Limketkai Sons Milling, Inc. vs. Court of Appeals PDF

8/23/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 250
VOL. 250, DECEMBER 1, 1995 523

Limketkai Sons Milling, Inc. vs. Court of Appeals
*
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.
Sales; Agency; Brokers; Banks and Banking; If a bank could

give the authority to sell to a licensed broker, the Court sees no
reason to doubt the authority to sell of two of the bank’s vice-
presidents whose precise job therein was to manage and
administer real estate property.—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 x x x.” 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.
Same; Contracts; The Phases in Contract-Making.—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).
Same; Same; Statute of Frauds; The fact that the deed of sale
still has to be signed and notarized does not mean that no contract
www.central.com.ph/sfsreader/session/000001741af41025b178d3eb003600fb002c009e/t/?o=False 1/24
has already been perfected—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.—In the case at bench,
the allegation of NBS that
_____________
* THIRD DIVISION.
524
524 SUPREME COURT REPORTS ANNOTATED
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).
Same; Same; Same; Cross-examination on the contract is
deemed a waiver of the defense of the Statute of Fraud.—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. 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).
Same; Same; Same; 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, which
memorandum may be found in several writings, not necessarily in
one document.—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.
525
VOL. 250, DECEMBER 1, 1995 525
Same; Evidence; Witnesses; 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.—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.
Same; Badges of Fraud; A buyer could not be considered an
innocent purchaser for value where it ignored the notice of lis
pendens on the title when it bought the lot.—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.
Same; Same; The circumstance that in the deed of absolute
sale, 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,
the reverse is found, clearly negates any allegation of good faith on
the part of the buyer.—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 BPFs title be found
defective.
526
Same; Same; 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.—NBS, in its reply memorandum, does not refute
or explain the above circumstance squarely. It simply cites the
badges of fraud mentioned in Oria v. 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.
Same; Damages; The profits and the use of the land which
were denied to vendee because of the non-compliance or
interference with a solemn obligation by the vendor and a third
party is somehow made up by the appreciation of the land values
in the meantime.—The Court of Appeals did not discuss the issue
of damages. Petitioner cites the fee for filing the amended

complaint to implead NBS, sheriff’s fees, registration fees, place
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.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Amadeo D. Seno for petitioner.
Manahan, Cornago, De Vera, Aquino & Associates for
National Book Store, Inc.
Alfonso B. Versoza for Bank of P.I.
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
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VOL. 250, DECEMBER 1, 1995 527

area, and located in Barrio Bagong Hog, 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 33,056square meter lot at
Barrio Bagong Hog, 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
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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:
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VOL. 250, DECEMBER 1, 1995 529

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:
530

(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
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VOL. 250, DECEMBER 1, 1995 531

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 x x x.” 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
532

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
Mclntosh 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
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VOL. 250, DECEMBER 1, 1995 533

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
534

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
535
VOL. 250, DECEMBER 1, 1995 535

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 fromthe time the
prospective contracting parties indicate interest in the contract
tothe time the contract is concluded (perfected). The perfection of
the contract takes place upon
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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 antecedents 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
537
VOL. 250, DECEMBER 1, 1995 537

“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 v. 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 v. 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 v. 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
538

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
crossexamination 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/arewritten
evidence that such a contract was
539
VOL. 250, DECEMBER 1, 1995 539

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. (Italics supplied)
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 plaintiff’s 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
540

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
testify-
541
VOL. 250, DECEMBER 1, 1995 541

ing 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 v. Court of Appeals (196 SCRA 107 [1991]) bears
stressing:
542

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
543
VOL. 250, DECEMBER 1, 1995 543

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 BPF’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 v. 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, sheriff’s 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
544

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.
Feliciano (Chairman), Romero, Vitug and

Panganiban, JJ., concur.
Judgment reversed and set aside. That of the court a quo

reinstated with deletion of the award of P10,000,000.00
damages.
Notes.—In case of fraud, bad faith, malice or wanton

attitude, the guilty party is liable for all damages which
may be reasonably attributed to the non-performance of the
obligations. (Legaspi Oil Co., Inc. vs. Court of Appeals, 224
SCRA 213 [1993])
It is imperative for a purchaser of land which is
possessed by persons not the vendor to inquire and
investigate into the rights or title of those in possession.
(Bautista vs. Court of Appeals, 230 SCRA 446 [1994])
——o0o——
545
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8/23/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 250

VOL. 250, DECEMBER 1, 1995 523

LIMKETKAI SONS MILLING, INC., petitioner, vs.

Sales; Agency; Brokers; Banks and Banking; If a bank could

has already been perfected—the requisite form under Article 1458

524 SUPREME COURT REPORTS ANNOTATED

Limketkai Sons Milling, Inc. vs. Court of Appeals

there was no concurrence of the offer and acceptance upon the

inadmissible, the same became competent and admissible because

VOL. 250, DECEMBER 1, 1995 525

Limketkai Sons Milling, Inc. vs. Court of Appeals

Same; Evidence; Witnesses; It is a settled principle of civil

value, the record shows that it is not. It acted in bad faith.

526 SUPREME COURT REPORTS ANNOTATED

Limketkai Sons Milling, Inc. vs. Court of Appeals

Same; Same; There are innumerable situations where fraud is

of damages. Petitioner cites the fee for filing the amended

PETITION for review on certiorari of a decision of the

The facts are stated in the opinion of the Court.

The issue in the petition before us is whether or not there

VOL. 250, DECEMBER 1, 1995 527

area, and located in Barrio Bagong Hog, Pasig City, Metro

of the trial court was reversed and the complaint

528 SUPREME COURT REPORTS ANNOTATED

officials, Alfonso Lim and Albino Limketkai, went to BPI to

the term payment be disapproved, then the price shall be

VOL. 250, DECEMBER 1, 1995 529

WHEREFORE, judgment is hereby rendered in favor of plaintiff

1. Declaring the Deed of Sale of the property covered by

4. Ordering the Register of Deeds of Pasig, upon registration

As earlier intimated, upon the decision being appealed, the

530 SUPREME COURT REPORTS ANNOTATED

(1) Was there a meeting of the minds between

There is no dispute in regard to the following: (a) that BPI

VOL. 250, DECEMBER 1, 1995 531

June 23, 1988 states, “this will serve as your authority to

no reason to doubt the authority to sell of the two BPI Vice-

532 SUPREME COURT REPORTS ANNOTATED

there was no need to withdraw authority which he never

Accordingly a banking corporation is liable to innocent third

In the present case, the position and title of Aromin alone,

VOL. 250, DECEMBER 1, 1995 533

President Albano. Albano and Aromin were the ones who

. . . Mr. Lim offered to buy the property at P900.00 per square

Asked if there was a meeting of the minds between the

Yes, sir, as far as my evaluation there was a meeting of the minds

The requirements in the payment of the purchase price on

534 SUPREME COURT REPORTS ANNOTATED

payment, the possibility of paying on terms was referred to

disapproval of the Committee, it is only on the terms.”

A. After you were able to agree on the price of

The record shows that if payment was in cash, either

VOL. 250, DECEMBER 1, 1995 535

payment in full. The BPI rejected the payment.

a. preparation, conception or generation, which is the period

But in more graphic prose, we turn to Ang Yu Asuncion,

. . . A contract undergoes various stages that include its

536 SUPREME COURT REPORTS ANNOTATED