G.R. No.

118509 December 1, 1995

LIMKETKAI SONS MILLING, INC., petitioner,

vs.

COURT OF APPEALS, BANK OF THE PHILIPPINE ISLANDS and NATIONAL BOOK

STORE, respondents.

MELO, J.:

The issue in the petition before us is whether or not there was a perfected contract between petitioner
Limketkai Sons Milling, Inc. and respondent Bank of the Philippine Islands (BPI) covering the sale of a
parcel of land, approximately 3.3 hectares in area, and located in Barrio Bagong Ilog, Pasig City, Metro
Manila.

Branch 151 of the Regional Trial Court of the National Capital Judicial Region stationed in Pasig ruled that
there was a perfected contract of sale between petitioner and BPI. It stated that there was mutual consent
between the parties; the subject matter is definite; and the consideration was determined. It concluded that
all the elements of a consensual contract are attendant. It ordered the cancellation of a sale effected by BPI to
respondent National Book Store (NBS) while the case was pending and the nullification of a title issued in
favor of said respondent NBS.

Upon elevation of the case to the Court of Appeals, it was held that no contract of sale was perfected because
there was no concurrence of the three requisites enumerated in Article 1318 of the Civil Code. The decision of
the trial court was reversed and the complaint dismissed.

Hence, the instant petition.

Shorn of the interpretations given to the acts of those who participated in the disputed sale, the findings of
facts of the trial court and the Court of Appeals narrate basically the same events and occurrences. The
records show that on May 14, 1976, Philippine Remnants Co., Inc. constituted BPI as its trustee to manage,
administer, and sell its real estate property. One such piece of property placed under trust was the disputed
lot, a 33,056-square meter lot at Barrio Bagong Ilog, Pasig, Metro Manila covered by Transfer Certificate of
Title No. 493122.

On June 23, 1988, 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.

Broker Revilla contacted Alfonso Lim of petitioner company who agreed to buy the land. On July 8, 1988,
petitioner's officials and Revilla were given permission by Rolando V. Aromin, BPI Assistant Vice-President,
to enter and view the property they were buying.

On July 9, 1988, Revilla formally informed BPI that he had procured a buyer, herein petitioner. On July 11,
1988, 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.

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.
It was Albano who dictated the terms under which the installment payment may be approved, and acting
thereon, Alfonso Lim, on the same date, July 11, 1988, wrote BPI through Merlin Albano embodying the
payment initially of 10% and the remaining 90% within a period of 90 days.

Two or three days later, petitioner learned that its offer to pay on terms had been frozen. Alfonso Lim went
to BPI on July 18, 1988 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.

An action for specific performance with damages was thereupon filed on August 25, 1988 by petitioner
against BPI. In the course of the trial, BPI informed the trial court that it had sold the property under
litigation to NBS on July 14, 1989. The complaint was thus amended to include NBS.

On June 10, 1991, the trial court rendered judgment in the case as follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants

Bank of the Philippine Islands and National Book Store, Inc.: —

1. Declaring the Deed of Sale of the property covered by T.C.T. No. 493122 in the name of
the Bank of the Philippine Islands, situated in Barrio Bagong Ilog, Pasig, Metro Manila, in
favor of National Book Store, Inc., null and void;

2. Ordering the Register of Deeds of the Province of Rizal to cancel the Transfer Certificate
of Title which may have been issued in favor of National Book Store, Inc. by virtue of the
aforementioned Deed of Sale dated July 14, 1989;

3. Ordering defendant BPI, upon receipt by it from plaintiff of the sum of P33,056,000.00,
to execute a Deed of Sale in favor of plaintiff of the aforementioned property at the price of
P1,000.00 per square meter; in default thereof, the Clerk of this Court is directed to
execute the said deed;

4. Ordering the Register of Deeds of Pasig, upon registration of the said deed, whether
executed by defendant BPI or the Clerk of Court and payment of the corresponding fees
and charges, to cancel said T.C.T. No. 493122 and to issue, in lieu thereof, another transfer
certificate of title in the name of plaintiff;

5. Ordering defendants BPI and National Book Store, Inc. to pay, jointly and severally, to
the plaintiff the sums of P10,000,000.00 as actual and consequential damages and
P150,000.00 as attorney's fees and litigation expenses, both with interest at 12% per
annum from date hereof;

6. On the cross-claim of defendant bank against National Book Store, ordering the latter to
indemnify the former of whatever amounts BPI shall have paid to the plaintiff by reason
hereof; and

7. Dismissing the counterclaims of the defendants against the plaintiff and National Book
Store's cross-claim against defendant bank.

