sold to another party
which led BPI to dishonor the contract with LSM. It is the very nature of the deed of absolute sale between BPI and NBS
which clearly negates any allegation of good faith on the part of the buyer. Instead of the vendee insisting that the vendor
guarantee its title to the land and recognize the right of the vendee against the vendor if the title to the land turns out to
be defective as when the land belongs to another person, the reverse is found in the deed of sale between BPI and NBS.
Any losses which NBS may incur in the event the title turns out to be vested in another person are to be borne by NBS
alone. BPI is expressly freed under the contract from any recourse of NBS against it should BPIs title be found
defective.
20. Enumeration of badges of fraud found in Oria v. McMicking cannot cover all indications from 1912 to
present and future
NBS simply and merely cited the badges of fraud mentioned in Oria vs. McMicking (21 Phil. 243 (1912]) in its
memorandum and argues that the enumeration there is exclusive. The decision in said case plainly states the following
are some of the circumstances attending sales which have been denominated by courts (as) badges of fraud. There are
innumerable situations where fraud is manifested. One enumeration in a 1912 decision cannot possibly cover all
indications of fraud from that time up to the present and into the future.