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626 SUPREME COURT REPORTS ANNOTATED

Limketkai Sons Milling, Inc. vs. Court of Appeals


*
G.R. No. 118509. March 29, 1996.

LIMKETKAI SONS MILLING, INC., petitioner, vs.


COURT OF APPEALS, et al., respondents.

Civil Law; Contracts; Sale; Petitioners Exhibits A to I either


scrutinized singly or collectively, do not reveal a perfection of the
purported contract of sale.The bottomline issue is whether or not
a contract of sale of the subject parcel of land existed between the
petitioner and respondent BPI. A re-evaluation of the attendant
facts and the evidence on record, specifically petitioners Exhibits
A to I, yields the negative. x x x These exhibits, either
scrutinized singly or collectively, do not reveal a perfection of the
purported contract of sale.
Same; Same; Same; A definite agreement on the manner of
payment of the price is an essential element in the formation of a
binding and enforceable contract of sale.The Court in Toyota
Shaw, Inc. v. Court of Appeals had already ruled that a definite
agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of
sale. Petitioners exhibits did not establish any definitive agreement
or meeting of the minds between the concerned parties as regards
the price or term of payment.
Same; Same; Same; Acceptance of an offer must be unqualified
and absolute.The acceptance of an offer must therefor be
unqualified and absolute. In other words, it must be identical in all
respects with that of the offer so as to produce consent or meeting of
the minds. This was not the case herein considering that
petitioners acceptance of the offer was qualified, which amounts to
a rejection of the original offer.

MELO, J., Dissenting Opinion:

Civil Law; Contracts; Sale; Appeal; There are well-established


exceptions to the general rule that the factual findings and
conclusions drawn therefrom by the Court of Appeals should be
treated as conclusive.There are also well-established exceptions to
the

_______________

* THIRD DIVISION.

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Limketkai Sons Milling, Inc. vs. Court of Appeals

general rule that the factual findings and conclusions drawn


therefrom by the Court of Appeals should be treated as conclusive.
Same; Same; Same Same; Exceptional circumstances that
would compel the Supreme Court to review findings of fact of the
Court of Appeals.In several decisions of recent vintage (Rizal
Cement Co., Inc. v. Villareal, G.R. No. L-30272, February 28, 1985,
135 SCRA 15; Ramos v. Court of Appeals, G.R. No. L-25463, April 4,
1975, 63 SCRA 331; Garcia v. Court of Appeals, G.R. No. L-26490,
June 30, 1970, 33 SCRA 623; Ramos v. Pepsi-Cola Bottling Co., G.R.
No. L-22533, February 9, 1967, 19 SCRA 289), the Court
summarized and enumerated the exceptional circumstances that
would compel the Supreme Court to review findings of fact of the
Court of Appeals, to wit: (1) when the conclusion is a finding
grounded entirely on speculation, surmises or conjectures (Joaquin
v. Navarro, 93 Phil. 257 (1953); (2) when the interference made is
manifestly absurd, mistaken or impossible (Luna v. Linatoc, 74
Phil. 15 (1942); (3) when there is grave abuse of discretion in the
appreciation of facts (Buyco v. People, 95 Phil. 253 (1954); (4) when
the judgment is premised on a misapprehension of facts (Dela Cruz
v. Sosing, 94 Phil. 26 (1953); Castillo v. Court of Appeals, G.R. No.
L-48290, September 29, 1983, 124 SCRA 808); (5) when the findings
of fact are conflicting (Casica v. Villeseca, 101 Phil. 1205 (1957); and
(6) when the Court of Appeals, in making its findings, went beyond
the issues of the case and the same is contrary to the admissions of
both appellant and appellee (Evangelista v. Alto Surety & Ins. Co.,
Inc., 103 Phil. 401 (1958).
Same; Same; Same; A sale of land is valid regardless of the
form it may have been entered into.The contention of respondents
that a formal deed of sale is essential before the contract may be
perfected and proved indicates a misapprehension of the Statute of
Frauds. As emphasized in the decision, a sale of land is valid
regardless of the form it may have been entered into (Claudel vs.
Court of Appeals, 199 SCRA 113, 199 [1991]). The fact that the deed
of sale still had to be signed and notarized does not mean that no
contract was perfected. If the law requires a document or special
legal form, the contracting parties may require each other to
observe the formality after the contract is perfected.
Same; Statute of Frauds; The cross-examination on the contract
is deemed a waiver of the defense of the Statute of Frauds.Even
assuming for purposes of argument that the perfected contract

628

628 SUPREME COURT REPORTS ANNOTATED

Limketkai Sons Milling, Inc. vs. Court of Appeals

infringes the Statute of Frauds, in Abrenica vs. Gonda (34 Phil. 379
[1916]), this Court ruled that the questioned contract is ratified
when the defense fails to object or asks questions on cross-
examination. As decided in Abrenica and later cases such as Talosig
vs. Vda. de Nieba (43 SCRA 472 [1972]), assuming that parole
evidence was initially inadmissible, the same became competent
and admissible because of the cross-examination. The cross-
examination on the contract is deemed a waiver of the defense of
the statute of frauds.

MOTION FOR RECONSIDERATION of a decision of the


Supreme Court, Third Division.

The facts are stated in the resolution of the Court.


Amadeo D. Seno for petitioner.
Alfonso B. Verzosa for BPI.
Manahan, Cornago, De Vera, Aquino & Associates for
National Bookstore, Inc.

RESOLUTION

FRANCISCO, J.:
**
In this motion for reconsideration, the Court is called
upon to take a second hard look on its December 1, 1995
decision reversing and setting aside respondent Court of
Appeals judgment of August 12, 1994 that dismissed
petitioner Limketkai Sons Milling Inc.s complaint for
specific performance and damages against private
respondents Bank of Philippine Islands (BPI) and National
Book Store (NBS). Petitioner Limketkai Sons Milling, Inc.,
opposed the motion and filed its Consolidated Comment, to
which private respon-

_______________

** The Third Division of this Court was initially composed of Justices


Feliciano, Romero, Melo, Vitug and Panganiban. After the promulgation
of the December 1, 1995 decision and in view of Justice Felicianos
retirement, the different Divisions of the Court were reorganized.
Consequently, the present Third Division is now composed of Chief
Justice Narvasa and Justices Davide, Melo, Francisco and Panganiban.

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Limketkai Sons Milling, Inc. vs. Court of Appeals

dent NBS filed a Reply. Thereafter, petitioner filed its


Manifestation and Motion for the voluntary inhibition of
Chief Justice Andres R. Narvasa from taking part in any
subsequent deliberations1
in this case. The Honorable
Chief Justice declined.
The Court is swayed to reconsider.
The bottomline issue is whether or not a contract of sale
of the subject parcel of land existed between the petitioner
and respondent BPI. A re-evaluation of the attendant facts
and the evidence on record, specifically petitioners
Exhibits A to2I, yields the negative. To elaborate:
Exhibit A is a Deed of Trust dated May 14, 1976,
entered into between Philippine Remnants Co., Inc., as
grantor, and respondent BPI, as trustee, stating that
subject3 property covered by TCT 493122 (formerly TCT No.
27324) has [been] assigned, 4
transferred, conveyed and set
over unto the Trustee expressly authorizing and
empowering the same in
_______________

1 In a Memorandum dated March 18, 1996, addressed to the members


of the Courts Third Division, the Honorable Chief Justice Andres
Narvasa noted petitioners baseless motion. Thus:

2. The information upon which petitioner relies is utterly without foundation


in fact and is nothing but pure speculation or wistful yearning. The Chief
Justice wishes to state for the record that while still in private practice, he
never had occasion to represent the National Bookstore and/or its principal
owner, the Ramos family, in any case or matter whatsoever; that he has never
had any transaction at all with them and that indeed, he has no recollection of
ever having even purchased anything from said store; and that he does not
know, and as far as he knows he never met, any member of the Ramos family
described as principal owners of the National Bookstore.
3. There is thus absolutely no reason for the inhibition of the Chief Justice
in this case, and he will continue to take part in all subsequent deliberations in
this case.