Costs against defendants.

(pp. 44-45, Rollo.)

As earlier intimated, upon the decision being appealed, the Court of Appeals (Buena [P], Rasul, and
Mabutas, JJ.), on August 12, 1994, reversed the trial court's decision and dismissed petitioner's complaint
for specific performance and damages.
The issues raised by the parties revolve around the following four questions:

(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?

There is no dispute in regard to the following: (a) that BPI as trustee of the property of Philippine Remnant
Co. authorized a licensed broker, Pedro Revilla, to sell the lot for P1,000.00 per square meter; (b) that
Philippine Remnants confirmed the authority to sell of Revilla and the price at which he may sell the lot; (c)
that petitioner and Revilla agreed on the former buying the property; (d) that BPI Assistant Vice-President
Rolando V. Aromin allowed the broker and the buyer to inspect the property; and (e) that BPI was formally
informed about the broker having procured a buyer.

The controversy revolves around the interpretation or the significance of the happenings or events at this
point.

Petitioner states that the contract to sell and to buy was perfected on July 11, 1988 when its top officials and
broker Revilla finalized the details with BPI Vice-Presidents Merlin Albano and Rolando V. Aromin at the
BPI offices.

Respondents, however, contend that what transpired on this date were part of continuing negotiations to
buy the land and not the perfection of the sale. The arguments of respondents center on two propositions —
(1) Vice-Presidents Aromin and Albano had no authority to bind BPI on this particular transaction and (2)
the subsequent attempts of petitioner to pay under terms instead of full payment in cash constitutes a
counter-offer which negates the existence of a perfected contract.

The alleged lack of authority of the bank officials acting in behalf of BPI is not sustained by the record.

At the start of the transactions, broker Revilla by himself already had full authority to sell the disputed lot.
Exhibit B dated June 23, 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 . . . ." We agree with Revilla's testimony that the authority given
to him was to sell and not merely to look for a buyer, as contended by respondents.

Revilla testified that at the time he perfected the agreement to sell the litigated property, he was acting for
and in behalf of the 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. If BPI could give the authority to sell to a
licensed broker, we see 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.

Respondent BPI alleges that sales of trust property need the approval of a Trust Committee made up of top
bank officials. It appears from the record that this trust committee meets rather infrequently and it does not
have to pass on regular transactions.

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. Aromin had been with the BPI Trust Department since 1968 and
had been involved in the handling of properties of beneficial owners since 1975 (tsn., December 3, 1990, p.
5).

Exhibit 10 of BPI, the February 15, 1989 letter from Senior Vice-President Edmundo Barcelon, while
purporting to inform Aromin of his poor performance, is an admission of BPI that Aromin 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, Vice-
President Merlin Albano had been with the Real Estate Division for only one week but he was present and
joined in the discussions with petitioner.

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.

Respondents state and the record shows 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.

Petitioner points to Areola vs. Court of Appeals (236 SCRA 643 [1994]) which cited Prudential Bank
vs. Court of Appeals (22 SCRA 350 [1993]), which in turn relied upon McIntosh vs. Dakota Trust Co. (52
ND 752, 204 NW 818, 40 ALR 1021), to wit:

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.)

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 Aromin's testimony. Aromin was
charged with poor performance but his dismissal was only sometime after he testified in court. More than
two long years after the disputed transaction, he was still Assistant Vice-President of BPI.

