LIMKETKAI SONS MILLING INC., petitioner, vs.

COURT OF APPEALS,
ET AL., respondents.
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 the Philippine Islands (BPI) and National Book Store (NBS). Petitioner
Limketkai Sons Milling, Inc., opposed the motion and filed its Consolidated Comment, to
which private respondent 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 deliberations in this case. The Honorable Chief Justice
declined.
*

[1]

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 to I,
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
subject property covered by TCT 493122 (formerly TCT No. 27324) has [been]
assigned, transferred, conveyed and set over unto the Trustee expressly authorizing
and empowering the same in its own name to sell and 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, to sell the Trust property or any lot or
parcel thereof.
[2]

[3]

[4]

[5]

[6]

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 P36,361,600.000.

Terms :

Cash

Brokers Commission :

Others :

2%

a) Docuemntary (sic) stamps to be affixed 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 nonexclusive 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: Italics supplied]

security guard on duty at subject property to allow him (Revilla, Jr.) and his
companion to conduct an ocular inspection of the premises.
[7]

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

the latter that he has procured a prospective buyer.
[8]

Exhibit E is the written proposal submitted by Alfonso Y. Lim in behalf of

petitioner Limketkai Sons Milling, Inc., offering to buy the subject property at
P1,000.00/sq. m.
[9]

Exhibit F is respondent BPIs letter addressed to petitioner pointing out that

petitioners proposal embodied in its Letter (Exhibit E) has been rejected by the
respondent BPIs Trust Committee.
[10]

Exhibit G is petitioners letter dated July 22, 1988 reiterating its offer to buy the
subject property at P1,000/sq. m. but now on cash basis.
[11]

Exhibit H refers to respondent BPIs another rejection of petitioners offer to buy

the property at P1,000/sq. m.
[12]

And finally, Exhibit I is a letter by petitioner addressed to respondent BPI

claiming the existence of a perfected contract of sale of the subject property between
them.
[13]

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:

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.
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. Instead, what merely appears
therefrom is respondent BPIs repeated rejection of the petitioners 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 is conditioned upon or qualified by its proposed terms to which
respondent BPI must first agree with.
[14]

[15]

[16]

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

xxx.

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.
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
[17]

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 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.
[18]

The Court also finds as unconvincing petitioners representation under Exhibits E,

G, and I that its proposal to buy the subject property for P 1,000/ 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)

xxx

xxx

xxx

(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

xxx.

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., BPI, and did not constitute the memoranda or
notes that the law speaks of. To consider them sufficient compliance with the Statute
[19]

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:

xxx. 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. Pano, 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 of Frauds.
[20]

[Note: Italics added]

Corrolarily, as the petitioners exhibits failed to establish the perfection of the
contract of sale, oral testimony cannot take their place without violating the parol
evidence rule. It 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 de persistent objection made by private respondents counsels as early
as the first scheduled hearing. While said counsels cross-examined the witnesses, this,
to our view, did not constitute a waiver of the parol evidence rule. The Talosig 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 the proper time, i.e., x x x at the time question is
[21]

[22]

[23]

asked, and that if not so made it will be understood to have been waived, do not apply
as these two 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:
[24]

[25]

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 a verbal contract to sell more specifically the answers contained
in page 3, Par. 1, the whole of the answer.
x x x

xxx

x x x.

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, Feb. 28, 1989, pp. 3-5;Italics
supplied.)
[26]

xxx

ATTY. CORNAGO:

xxx

xxx

Before we proceed, we would like to make of record our continuing objection

insofar as questions and answers propounded to Pedro Revilla datedFebruary
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 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 inadmissible.
[28]

[Italics 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.