2 Records, pp. 10-14.


3 Complaint, p. 2; Records, p. 2.
4 Deed of Trust, p. 2; Records, p. 11.

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630 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

its own name to sell and5 dispose of said trust property or


any lot or parcel thereof and to facilitate [the] sale of the
trust property, the Trustee may engage the services of real
estate broker or brokers, under such terms and conditions
which the Trustee may deem proper, 6
to sell the Trust
property or any lot or parcel thereof.
Exhibit B is a Letter of Authority for the petitioner
issued by respondent BPI to Pedro A. Revilla, Jr., a real
estate broker, to sell the property pursuant to the Deed of
Trust. The full text of Exhibit B is hereby quoted:

Trust Account No. 75-09

23 June 1988

ASSETRADE CO.
70 San Francisco St.
Capitol Subdivision
Pasig, Metro Manila
Attention: Mr. Pedro P. Revilla, Jr.
Managing Partner

Gentlemen:

This will serve as your authority to sell on an as is where is


basis the property located at Pasig Blvd., Bagong Ilog, Pasig, Metro
Manila, under the following details and basic terms and conditions:

TCT No.: 493122 in the name of BPI as


trustee
of Philippine Remnants Co., Inc.
Area: 33,056.0 square meters (net of 890
sq. m. sold to the Republic of the
Philippines due to the widening of
Pasig Blvd.)
Price: P1,100.00 per sq. m. or
P36,361,600.00.
Terms: Cash
Brokers 2%
Commission:

_______________

5 Id.
6 Id.

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VOL. 255, MARCH 29, 1996 631


Limketkai Sons Milling, Inc. vs. Court of Appeals

Others: a) Docuemntary (sic) stamps to be af-


fixed to Deed of Absolute Sale, transfer
tax, registration expenses, and other
titling expenses for account of the Buyer.
b) Capital gains tax, if payable, and
real estate taxes up to 30 June 1988 shall
be for the account of the Seller.

This authority which is good for thirty (30) days only from date
hereof is non-exclusive and on a first-come first-serve basis.
Very truly yours,
BANK OF THE PHILIPPINE ISLANDS
as trustee of
Philippine Remnants Co., Inc.

(Sgd.) (Sgd.)
FERNANDO J. SISON, III ALFONSO R. ZAMORA
Assistant Vice-President Vice President
[Note: Emphasis supplied]

Exhibit C is the letter dated July 8, 1988, issued to Pedro


Revilla, Jr., upon his request by respondent BPI addressed
to the security guard on duty at subject property to allow
him (Revilla, Jr.) and his 7companion to conduct an ocular
inspection of the premises.

_______________

7 The Full Text of Exhibit C is as follows:

Trust Account No. 75-11

08 July 1988

The Security Guard


On Detail
Universal Security &
Investigation Agency
c/o Phil. Remnants Co., Inc.
Pasig Blvd., Bagong-Ilog
Pasig, Metro Manila

Dear Sir:

Please allow Mr. Pedro Revilla, Jr., whose specimen signature appears
below, and company to enter the premises that you are securing located
at the above-given address for the purpose of conducting an ocular
inspection and verification survey of the same.

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632 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

Exhibit D is a letter addressed by Pedro Revilla, Jr. to


respondent BPI informing
8
the latter that he has procured a
prospective buyer.
_______________

Kindly extend to Mr. Revilla your usual courtesies and assistance on


this matter. Thank you.
Very truly yours,
BANK OF THE PHILIPPINE ISLANDS
As Trustees For
Philippine Remnants Co., Inc.
By:

(Sgd.) (Sgd.)
PEDRO REVILLA, JR. ROLANDO V. AROMIN
Assistant Vice-President

8 Exhibit D reads as follows:

July 9, 1988

Bank of the Philippine Islands


Bank of P.I. Building
Ayala Avenue, Makati
Metro Manila

ATTN: Mr. Alfonso R. Zamora


Vice President
and
Mr. Fernando J. Sison III
Asst. Vice President

Gentlemen:

I refer to the authority you gave me on June 23, 1988, in your capacity
as Trustee of the Philippine Remnants Co., Inc., in connection with the
sale of one (1) parcel of land, located along Pasig Boulevard, Bagong Ilog,
Pasig, Metro Manila, with an area of 33,056 square meters and covered
by Transfer Certificate of Title No. 493122.
I am pleased to inform you that I have procured a buyer for the above
described property in the name of Limketkai Sons Milling, Inc., with
office address at Limketkai Building, Greenhills, San Juan, Metro
Manila and represented by its Executive Vice President, Mr. Alfonso Lim.
It is understood therefore, that pursuant to my authority, I shall be
paid a brokers fee of 2% of the gross purchase price in the

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VOL. 255, MARCH 29, 1996 633


Limketkai Sons Milling, Inc. vs. Court of Appeals
Exhibit E is the written proposal submitted by Alfonso Y.
Lim in behalf of petitioner Limketkai Sons Milling, 9Inc.,
offering to buy the subject property at P1,000.00/sq. m.

_______________

event the sale to the above named buyer is consumated.


Very truly yours,
(Sgd.)
Pedro P. Revilla, Jr.

[Note: Emphasis supplied]

9 Exhibit E has these salient portions:

Gentlemen:

This confirms our conversation this morning regarding the purchase of


a parcel of land in Barrio Bagong Ilog, Municipality of Pasig, covered by
Transfer Certificate of Title No. 493122 of the Registry of Deeds of Rizal,
(specified therein as having an area of 33,946 sq. m. minus 890 sq. m.
previously sold to the Republic of the Philippines, or a net area of 33,056
sq. m.), registered in your name as trustee of the Philippine Remnants
Company. Specifically, this confirms your offer to sell the said property at
One Thousand (P1,000.00) Pesos per square meter, and our acceptance in
principle of that offer, subject to the following terms:

a) We are to give an initial amount equivalent to Ten (10%) Percent


of the total purchase price as earnest money;
b) The balance is to be paid by us within ninety (90) days from the
execution of the agreement;
c) If the balance is not paid within the above-stated period, by
reason of any cause other than those mentioned in paragraphs
(d), (e) and (f) below, Twenty (20%) Percent of The Ten (10%)
Percent paid under paragraph (a) shall be forfeited in your favor,
the remaining Eighty (80%) is to be refunded to us; in the event
the non-payment of the said balance is caused by non-
performance of any of the stipulations in paragraphs (d), (e) and
(f) below, the entire sum paid as earnest money shall be refunded
to us;
d) The Title of the property shall be free from all liens and
encumbrances and the property itself free from all squatters;
e) The BPI as trusteetitle holder is to warrant that it has the legal
right and title to transfer ownership to us;
f) Physical possession by us upon the payment of the Ten (10%)
Percent referred to in paragraph (a) above.
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634 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

Exhibit F is respondent BPIs letter addressed to


petitioner pointing out that petitioners proposal embodied
in its Letter (Exhibit E) has 10been rejected by the
respondent BPIs Trust Committee.