The records show that the letter of instruction dated June 14, 1988 from the owner of Philippine Remnants
Co. regarding the sale of the firm's property was addressed to Aromin. The P1,000.00 figure on the first page
of broker Revilla's authority to sell was changed to P1,100.00 by Aromin. The price was later brought down
again to P1,000.00, also by Aromin. The permission given to petitioner to view the lot was signed by Aromin
and honored by the BPI guards. The letter dated July 9, 1988 from broker Revilla informing BPI that he had
a buyer was addressed to Aromin. The conference on July 11, 1988 when the contract was perfected was with
Aromin and Vice-President Albano. Albano and Aromin were the ones who assured petitioner Limketkai's
officers that term payment was possible. It was Aromin who called up Miguel Bicharra of Philippine
Remnants to state that the BPI rejected payment on terms and it was to Aromin that Philippine Remnants
gave the go signal to proceed with the cash sale. 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, Aromin's alleged inefficiency is not proof that he was not fully clothed with authority to
bind BPI.

Respondents' second contention is that there was no perfected contract because petitioner's request to pay
on terms constituted a counter-offer and that negotiations were still in progress at that point.

Asst. Vice-President Aromin was subpoenaed as a hostile witness for petitioner during trial. Among his
statements is one to the effect that —

. . . Mr. Lim offered to buy the property at P900.00 per square meter while Mr. Albano
counter-offered to sell the property at P1,100.00 per square meter but after the usual
haggling, we finally agreed to sell the property at the price of P1,000.00 per square meter
...
 (tsn, 12-3-90, p. 17; Emphasis supplied.)

Asked if there was a meeting of the minds between the buyer and the bank in respect to the price of
P1,000.00 per square meter, Aromin answered:

Yes, sir, as far as my evaluation there was a meeting of the minds as far as the price is
concerned, sir.

(ibid, p. 17.)

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." (ibid,
p. 19). This is incontrovertibly established in the following testimony of Aromin:

A. After you were able to agree on the price of P1,000.00/sq. m., since
the letter or authority says the payment must be in cash basis, what
transpired later on?

B. 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 his proposed
payment on terms will not be approved by our trust committee,
Limketkai should pay the price in cash.

Q And did 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 You said that the agreement on terms was to be submitted to the trust
committee for approval, are you telling the Court that what was to be
approved by the trust committee was the provision on the payment on
terms?

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, pp. 18-19; Emphasis supplied.)

The record shows that if payment was in cash, either broker Revilla or Aromin had full authority. But
because petitioner took advantage of the suggestion of Vice-President 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.

In its Comment and Memorandum, respondent NBS cites Ang Yu Asuncion vs. Court of Appeals (238 SCRA
602 [1994]) to bolster its case. Contrarywise, it would seem that the legal principles found in said case
strengthen and support petitioner's submission that the contract was perfected upon the meeting of the
minds of the parties.

The negotiation or preparation stage started with the authority given by Philippine Remnants to BPI to sell
the lot, followed by (a) the authority given by BPI and confirmed by Philippine Remnants to broker Revilla to
sell the property, (b) the offer to sell to Limketkai, (c) the inspection of the property and finally (d) 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 petitioner Limketkai, agreed to buy the disputed lot at P1,000.00 per
square meter. Aside from this there was the earlier agreement between petitioner and the authorized broker.
There was a concurrence of offer and acceptance, on the object, and on the cause thereof.

The phases that a contract goes through may be summarized as follows:

a. preparation, conception or generation, which is the period of negotiation and

bargaining, ending at the moment of agreement of the parties;

b. perfection or birth of the contract, which is the moment when the parties come to agree
on the terms of the contract; and

c. consummation or death, which is the fulfillment or performance of the terms agreed

upon in the contract (Toyota Shaw, Inc. vs. Court of Appeals, G.R. No. 116650, May 23,
1995).

But in more graphic prose, we turn to Ang Yu Asuncion, per Justice Vitug:

. . . 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.

Until the contract is perfected, it cannot, as an independent source of obligation, serve as a

binding juridical relation. In sales, particularly, to which the topic for discussion about the
case at bench belongs, the contract is perfected when a person, called the seller, obligates
himself, for a price certain, to deliver and to transfer ownership of a thing or right to
another, called the buyer, over which the latter agrees.

(238 SCRA 602; 611 [1994].)

In Villonco Realty Company vs. Bormaheco (65 SCRA 352 [1975]), bearing factual antecendents similar to
this case, the Court, through Justice Aquino (later to be Chief Justice), quoting authorities, upheld the
perfection of the contract of sale thusly:
 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.)

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 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 vendor's 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 counter-offer. (Stuart vs. Franklin Life Ins. Co., supra.)