_______________

Anticipating your favorable action, we thank you for your prompt


attention and early reply.
Very truly yours,
LIMKETKAI SONS MILLING, INC.
(Sgd.)
ALFONSO U. LIM
Executive Vice President

[Note: Emphasis added]

10 Exhibit F states:

Attention: Mr. Alfonso U. Lim


Executive Vice President

Gentlemen:

Re: Bo. Bagong Ilog (Pasig) Property

In connection with subject property, we regret to inform you that the


Banks Trust Committee did not approve your proposal to purchase said
property under the terms and conditions of your letter to our Mr. Merlin A.
Albano dated 11 July 1988. Instead, the Trust Committee instructed us to
consider offers from other interested parties.
In a meeting held on 20 July 1988, Senior Management instructed us
to offer the same property to all interested buyers under the following
terms and conditions:

a. 15% downpayment upon notification of acceptance by BPI;


b. balance payable upon signing of the Deed of Sale;
c. price to BPI shall be net of brokers commission;
d. the party with the best price shall have five (5) days within which
to pay the downpayment, otherwise, the party with the next best
price shall be entertained.
Should you still be interested in subject property, kindly submit to us
not later than 12:00 noon of 22 July 1988 your written offer together with
the price per square meter. The Bank shall not entertain proposals
received after said cut-off time.

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VOL. 255, MARCH 29, 1996 635


Limketkai Sons Milling, Inc. vs. Court of Appeals

Exhibit G is petitioners letter dated July 22, 1988


reiterating its offer to buy the 11 subject property at
P1,000/sq. m. but now on cash basis.

_______________

It is understood, however, that acceptance of any offer is still subject to


the approval of the Beneficial Owner of the property as well as the Trust
Committee of the Bank.

Very truly yours,

(Sgd.) (Sgd.)
ALFONSO R. ZAMORA FERNANDO J. SISON III
Vice President Asst. Vice President

[Note: Emphasis added]

11 Exhibit G quoted in full is as follows:

July 22, 1988

The Chairman
Trust Committee
Bank of the Philippine Islands
Makati, Metro Manila

Dear Sir:

We are in receipt of the letter dated July 20, 1988, signed by Mr.
Alfonso Zamora and Mr. Fernando J. Sison III, copy of which we are
hereto attaching.
Please consider our letter of July 21, 1988 addressed to Mr. Xavier P.
Loinaz, Bank President, and copy furnished your committee, as our reply
thereto.
We are, therefore, hereby adopting and reiterating our former offer to
buy the lot at P1,000.00 per square meter but on cash basis.
Very truly yours,
LIMKETKAI SONS MILLING, INC.
(Sgd.)
ALFONSO U. LIM
Executive Vice-President

[Note: Emphasis added]

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636 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

Exhibit H refers to respondent BPIs another rejection 12


of
petitioners offer to buy the property at P1,000/sq. m.
And finally, Exhibit I is a letter by petitioner addressed
to respondent BPI claiming the existence of a perfected 13
contract of sale of the subject property between them.

_______________

12 Exhibit Hs pertinent portions read as follows:

Attention: Mr. Alfonso U. Lim


Exec. Vice President

Gentlemen:

We reply to your letter dated 29 July 1988 addressed to the Chairman


of our Trust Committee.
We again regret to inform you that your offer to purcxhase the Bo.
Bagong Ilog, Pasig property (TCT 493122) at P1,000.00 per square meter
has not been approved, as previously communicated to you per our letter
dated 20 July 1988.
Per the Deed of Trust entered into by and between the Grantor of said
property and ourselves, the Bank as Trustee is duty-bound, in the event of
sale of the property, to select the terms and consideration it deems to be
most advantageous to the Grantor. The 30-day authority given to your
broker also presupposed that during said period, the Bank on its own
would also consider other offers. This is why no offer to purchase was
deemed final and accepted until formally approved by the Trust
Committee.
xxx xxx xxx
Very truly yours,

(Sgd.) (Sgd.)
NELSON M. BONA FERNANDO J. SISON III
Vice President Asst. Vice President

[Note: Emphasis added]

13 Exhibit I pertinently provides:

August 8, 1988

Mr. Nelson M. Bona


Vice-President
and
Mr. Fernando J. Sison III

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Limketkai Sons Milling, Inc. vs. Court of Appeals

These exhibits, either scrutinized singly or collectively, do


not reveal a perfection of the purported contract of sale.
Article 1458 of the Civil Code defines a contract of sale as
follows:

_______________

Asst. Vice-President
BANK OF THE PHILIPPINE ISLANDS
Manila

Gentlemen:

This refers to your letter of 2 August 1988 regarding our agreement to


purchase the Barrio Bagong Ilog property under TCT No. 493122 at
P1,000.00 per square meter.
xxx xxx xxx
Under the afore-quoted provision of the Deed of Trust, your Bank as
Trustee, has the absolute authority to sell and dispose of the property
under trust without consulting the Grantor as to price and terms.
Moreover, under said quoted stipulation, the Bank may engage the
services of a real estate broker or brokers under such terms and
conditions which the Trustee may deem proper. Consequently, on 23 June
1988, you authorized Mr. Pedro P. Revilla, Jr. as broker to sell the
property covered by Title No. 493122 on a firstcome first-serve basis
as per written authority signed by Mr. Fernando J. Sison III and Mr.
Alfonso R. Zamora in behalf of the Bank as Trustee of Philippine
Remnants Co., Inc.
We would like to invite your kind attention that we are the first-
come offeror of the lot. And, while the price mentioned in the authority
granted to Mr. Revilla is P1,000.00 per square meter, nonetheless, in the
negotiations between us and your responsible bank officials done in the
presence of Mr. Revilla, the price per square meter was finally agreed at
P1,000.00.
True, we requested for payment of the price on terms but, should the
terms we requested be not accepted by your bank, we were ready to pay
in cash per our understanding with your Mr. Albano and Mr. Aromin and
which we have clearly made known in our July 22, 1988 letters. As a
matter of fact, even before July 21 and 22, 1988 we personally tendered a
check for the entire purchase price to Mr. Albano but he refused to accept
the check because, according to him, the authority to transact the sale
was taken away from him. The same proposal to pay in cash was made
by us in a meeting with Mr. Bona, Mr. Sison and other Bank officials,
and we were told that the matter will be resolved by the Bank officials
concerned in due time but nothing positive came about. We are still

638

638 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

ART. 1458. By the contract of sale one of the contracting parties


obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or conditional.

Article 1475 of the same code specifically provides when a


contract of sale is deemed perfected, to wit:

ART. 1475. The contract of sale is perfected at the moment there is


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.
14
The Court in Toyota Shaw, Inc. v. Court of Appeals had
already ruled that a definite agreement on the manner of

_______________

ready to buy the subject property at P1,000.00 per square meter on


cash basis.
xxx xxx xxx
Through this letter we would like to make known to your Bank that
we maintain our position that there has been a perfected contract
between your Bank as Trustee and our Corporation insofar as the sale of
the property to us is concerned because in the written authority granted
by you to Mr. Pedro P. Revilla, Jr. signed by no less than the Assistant
Vice-President and Vice-President of the Bank as Trustee, there is no
condition imposed that the sale of the property transacted by him under
said authority is subject to the approval of the Trust Committee.
We hope your Bank will understand our position and we expect that
the sale of the subject lot in our favor be consummated as early as
possible.
Very truly yours,
(Sgd.)
ALFONSO U. LIM
Exec. Vice-President/Director
14 244 SCRA 320, 328, citing Velasco v. Court of Appeals, 51 SCRA 439
(1973).

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VOL. 255, MARCH 29, 1996 639


Limketkai Sons Milling, Inc. vs. Court of Appeals

payment of the price is an essential element in the


formation of a binding and enforceable contract of sale.
Petitioners exhibits did not establish any definitive
agreement or meeting of the minds between the concerned
parties as regards the price or term of payment. Instead,
what merely appears therefrom is respondent BPIs
repeated rejection of the petitioners
15
proposal to buy the
property at P1,000/sq. m. In addition, even on the
assumption that Exhibit E reflects that respondent BPI
offered to sell the disputed property for P1,000/sq. m.,
petitioners acceptance of the offer
16
is conditioned upon or
qualified by its proposed terms to which respondent BPI
must first agree with.
On the subject of consent as an essential element of
contracts, Article 1319 of the Civil Code has this to say:

ART. 1319. 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.
xxx xxx x x x.
The acceptance of an offer must therefor be unqualified and
absolute. In other words, it must be identical in all respects
with that of the offer so as to produce consent or meeting of
the minds. This was not the case herein considering that
petitioners acceptance of the offer was qualified,
17
which
amounts to a rejection of the original offer. And contrary
to petitioners assertion that its offer was accepted by
respondent BPI, there was no showing that petitioner
complied with the terms and conditions explicitly
18
laid down
by respondent BPI for prospective buyers. Neither was
the petitioner able to prove that its offer to buy the subject
property was formally approved by the beneficial owner of
the property and the

_______________

15 See Exhibits F and H.


16 See Exhibit E.
17 See Logan v. Phil. Acetylene Co., 33 Phil. 177; Beaumont v. Prieto,
41 Phil. 670; Zayco v. Serra, 44 Phil. 326.
18 See Exhibit F.

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640 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

Trust Committee of the Bank, an essential requirement for


the acceptance of the offer which was clearly specified in
Exhibits F and H. Even more telling is petitioners
unexplained failure to reduce in writing the alleged
acceptance of its offer to buy the property at P1,000/sq. m.
The Court also finds as unconvincing petitioners
representation under Exhibits E, G, and I that its
proposal to buy the subject property for P1,000/sq. m. has
been accepted by respondent BPI, considering that none of
the said Exhibits contained the signature of any
responsible official of respondent bank.
It is therefore evident from the foregoing that
petitioners documentary evidence floundered in
establishing its claim of a perfected contract of sale.
Moreover, petitioners case failed to hurdle the strict
requirements of the Statute of Frauds. Article 1403 of the
Civil Code states:
ART. 1403.The following contracts are unenforceable, unless
they are ratified:
(1) x x x
(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement hereafter
made shall be unenforceable by action, unless the same, or some
note or memorandum, thereof, be in writing, and subscribed by the
party charged, or by his agent; evidence, therefore, of the agreement
cannot be received without the writing, or a secondary evidence of
its contents:
xxx xxx xxx
(e) An agreement for the leasing for a long period than one year,
or for the sale of real property or of an interest therein.
xxx xxx x x x.

In this case there is a patent absence of any deed of sale


categorically conveying the subject property from
respondent BPI to petitioner. Exhibits E, G, I which
petitioner claims as proof of perfected contract of sale
between it and respondent BPI were not subscribed by the
party charged, i.e.,

641

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Limketkai Sons Milling, Inc. vs. Court of Appeals

BPI, and did not 19constitute the memoranda or notes that


the law speaks of. To consider them sufficient compliance
with the Statute of Frauds is to betray the avowed purpose
of the law to prevent fraud and perjury in the enforcement
of obligations. We share, in this connection, respondent
Court of Appeals observation when it said:

x x x. The requirement that the notes or memoranda be subscribed


by BPI or its agents, as the party charged, is very vital for the strict
compliance with the avowed purpose of the Statute of Frauds which
is to prevent fraud and perjury in the enforcement of obligations
depending for their evidence on the unassisted memory of witnesses
by requiring certain enumerated contracts and transactions to be
evidenced by a writing signed by the party to be charged (Asia
Production Co., Inc. vs. Pao, 205 SCRA 458). It cannot be gainsaid
that a shrewd person could easily concoct a story in his letters
addressed to the other party and present the letters to the court as
notes to prove the existence of a perfected oral contract of sale when
in truth there is none.
In adherence to the provisions of the Statute of Frauds, the
examination and evaluation of the notes or memoranda adduced by
the appellee was confined and limited to within the four corners of
the documents. To go beyond what appears on the face of the
documents constituting the notes or memoranda, stretching their
import beyond what is written in black and white, would certainly
be uncalled for, if not violative of the Statute of Frauds and opening
the doors to fraud, the very evil sought to be avoided by the statute.
In fine, considering that the documents adduced by the appellee do
not embody the essentials of the contract of sale aside from not
having been subscribed by the party charged or its agent, the
transaction involved definitely falls within the ambit of the Statute
20
of Frauds.
[Note: Emphasis added]

Corollarily, as the petitioners exhibits failed to establish


the perfection of the contract of sale, oral testimony cannot
21
take their place without violating the parol evidence rule.
It

_______________

19 See Paredes v. Espino, 22 SCRA 1000.


20 CA Decision, pp. 11-12; Rollo, pp. 54-55.
21 Rule 130, Section 9, Rules of Court.

642

642 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

was therefore irregular for the trial court to have admitted


in evidence testimony to prove the existence of a contract of
sale of a real property between the parties despite the
persistent objection made by private respondents counsels
as early as the first scheduled hearing. While said counsels
crossexamined the witnesses, this, to our view, did not
constitute a waiver22
of the parol evidence rule. The Talosig 23
v. Vda. de Nieba, and Abrenica v. Gonda and de Gracia
cases cited by the Court in its initial decision, which ruled
to the effect that an objection against the admission of any
evidence must be made at 24
the proper time, i.e., x x x at the
time question is asked, and that if not so made it will be
understood to have been waived, do not apply as these two
25
cases involved facts different from the case at bench. More
importantly, here, the direct testimonies of the witnesses
were presented in affidavit-form where prompt objection
to inadmissible evidence is hardly possible, whereas the
direct testimonies in these cited cases were delivered orally
in open court. The best that counsels could have done, and
which they did, under the circumstances was to preface the
cross-examination with objection. Thus:

ATTY. VARGAS:
Before I proceed with the cross-examination of the
witness, your Honor, may we object to the particular
portion of the affidavit which attempt to prove the
existence of averbal contract to sell more specifically
the answers contained in page 3. Par. 1, the whole of
the answer.

_______________

22 43 SCRA 473.
23 34 Phil. 739.
24 Abrenica, (supra) at p. 746, citing Kreigh v. Sherman, 105 Ill., 49; 46
Am. Dig., Century Ed., 932.
25 In Talosig v. Vda. de Nieba, for instance, a deed of sale executed
between the parties was undisputed, as well as the existence of receipts
evidencing payment; while in Abrenica v. Gonda and De Gracia, counsel
for the defendant never raised any objection to the examination of the
witnesses which elicited testimony tending to prove the contract. Only
after the examination was terminated did counsel move to strike out all
the given testimony.

643

VOL. 255, MARCH 29, 1996 643


Limketkai Sons Milling, Inc. vs. Court of Appeals

x x x xxx xxx
COURT:
Objection overruled.
ATTY. VARGAS:
Your Honor, what has been denied by the Court was
the motion for preliminary hearing on affirmative
defenses. The statement made by the witness to prove
that there was a verbal contract to sell is inadmissible
in evidence in this case because an agreement must be
in writing.
COURT:
Go ahead, that has been already overruled.
ATTY. VARGAS:
So may we reiterate our objection with regards to all
other portions of the affidavit which deal on the verbal
contract. (TSN,
26
Feb. 28, 1989, pp. 3-5. Italics
supplied.)
x x x xxx xxx
ATTY. CORNAGO:
Before we proceed, we would like to make of record
our continuing objection in so far as questions and
answers propounded to Pedro Revilla dated February
27, 1989, in so far as questions would illicit (sic)
answers which would be violative of the best evidence
rule in relation to Art. 1403. I refer to questions Nos.
8, 13, 16 and 19 of the affidavit of this witness which
is considered as his direct testimony. (T.S.N., June
29, 1990, p. 2)
ATTY. CORNAGO:
May we make of record our continued objection on the
testimony which is violative of the best evidence rule
in relation to Art. 1403 as contained in the affidavit
particularly questions Nos. 12, 14, 19 and 20 of the
affidavit of Alfonso Lim executed on February 24,
1989. x x x.
(T.S.N., June 28, 1990, p. 8).27