(at pp. 362-363; 365-366.)

In the case at bench, the allegation of NBS that there was no concurrence of the offer and acceptance upon
the cause of the contract is belied by the testimony of the very BPI official with whom the contract was
perfected. Aromin and Albano concluded the sale for BPI. 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, 199 SCRA 113, 119 [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
(Vitug, Compendium of Civil Law and Jurisprudence, 1993 Revised Edition, p. 552). 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).

Regarding the admissibility and competence of the evidence adduced by petitioner, respondent Court of
Appeals ruled that because the sale involved real property, the statute of frauds is applicable.

In any event, petitioner cites Abrenica vs. Gonda (34 Phil. 739 [1916]) wherein 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 succinct words of Justice Araullo still ring in judicial cadence:

As no timely objection or protest was made to the admission of the testimony of the
plaintiff with respect to the contract; and as the motion to strike out said evidence came
too late; and, furthermore, as the defendants themselves, by the cross-questions put by
their counsel to the witnesses in respect to said contract, tacitly waived their right to have
it stricken out, that evidence, therefore, cannot be considered either inadmissible or
illegal, and court, far from having erred in taking it into consideration and basing his
judgment thereon, notwithstanding the fact that it was ordered to be stricken out during
the trial, merely corrected the error he committed in ordering it to be so stricken out and
complied with the rules of procedure hereinbefore cited.

(at p. 748.)
In the instant case, counsel for respondents cross-examined petitioner's 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. Under the Abrenica 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 (Vitug, Compendium of Civil Law and Jurisprudence, 1993 Revised Edition, supra, p.
563).

The reason for the rule is that as pointed out in Abrenica "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" (pp. 747-748).

Moreover, 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.

We cite the findings of the trial court on this matter:

In accordance with the provisions of Art. 1403 of the Civil Code, 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. Thus, it has been held:

The Statute of Frauds, embodied in Article 1403 of the Civil Code of the
Philippines, does not require that the contract itself be written. The
plain test of Article 1403, Paragraph (2) is clear that a written note or
memorandum, embodying the essentials of the contract and signed by
the party charged, or his agent suffices to make the verbal agreement
enforceable, taking it out of the operation of the statute. (Emphasis
supplied)

xxx xxx xxx

In the case at bar, the complaint in its paragraph 3 pleads that the deal
had been closed by letter and telegram (Record on Appeal, p. 2), and the
letter referred to was evidently the one copy of which was appended as
Exhibit A to plaintiffs opposition to the motion to dismiss. The letter,
transcribed above in part, together with the one marked as Appendix B,
constitute an adequate memorandum of the transaction. They are
signed by the defendant-appellant; refer to the property sold as a Lot in
Puerto Princesa, Palawan, covered by T.C.T. No. 62, give its area as
1,825 square meters and the purchase price of four (P4.00) pesos per
square meter payable in cash. We have in them, therefore, all the
essential terms of the contract and they satisfy the requirements of the
Statute of Frauds.

(Footnote 26, Paredes vs. Espino, 22 SCRA 1000 [1968]).

While there is no written contract of sale of the Pasig property executed by BPI in favor of
plaintiff, there are abundant notes and memoranda extant in the records of this case
evidencing the elements of a perfected contract. There is Exhibit P, the letter of Kenneth
Richard Awad addressed to Roland Aromin, authorizing the sale of the subject property at
the price of P1,000.00 per square meter giving 2% commission to the broker and
instructing that the sale be on cash basis. Concomitantly, on the basis of the instruction of
Mr. Awad, (Exh. P), an authority to sell, (Exh. B) was issued by BPI to Pedro Revilla, Jr.,
representing Assetrade Co., authorizing the latter to sell the property at the initial quoted
price of P1,000.00 per square meter which was altered on an unaccepted offer by
 Technoland. After the letter authority was issued to Mr. Revilla, a letter authority was
signed by Mr. Aromin allowing the buyer to enter the premises of the property to inspect
the same (Exh. C). On July 9, 1988, Pedro Revilla, Jr., acting as agent of BPI, wrote a letter
to BPI informing it that he had procured a buyer in the name of Limketkai Sons Milling,
Inc. with offices at Limketkai Bldg., Greenhills, San Juan, Metro Manila, represented by its
Exec. Vice-President, Alfonso Lim (Exh. D). On July 11, 1988, the plaintiff, through
Alfonso Lim, wrote a letter to the bank, through Merlin Albano, confirming their
transaction regarding the purchase of the subject property (Exh. E). On July 18, 1988, the
plaintiff tendered upon the officials of the bank a check for P33,056,000.00 covered by
Check No. CA510883, dated July 18, 1988. On July 1, 1988, Alfonso Zamora instructed Mr.
Aromin in a letter to resubmit new offers only if there is no transaction closed with
Assetrade Co. (Exh. S). Combining all these notes and memoranda, the Court is convinced
of the existence of perfected contract of sale. Aptly, the Supreme Court, citing American
cases with approval, held:

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,
as discussed respectively infra secs. 178-200, and infra secs. 201-205, 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, as considered respectively infra secs. 179-200 and secs. 201-
215.

(pp. 460-463, Original RTC Record).

The credibility of witnesses is also decisive in this case. The trial court directly observed the demeanor and
manner of testifying of the witnesses while the Court of Appeals 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.

(pp. 454-455, Original RTC Record.)

On the matter of credibility of witnesses where the findings or conclusions of the Court of Appeals and the
trial court are contrary to each other, the pronouncement of the Court in Serrano vs. Court of Appeals (196
SCRA 107 [1991]) bears stressing:

It is a settled principle of civil procedure that the conclusions of the trial court regarding
the credibility of witnesses are entitled to great respect from the appellate courts because
the trial court had an opportunity to observe the demeanor of witnesses while giving
testimony which may indicate their candor or lack thereof. While the Supreme Court
ordinarily does not rule on the issue of credibility of witnesses, that being a question of
fact not properly raised in a petition under Rule 45, the Court has undertaken to do so in
exceptional situations where, for instance, as here, the trial court and the Court of Appeals
arrived at divergent conclusions on questions of fact and the credibility of witnesses.

(at p. 110.)

On the fourth question of whether or not NBS is an innocent purchaser for value, the record shows that it is
not. It acted in bad faith.

Respondent 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 Limketkai.

Petitioner cites several badges of fraud indicating that BPI and NBS conspired to prevent petitioner from
paying the agreed price and getting possession of the property:

1. The sale was supposed to be done through an authorized broker, but top officials of BPI personally and
directly took over this particular sale when a close friend became interested.

2. BPI Senior Vice President Edmundo Barcelon admitted that NBS's President, Alfredo Ramos, was his
friend; that they had lunch meetings before this incident and discussed NBS's purchase of the lot. Barcelon's
father was a business associate of Ramos.

3. George Feliciano, in behalf of NBS, offered P5 million and later P7 million if petitioner would drop the
case and give up the lot. Feliciano went to petitioner's office and haggled with Alfonso Lim but failed to
convince him inspite of various and increasing offers.

4. In a place where big and permanent buildings abound, NBS had constructed only a warehouse marked by
easy portability. The warehouse is bolted to its foundations and can easily be dismantled.

It is the very nature of the deed of absolute sale between BPI and NBS which, however, 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 to proceed 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 BPI's title be found defective.

NBS, in its reply memorandum, does not refute or explain the above circumstance squarely. It simply cites
the badges of fraud mentioned in Oria vs. McMicking (21 Phil. 243 [1912]) 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.

The Court of Appeals did not discuss the issue of damages. Petitioner cites the fee for filing the amended
complaint to implead NBS, sheriffs fees, registration fees, plane fare and hotel expenses of Cebu-based
counsel. Petitioner also claimed, and the trial court awarded, damages for the profits and opportunity losses
caused to petitioner's business in the amount of P10,000,000.00.

We rule that the 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.

Prescinding from the above, we rule that 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.

WHEREFORE, the questioned judgment of the Court of Appeals is hereby REVERSED and SET ASIDE. The
June 10, 1991 judgment of Branch 151 of the Regional Trial Court of The National Capital Judicial Region
stationed in Pasig, Metro Manila is REINSTATED except for the award of Ten Million Pesos
(P10,000,000.00) damages which is hereby DELETED.

SO ORDERED