Counsels should not be blamed and, worst, penalized for


taking the path of prudence by choosing to cross-examine
the witnesses instead of keeping mum and letting the
inadmissible testimony in affidavit form pass without
challenge. We

_______________

26 CA Decision, pp. 13-14; Rollo, pp. 56-57; Pedro Revilla, Jr., TSN,
February 28, 1989, pp. 3-5.
27 Memorandum For Respondent Bank of the Phil. Islands, April 24,
1995, p. 16; Rollo, p. 229.
644

644 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

thus quote with approval the observation of public


respondent Court of Appeals on this point:

As a logical consequence of the above findings, it follows that the


court a quo erred in allowing the appellee to introduce parol
evidence to prove the existence of a perfected contract of sale over
and above the objection of the counsel for the defendant-appellant.
The records show that the court a quo allowed the direct testimony
of the witnesses to be in affidavit form subject to cross-examination
by the opposing counsel. If the purpose thereof was to prevent the
opposing counsel from objecting timely to the direct testimony, the
scheme failed for as early as the first hearing of the case on
February 28, 1989 during the presentation of the testimony in
affidavit form of Pedro Revilla, Jr., plaintiff-appellees first witness,
the presentation of such testimony was already objected to as
28
inadmissible.
[Emphasis supplied.]

WHEREFORE, in view of the foregoing premises, the


Court hereby GRANTS the motion for reconsideration, and
SETS ASIDE its December 1, 1995 decision. Accordingly,
the petition is DENIED and the Court of Appeals decision
dated August 12, 1994, appealed from is AFFIRMED in
toto.
SO ORDERED.

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


concur.
Melo, J., Please see dissent.
Panganiban, J., I join Mr. Justice Melos dissent.

DISSENTING OPINION

MELO, J.:

I beg to dissent from the new majoritys action granting


private respondents motions for reconsideration.
_______________

28 CA Decision, pp. 12-13; Rollo, pp. 55-56.

645

VOL. 255, MARCH 29, 1996 645


Limketkai Sons Milling, Inc. vs. Court of Appeals

On December 26, 1995, respondents Bank of the Philippine


Islands (BPI) and National Book Store, Inc. (NBS) filed
separate and extended motions (18 pages and 44 pages,
respectively) urging the reconsideration of the Courts
December 1, 1995 decision which was a unanimous action
of the then 5 members of the Third Division. On January
12, 1996 petitioner Limketkai Sons Milling, Inc.
(Limketkai), in turn, filed its 41-page consolidated
comment in opposition to the two motions. NBS thereafter
filed a reply to Limketkais comment.
A careful consideration of the two motions and the
comment thereon, as well as the reply thereto, readily
shows that while lengthy and at times emotional, the
motions are simply reiterations of earlier pleadings found
in the records, with each party repeating the same
arguments and insisting that its witnesses are telling the
truth, its evidence is superior, and the witnesses for the
other side are lying.
The arguments raised in the two motions for
reconsideration and refuted in the comment revolve around
the core issue of whether or not there was a perfected
contract of sale between BPI and Limketkai. The other
issue is whether or not respondent NBS is an innocent
buyer for value which acted in good faith.
The other questions posed in the 8 grounds of BPI and
the 4 grounds of NBS to support their respective motions
are related to these two issues. All of these questions, I
believe, have already been fully considered and passed
upon in detail in the Courts decision.
Most of the relevant facts are shared in common by the
parties. It is in the interpretation of these facts and the
need to include certain details overlooked by respondent
Court where they differ.
Invocation by Mr. Justice Davide of the general rule that
in petitions for review of decision of the Court of Appeals
only questions of law may be raised to the Supreme Court
is, with all due respect, not all that too significant nor is
the principle really being ignored. The different conclusions
and interpretations arising from the same facts bring about
questions of law. In the same way that respondent court did
not

646

646 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

consider itself bound by the conclusions of the regional trial


court, we should have no reluctance to discard the factual
interpretations of respondent court and reiterate those of
the trial court.
There are also well-established exceptions to the general
rule that the factual findings and conclusions drawn
therefrom by the Court of Appeals should be treated as
conclusive.
In Gaw vs. Intermediate Appellate Court (220 SCRA 405,
413-414 [1993], this Court, through Mdm. Justice Romero,
stated:

As a rule, the jurisdiction of this Court in cases brought to it from


the Court of Appeals or the then Intermediate Appellate Court is
limited to the review and revision of errors of law allegedly
committed by the appellate court, as its findings of fact are deemed
conclusive. As such, this Court is not duty-bound to analyze and
weigh all over again the evidence already considered in the
proceedings below. This rule, however, is not without exceptions.
One of these exceptions is when there is a conflict between the
factual findings of the Court of Appeals and the trial court which
necessitates a review of such factual findings. This case falls within
the exception.
(at pp. 413-414.)

Summing up or collating the instances when findings of


fact of the Court of Appeals may be examined, we had
occasion to re-echo Remalante vs. Tibe (158 SCRA 138
[1985]) in Morales vs. Court of Appeals (197 SCRA 391
[1991]), thusly:

In several decisions of recent vintage (Rizal Cement Co., Inc. v.


Villareal, G.R. No. L-30272, February 28, 1985, 135 SCRA 15;
Ramos v. Court of Appeals, G.R. No. L-25463, April 4, 1975, 63
SCRA 331; Garcia v. Court of Appeals, G.R. No. L-26490, June 30,
1970, 33 SCRA 623; Ramos v. Pepsi-Cola Bottling Co., G.R. No. L-
22533, February 9, 1967, 19 SCRA 289), the Court summarized and
enumerated the exceptional circumstances that would compel the
Supreme Court to review findings of fact of the Court of Appeals, to
wit:

(1) when the conclusion is a finding grounded entirely


on speculation, surmises or conjectures (Joaquin v.
Navarro,

647

VOL. 255, MARCH 29, 1996 647


Limketkai Sons Milling, Inc. vs. Court of Appeals

93 Phil. 257 (1953);


(2) when the interference made is manifestly absurd,
mistaken or impossible (Luna v. Linatoc, 74 Phil. 15
(1942);
(3) when there is grave abuse of discretion in the
appreciation of facts (Buyco v. People, 95 Phil. 253
(1954);
(4) when the judgment is premised on a
misapprehension of facts (Dela Cruz v. Sosing, 94
Phil. 26 (1953); Castillo v. Court of Appeals, G.R.
No. L-48290, September 29, 1983, 124 SCRA 808);
(5) when the findings of fact are conflicting (Casica v.
Villeseca, 101 Phil. 1205 (1957); and
(6) when the Court of Appeals, in making its findings,
went beyond the issues of the case and the same is
contrary to the admissions of both appellant and
appellee (Evangelista v. Alto Surety & Ins. Co., Inc.,
103 Phil. 401 (1958). (at p. 401.)

Items 1, 2, and 4 of the above citation are applicable to this


case.
The majority opinions of Justices Davide and Francisco
are based on interpretations of petitioners first nine
exhibits. There is no dispute over Exhibit A, except that it
may be pointed out that BPI was authorized by the owner
of the lot to engage brokers to sell the property. Exhibit B
implements Exhibit A.
The first disputed issue refers to the authority of the
broker and the Assistant Vice-President and Trust Officer,
Rolando V. Aromin, of BPI to sell the lot. It was the broker,
Pedro Revilla, who offered his services to sell the lot at
P1,000.00 per square meter. Kenneth Richard Awad of
Philippine Remnants Co., Inc., owner of the lot, gave his
written conformity (Exh. P) on June 14, 1988 to the sale
at P1,000.00 per square meter for cash with a 2%
commission for the broker.
The records show that Assistant Vice-President Rolando
V. Aromin was in charge of the administration and
management of various real estate property held in trust
by the bank. This explains why the owner of the lot, the
broker, and the buyer all dealt with Aromin. He was the
one held out by BPI as

648

648 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

authorized to sell trust property. On December 3, 1990,


long after the disputed sale had been consummated,
Aromin defined his duties in his testimony as follows:

ATTY. VERZOSA (On Cross)


Q. You mentioned that one of your duties is the
administration and management of the real estate
properties endorsed by your clients to the bank?
A. Yes, sir.
Q. One of these duties include the disposition of real
estate properties?
A. Yes, sir.
Q. Are we to understand that you do not have to get
approval of anybody before disposition of the
properties entrusted to your bank?
A. In this particular case we have received instruction
regarding instruction (sic) from the owner directly, sir.
ATTY. SENO:
At this instance, may I request that this witness be
required to produce this afternoon the written
instruction from Mr. Awad and if he has copy of the
written offer of Technoland, the disapproved authority
to sell to Technoland if he has copy.
COURT:
So ordered.
ATTY. VERZOSA:
Q. With that answer, are we to understand that most
properties could be disposed without the approval of the
Trust Committee based on your previous answer?
A. Yes, sir.
(tsn, Dec. 3, 1990 [A.M.], pp. 34-35).

Only after Aromins testimony as a hostile witness


displeased BPI were his authority and responsibility
withdrawn by the bank.
Since Aromin was not going to sell the lot himself, for
this power was delegated to a broker, authority from the
BPI Trust Committee was sought and given. Revilla was
authorized to sell the property at P1,000.00 per square
meter. When the authority was forwarded to Aromin, he
changed the quoted selling price to P1,000.00 per square
meter. This was

649

VOL. 255, MARCH 29, 1996 649


Limketkai Sons Milling, Inc. vs. Court of Appeals

done because another broker, Technoland Properties, had


offered to sell the lot at that price. Aromin, however, was
later informed (Exh. S) that Technoland Properties was
not in the list of brokers approved by the BPI Investment
and Trust Committees to sell trust property held by the
bank.
The authority (Exh. B) given to broker Revilla, clearly
authorized him to sell the property, not merely to look for
a buyer. Revilla contacted petitioner through its Executive
Vice-President Alfonso Lim who agreed to buy the lot.
It is significant to note that, all this while, it was
Assistant Vice-President Aromin with whom all the parties
in this transaction were dealing. He was the BPI official
who gave written authority (Exh. C) for the buyer to
inspect what it was purchasing.
On July 9, 1988 Revilla wrote BPI (Exh. D) that he
had a buyer. Again, the letter was received by Aromin. On
July 11, 1988 the top officials of petitioner, Alfonso Lim and
Albino Limketkai, went to the bank to confirm the sale.
Significantly, they went to the office of Merlin Albano and
Rolando Aromin of the Real Property Management Unit
and not to any other officer, much less the Trust
Committee.
Justice Davide asks why negotiations over the price
were made with Aromin and Albano, not other officials.
The records show that Alfonso Lim trusted Revilla who
brought him to the office in charge of and managing trust
property of the bank. BPI is a big place. When Revilla
brought Alfonso Lim to Merlin Albano and Rolando Aromin
and introduced them to Lim as Vice-President and
Assistant Vice-President, respectively, there was no reason
for Lim not to assume and presuppose their authority to
dispose of the property. The visit to BPI does not in any
way reduce or lessen the authority of Revilla to sell the lot.
It shows that petitioners officials were cautious buyers and
wanted to be sure about the details and the documentation
of the transaction, considering the amount involved. They
decided to deal not only with the broker but also with the
bank officials themselves.
When the Limketkai brothers met with Albano and
Aromin, they tried to bring down the price to P900.00 per

650

650 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

square meter. Albano said it should be P1,100.00. Finally,


the parties both agreed that the lot would be sold at
P1,000.00 per square meter to Limketkai, payable in cash.
At that very moment, the contract of sale was perfected.
There was a meeting of the minds upon the subject matter
and the P1,000.00 per square meter price.
On the attempts of private respondents to denigrate the
authority of Aromin to close the deal, it may be noted that
Alfonso Lim, in all his dealings with BPI, conducted
business with Aromin. There is nothing in the records to
show that Aromin, at this point, had already been stripped
of his authority. When he testified two years after the sale,
he was still BPIs Assistant Vice-President.
In Areola vs. Court of Appeals, et al., (236 SCRA 643
[1994]), this court held:
Accordingly, 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.
(at pp. 652-653; emphasis supplied).

Petitioner stresses that Aromin was not in any way


abusing his authority nor attempting any fraud. A
corporation acts through its officers and employees whose
acts, if within the scope of their authority, bind the
corporation. The public transacted business with Vice-
President and Trust Officer Aromin. He was regularly
acting within the scope of his duties and responsibilities.
Since Assistant Vice-President and Trust Officer Aromin
himself testified that he closed the deal for BPI, there
should be no question about there being a perfected
contract of sale.
The testimony of Aromin is significant at this juncture:

Q. What transpired after the two (2) gentlemen (the


Lims) were introduced to you?
A. After the usual courtesies, Mr. Revilla informed us
that

651

VOL. 255, MARCH 29, 1996 651


Limketkai Sons Milling, Inc. vs. Court of Appeals

the purpose of their visit is to discuss the possibility of


his client, Limketkai Sons Milling, of buying the
Bagong Ilog property. Mr. Lim offered to buy the
property at P900.00 per sq. m. while Mr. Albano
counter-offered to sell at P1,100.00/sq. m. but after the
usual haggling, we finally agreed to sell the property at
the price of P1,000.00/sq. m. because this was the price
the benef icial owner of the property instructed the
bank to quote to prospective buyers as borne by the fact
that we are holding the covering letter of instruction to
sell the property at P1,000.00 per square meter.
Q. Are you telling the Court that there was meeting of the
minds between the buyer and the bank in respect to
the price of P1,000.00/sq. m.
A. Yes, sir, as far as my evaluation, there was a meeting of
the minds as far as the price is concerned, sir.
Q. After you were able to agree on the price of
P1,000.00/sq. m. since the letter of authority says the
payment must be in cash basis, what transpired later
on?
A. After we have agreed on the price, the Lim brothers
inquired on how to go about submitting the covering
proposal if they will be allowed to pay on terms. They
requested us to give them a guide on how to prepare
the corresponding letter of proposal. I recall that upon
the request of Mr. Albino Limketkai, we dictated a
guide on how to word a written firm offer that was to
be submitted by Mr. Lim to the bank setting out the
terms of payment but with the mutual agreement that
if the proposed payment on terms will not be approved
by our Trust Committee, Limketkai should pay the
price in cash.
Q. And did the buyer Limketkai agree to pay in cash in
case the offer of terms will be cash (disapproved).
A. Yes, sir.
Q. At the start did they show their willingness to pay in
cash?
A. Yes, sir.
Q. So the amount was no longer subject to the approval or
disapproval of the Committee, it is only on the terms?
A. Yes, sir.
(tsn, Dec. 3, 1990 [A.M.], pp. 16-19; emphasis and
parent hesized word, supplied).

652

652 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

The testimony of the bank official dovetails with those of


Limketkai officials involved in the transactions. Revilla
was the accredited BPI broker for the real estate which BPI
wanted to sell. Aromin was the BPI Assistant Vice-
President and Trust Officer charged with the handling of
real estate transactions and incidents. Together with the
statements of Limketkai officials, the logical and
convincing testimony of disinterested witness Revilla and
hostile witness Aromin categorically shows there was a
perfected contract of sale. NBS states that Aromin merely
pretended to testify reluctantly but was, in truth, biased in
favor of Limketkai. As one of the assistant vice-presidents
of BPI when he testified, there was every reason for
Aromin to be genuinely reluctant even when stating the
truth as it was against his employer. Aromin and Revilla
were privy to the contract. The BPI officials who testified
for respondents spoke of negative restrictions in general
but not on the contract itself. They were not present during
the negotiations and during the perfection of the contract.
Respondents denigrate Aromin for what they call his
prodigious memory for details, but this just shows that he
was well-versed in his line of work due to his long years of
handling BPI real estate matters and that he was properly
attentive to every aspect of his job.
Respondents arguments on the usual limitations on the
powers of real estate brokers in general cannot prevail over
the specific and exact wording of Revillas written
authority. Revilla was authorized to sell the lot but there
is nothing unusual about a fully authorized agent bringing
the buyer to his principal, not only to strengthen the
validity of his representations but also for easier
documentation of the sale. The fact that broker Revilla
dealt with Aromin and brought the buyers directly and
introduced them shows not only the authority of Aromin
but also that BPI represented Aromin to the public as its
official handling such matters.
BPIs contention that it had discretion to sell the lot
without having to get permission from the corporation of
the Awad family is correct. However, the fact that Kenneth
Richard Awad confirmed in writing (Exh. P) their
conformity to the

653

VOL. 255, MARCH 29, 1996 653


Limketkai Sons Milling, Inc. vs. Court of Appeals

sale of the lot at P1,000.00 per square meter inspite of


BPIs discretionary authority over the lot held in trust,
merely indicated how careful and businesslike the owner
and the bank officials were in disposing of the lot. The
letter does not in any way prove the opposite.
The real and principal bone of contention refers to
events which immediately followed the perfection of the
agreement.
Exhibit E, the request of Alfonso Lim to pay on terms,
cannot be treated in isolation of the events that caused it to
be written. As earlier stated, Limketkai and the BPI
officials agreed that the disputed lot shall be sold to
Limketkai at P1,000.00 per square meter payable in full
and in cash. The record shows that on July 11, 1988 this
agreement was finalized and tender of full payment was
made on July 18, 1988.
On July 11, however, Alfonso Lim asked if it was
possible to pay on terms. This appears to be a rational
query. It was answered in a perfectly logical manner. Vice-
Presidents Albano and Aromin answered Lim that there
was no harm in asking to pay in terms since this mode of
payment had been allowed in past cash sales. Limketkai
and the bank officials, nonetheless agreed that should term
payments not be acceptable, full cash payment as agreed
upon would be effected. This explains the background of
Exhibit E.
The ruling in Villonco Realty Co. vs. Bormaheco (65
SCRA 352 [1995]), cited in our unanimous December 1,
1995 decision bears repeating:

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 contract. (Article 1475, ibid.)
xxx
xxx
xxx
Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the

654

654 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

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).
xxx
xxx
xxx
It is true that 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. (Stuart vs. Franklin
Life Ins. Co., 105 Fed. 2nd 965, citing Sec. 79, Williston on
Contracts).
xxx
xxx
xxx
. . . the vendors change in a phrase of the offer to purchase,
which change does not essentially change the terms of the offer,
does not amount to a rejection of the offer and the tender or a
counteroffer. (Stuart vs. Franklin Life Ins. Co., supra).
(pp. 362-363; 365-366; pp. 12-18, Decision.)

The record shows that the two bank officials were the ones
who dictated the terms of payment, as Albino Limketkai
told them that he did not know how to go about drafting
the request to pay on terms. It bears emphasizing that
Exhibit E, the letter asking for term payments, was made
in the afternoon of July 11, 1988 or after the parties
already had a meeting of the minds on the contract.
Respondents ask why did Limketkai, if there was
already a perfected contract to pay at P1,000.00 per square
meter in cash, allow itself to supposedly yield to the BPI
officials blandishments on term payments, knowing that it
would endanger its position?
The answer is that Limketkai did not know. The record
shows that the buyer was dealing in good faith and at
armslength with BPI. It is a natural behavior of the buyer
to trust the word of BPI officials who represent the bank,
as the bank

655

VOL. 255, MARCH 29, 1996 655


Limketkai Sons Milling, Inc. vs. Court of Appeals

is a symbol of trust and credibility. Limketkai had no


knowledge or reason to suspect that an influential person
would enter the picture and inveigle the top officials of the
bank to rescind the perfected contract and to sell the lot to
him. Petitioner Limketkai acted without suspicion as it
saw no imminent danger to the agreement.
Around July 14, 1988, Limketkai learned that BPI was
freezing action on its July 11 request. So it tendered full
payment on July 18, 1988 before the BPI Trust Committee
could act either way on the request to pay on terms and also
before the expiry date of the authority letter of broker
Revilla, that is July 23, 1988. The tender of payment was,
therefore, a withdrawal or abrogation of Limketkais July
11 request before it would either be granted or withdrawn,
before BPI could act on the request for a change of terms.
On July 20, 1988, BPIs senior management officials
held a meeting and decided to disapprove Limketkais
request (Exh. F). But this was two days after Limketkai
had already tendered full payment and when the request
was technically moot.
On July 22, 1988, or four days after tender of payment
was not accepted, Limketkai wrote another letter (Exh.
G) in reply to BPIs letter (Exh. F). The letter of
Limketkai dated July 22, 1988 merely asked for compliance
with the agreement with Messrs. Albano and Aromin on
the original offer at P1,000.00 per square meter.
On July 22, 1988, BPI repeated its July 20, 1988
disapproval of the request to pay on terms (Exh. H). Since
BPI stated at that point that no offer to purchase was
deemed final and accepted until formally approved by the
Trust Committee, Limketkai wrote BPI on August 8, 1988
(Exh. I) explaining why the acts of BPI are a repudiation
of the contract perfected as early as July 11, 1988.
In said August 8, 1988 letter of Limketkai to Vice-
President Nelson M. Bona and Assistant Vice-President
Fernando J. Sison III, Alfonso Lim stated in part:

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656 SUPREME COURT REPORTS ANNOTATED


Limketkai Sons Milling, Inc. vs. Court of Appeals

We would like to invite your kind attention that we are the First-
come offeror of the lot. And, while the price mentioned in the
authority granted to Mr. Revilla is P1,100.00 per square meter,
nonetheless, in the negotiations between us and your responsible
bank officials done in the presence of Mr. Revilla, the price per
square meter was finally agreed at P1,000.00.
True, we requested for payment of the price on terms but, should
the terms be not accepted by your bank, we were ready to pay in
cash per our understanding with your Mr. Albano and Mr. Aromin
and which we have clearly made known in our July 21, and July 22,
1988 letters. As a matter of fact, even before July 21 and 22, 1988
we personally tendered a check for the entire purchase price to Mr.
Albano but he refused to accept the check because, according to
him, the authority to transact the sale was taken away from him.
The same proposal to pay in cash was made by us in a meeting with
Mr. Bona, Mr. Sison and other Bank officials, and we were told that
the matter will be resolved by the Bank officials concerned in due
time but nothing positive came about. We are still ready to buy the
subject property at P1,000.00 per square meter on cash basis.

BPIs Assistant Vice-President Aromin confirmed the


tender of payment on July 18, 1988 as follows:

Q. Since no action was taken on the terms that you


agreed upon with Limketkai, as according to you the
authority was taken away from you by higher
authorities as relayed to you by Mr. Albano, did you
meet Mr. Lim again on July 18, 1988?
A. Yes, sir, we met him again few days after they submit
the letter of proposal. It was on that day that Mr.
Alfonso Lim, together with Mr. Revilla met us in the
office of Mr. Albano on our side and Mr. Bobby de Leon
who was manager or the account officer handling the
account of Limketkai in the bank when Mr. Alfonso
Lim tendered a check in the amount of P33,056,000.00
representing payment on the basis of P1,000.00/sq. m.
for the property, sir.
Q. Did you accept the check?
A. It was Mr. Albano who is responsible for that and he
did not accept the check for the same reason we are no
longer authorized to handle the transaction and he
also said to present the check to the officer who is now

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Limketkai Sons Milling, Inc. vs. Court of Appeals

authorized to handle the transaction, sir.


(tsn, Dec. 3, 1990 [A.M.], pp. 28-29.)
Private respondents case primarily depends upon Exhibits
E, F, G, H, and I. The separate opinions of Justices
Davide and Francisco gave credence to respondents
position. It can be seen above that far from supporting the
movants arguments, Exhibits E, F, G, H, and I
prove exactly the opposite of what the respondents allege.
Regarding the tender of P33,056,000.00 in full payment
of the lot, respondents did not question the fact of tender
nor the authenticity of the check tendered by Limketkai,
through Alfonso Lim, to BPI. Instead, respondents tried to
show that the check was not fully funded by assailing the
non-categorical answers of the Solidbank official who
refused to answer the questions of respondents lawyers
due to the prohibition under the Secrecy of Bank Deposits
Law against a bank revealing the extent of its clients
deposits. Alfonso Lim testified that in tendering the check,
he was accompanied by a certain Bobby de Leon, a high-
ranking officer of the BPI, and he approached several other
bank executives among whom was the Vice-President,
Nelson Bona, in the presence of Sison, de Leon, Mike
Mendoza, and Ruth Bandera. The record shows that tender
of payment was also made on BPIs Fernando Sison III,
Merlin Albano, and Nelson Bona, all high-ranking BPI
officials. Inexplicably, respondents did not present any of
these officials to rebut the testimony of Alfonso Lim of his
having tendered a check for the amount of the purchase
price. At any rate, all the BPI officials to whom the check
was tendered did not question, at the time, its authenticity
nor its funding. They gave only one reason for non-
acceptance of tendereither they had no authority or their
authority to accept payment from Limketkai had been
withdrawn. If they did not possess authority earlier, there
would have been nothing to withdraw.
Whether the Statute of Frauds is applicable or not was
discussed at length before the trial court and the Court of
Appeals and in our December 1, 1995 decision.

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Limketkai Sons Milling, Inc. vs. Court of Appeals

The contention of respondents that a formal deed of sale is


essential before the contract may be perfected and proved
indicates a misapprehension of the Statute of Frauds. As
emphasized in the decision, a sale of land is valid
regardless of the form it may have been entered into
(Claudel vs. Court of Appeals, 199 SCRA 113, 199 [1991]).
The fact that the deed of sale still had to be signed and
notarized does not mean that no contract was perfected. If
the law requires a document or special legal form, the
contracting parties may require each other to observe the
formality after the contract is perfected.
If there had been a formal deed of sale in this case, there
is no need to even discuss the Statute of Frauds. Precisely
because Article 1403 of the Civil Code requires a note or
memorandum thereof and mentions secondary evidence
of its contents, the Statute of Frauds becomes material.
Taking all of the documents in this case together, there can
be no doubt that the requirement of a note or memorandum
of the sale is more than met. This issue is more fully
discussed in pages 14 to 17 of our December 1, 1995
decision.
Equally significant is the fact that Limketkais witnesses
were cross-examined at length by respondents counsels on
the perfection of the contract, the purchase price, the
tender of full cash payment, and other facts which
respondents-movants now claim must be stricken out
unless fully documented in writing. Even assuming for
purposes of argument that the perfected contract infringes
the Statute of Frauds, in Abrenica vs. Gonda (34 Phil. 379
[1916], this Court ruled that the questioned contract is
ratified when the defense fails to object or asks questions
on cross-examination. As decided in Abrenica and later
cases such Talosig vs. Vda. de Nieba (43 SCRA 472 [1972]),
assuming that parole evidence was initially inadmissible,
the same became competent and admissible because of the
cross-examination. The cross-examination on the contract
is deemed a waiver of the defense of the statute of frauds
(Vitug, Compendium of Civil Law and Jurisprudence, 1993
Revised Edition, p. 563).
There is no reason to doubt the aptness of the
documents and the reliable nature of the testimony,
especially the

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Limketkai Sons Milling, Inc. vs. Court of Appeals
answers during cross-examination, showing a meeting of
the minds of buyer and seller as to the subject matter of the
contract and the cause of the obligation.
Regarding the buyer-in-good-faith arguments of NBS,
perhaps all that needs to be said is that it is readily seen
that any person who buys property under litigation which
is covered by a notice of lis pendens subjects himself to the
outcome of the litigation. Respondents try to explain the
allegedly true nature of the petitioners so-called badges of
fraudBPI dealing directly through top executives with an
influential buyer when the lot was supposed to be sold
through brokers; there were personal, family, and business
relationships between BPI Senior Vice-President Edmundo
Barcelon and NBS President Alfredo Ramos; NBS offered
Limketkai a big amount through broker George Feliciano
to drop the case and to lift the notice of lis pendens; the
vendor did not guarantee its title to the land and the right
of the buyer to proceed against the seller if the latter sold
property no longer owned by it and instead had the buyer
guaranteeing its own purchase; and NBSs construction on
the property was characterized by easy portability. The
explanations are far from convincing. The confluence of all
these factors shows that there was indeed collusion
between a top BPI executive and the NBS president whose
relationship was such that BPI was willing to renege on its
obligations and rescind a perfected contract with an earlier
buyer. Of course, seller BPI was protected because buyer
NBS assumed all risks.
NBS refutes the arguments of Limketkai on the
temporary nature and easy portability of its construction
on valuable real estate. It states that the building was
destroyed by fire. Whether or not the temporary nature of
the building may still be proved, the record shows that
NBS was acting in bad faith in trying to buy property
which was earlier sold to another buyer and buying it
inspite of notice of lis pendens. BPI Vice-President Barcelon
and NBS President Ramos also gave conflicting testimony
on similar points. Ramos strongly denied friendship or even
acquaintanceship with Barcelon. He denied even discussing
with Barcelon his desire to buy the

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Limketkai Sons Milling, Inc. vs. Court of Appeals
property. Barcelon, in turn, admitted his friendship with
Ramos, a valued BPI client, and their taking lunch
together at which time the sale to NBS was discussed.
There was no reason for Ramos to deny the friendship or
their discussion of the sale even as Barcelon was innocently
contradicting him, unless the witness wanted to hide his
bad faith from the trial court.
The chain or circumstances in this case shows that the
participants acted in the natural order of things and that
the sale to Limketkai was not only perfected but appears
regular and aboveboard.
The resolution of the instant motions for reconsideration
hinges on the credibility of witnesses and the weight to be
given to the documentary and other pieces of evidence. The
observations and conclusions of the trial judge who directly
heard the witnesses and who personally presided over the
presentation and offer of other evidence, especially as to
the credibility of witnesses for both sides, is significant in
this regard.
I find respondents criticisms of the trial court and their
skepticism of this Courts statements not only totally
unfounded but also tastelessly disdainful. A losing litigant
in a case where both the evidence and the law are clearly
against its position cannot, after a decision has been
rendered, get a reversal through such tactics. The motions
must be resolved on their merits.
I, therefore, vote to deny the two motions for
reconsideration.
Motion for reconsideration granted. Judgment of
December 1, 1995 set aside, that of the Court of Appeals
affirmed in toto.

Note.A contract of sale being consensual, it is


perfected by the mere consent of the parties. (Aspi vs. Court
of Appeals, 236 SCRA 94 [1994])

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661
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