[Syllabus]

THIRD DIVISION
[G.R. No. 118509. March 29, 1996]

LIMKETKAI SONS MILLING INC., petitioner, vs. COURT OF APPEALS,

ET AL., respondents.
RESOLUTION
FRANCISCO, J.:

In this motion for reconsideration, the Court is called upon to take a

second hard look on its December 1, 1995 decision reversing and setting
aside respondent Court of Appeals judgment of August 12, 1994 that
dismissed petitioner Limketkai Sons Milling Inc.s complaint for specific
performance and damages against private respondents Bank of the Philippine
Islands (BPI) and National Book Store (NBS). Petitioner Limketkai Sons
Milling, Inc., opposed the motion and filed its Consolidated Comment, to which
private respondent NBS filed a Reply. Thereafter, petitioner filed its
Manifestation and Motion for the voluntary inhibition of Chief Justice Andres R.
Narvasa from taking part in any subsequent deliberations in this case. The
Honorable Chief Justice declined.
*

[1]

The Court is swayed to reconsider.

The bottomline issue is whether or not a contract of sale of the subject
parcel of land existed between the petitioner and respondent BPI. A reevaluation of the attendant facts and the evidence on record, specifically
petitioners Exhibits A to I, yields the negative. To elaborate:
Exhibit A is a Deed of Trust dated May 14, 1976, entered into between
Philippine Remnants Co. Inc., as grantor, and respondent BPI, as trustee,
stating that subject property covered by TCT 493122 (formerly TCT No.
27324) has [been] assigned, transferred, conveyed and set over unto the
Trustee expressly authorizing and empowering the same in its own name to
sell and dispose of said trust property or any lot or parcel thereof and to
[2]

[3]

[4]

[5]

facilitate [the] sale of the trust property, the Trustee may engage the services
of real estate broker or brokers, under such terms and conditions which the
Trustee may deem proper, to sell the Trust property or any lot or parcel
thereof.
[6]

Exhibit B is a Letter of Authority for the petitioner issued by respondent

BPI to Pedro A. Revilla, Jr., a real estate broker, to sell the property pursuant
to the Deed of Trust. The full text of Exhibit B is hereby quoted:
Trust Account No. 75-09
23 June 1988
ASSETRADE CO.
70 San Francisco St.
Capitol Subdivision
Pasig, Metro Manila
Attention:

Mr. Pedro P. Revilla, Jr.

Managing Partner

Gentlemen:
This will serve as your authority to sell on an as is where is basis the property
located at Pasig Blvd., Bagong Ilog, Pasig, Metro Manila, under the following details
and basic terms and conditions:
TCT No. :

493122 in the name of BPI as trustee of Philippine Remnants Co.,

Inc.

Area :

33,056.0 square meters (net of 890 sq. m. sold to the Republic of

the Philippines due to the widening of Pasig Blvd.)

Price :

P1,100.00 per sq. m. or P36,361,600.000.

Terms :

Cash

Brokers Commission :

Others :

2%

a) Docuemntary (sic) stamps to be affixed to Deed of Absolute

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

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

(Sgd.)

FERNANDO J. SISON,
Assistant Vice-President

III ALFONSO R. ZAMORA

Vice President

[Note: Italics supplied]

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

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

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

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

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

Exhibit F is respondent BPIs letter addressed to petitioner pointing out

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

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

Exhibit H refers to respondent BPIs another rejection of petitioners

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

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

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

These exhibits, either scrutinized singly or collectively, do not reveal a

perfection of the purported contract of sale. Article 1458 of the Civil Code
defines a contract of sale as follows:
ART. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
Article 1475 of the same code specifically provides when a contract of sale
is deemed perfected, to wit:
ART. 1475. The contract of sale is perfected at the moment there is meeting of minds
upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
The Court in Toyota Shaw, Inc. v. Court of Appeals had already ruled that a
definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of
sale. Petitioners exhibits did not establish any definitive agreement or
meeting of the minds between the concerned parties as regards the price or
[14]

term of payment. Instead, what merely appears therefrom is respondent BPIs

repeated rejection of the petitioners proposal to buy the property at P1,000/
sq.m. In addition, even on the assumption that Exhibit E reflects that
respondent BPI offered to sell the disputed property for P1,000/sq. m.,
petitioners acceptance of the offer is conditioned upon or qualified by its
proposed terms to which respondent BPI must first agree with.
[15]

[16]

On the subject of consent as an essential element of contracts, Article

1319 of the Civil Code has this to say:
ART. 1319. Consent is manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. The offer must be
certain and the acceptance absolute. A qualified acceptance constitutes a counteroffer.
xxx xxx

xxx.

The acceptance of an offer must therefor be unqualified and absolute. In other

words, it must be identical in all respects with that of the offer so as to produce
consent or meeting of the minds. This was not the case herein considering
that petitioners acceptance of the offer was qualified, which amounts to a
rejection of the original offer. And contrary to petitioners assertion that its
offer was accepted by respondent BPI, there was no showing that petitioner
complied with the terms and conditions explicitly laid down by respondent BPI
for prospective buyers. Neither was the petitioner able to prove that its offer
to buy the subject property was formally approved by the beneficial owner of
the property and the Trust Committee of the Bank, an essential requirement
for the acceptance of the offer which was clearly specified in Exhibits F and H.
Even more telling is petitioners unexplained failure to reduce in writing the
alleged acceptance of its offer to buy the property at P1,000/sq. m.
[17]

[18]

The Court also finds as unconvincing petitioners representation under

Exhibits E, G, and I that its proposal to buy the subject property for P
1,000/ sq. m. has been accepted by respondent BPI, considering that none of
the said Exhibits contained the signature of any responsible official of
respondent bank.

It is therefore evident from the foregoing that petitioners documentary

evidence floundered in establishing its claim of a perfected contract of sale.
Moreover, petitioners case failed to hurdle the strict requirements of the
Statute of Frauds. Article 1403 of the Civil Code states:
ART. 1403. - The following contracts are unenforceable, unless they are ratified:
(1)

xxx

xxx

xxx

(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum, thereof, be in writing, and subscribed
by the party charged, or by his agent; evidence, therefore, of the agreement cannot be
received without the writing, or a secondary evidence of its contents:
xxx

xxx

xxx

(e) An agreement for the leasing for a long period than one year, or for the sale of real
property or of an interest therein.
xxx xxx

xxx.

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

conveying the subject property from respondent BPI to petitioner. Exhibits E,
G, I which petitioner claims as proof of perfected contract of sale between it
and respondent BPI were not subscribed by the party charged, i.e., BPI, and
did not constitute the memoranda or notes that the law speaks of. To
consider them sufficient compliance with the Statute of Frauds is to betray the
avowed purpose of the law to prevent fraud and perjury in the enforcement of
obligations. We share, in this connection, respondent Court of Appeals
observation when it said:
[19]

xxx. The requirement that the notes or memoranda be subscribed by BPI or its
agents, as the party charged, is very vital for the strict compliance with the avowed
purpose of the Statute of Frauds which is to prevent fraud and perjury in the
enforcement of obligations depending for their evidence on the unassisted memory of
witnesses by requiring certain enumerated contracts and transactions to be evidenced

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

[Note: Italics added]

Corrolarily, as the petitioners exhibits failed to establish the perfection of
the contract of sale, oral testimony cannot take their place without violating the
parol evidence rule. It was therefore irregular for the trial court to have
admitted in evidence testimony to prove the existence of a contract of sale of
a real property between the parties despite de persistent objection made by
private respondents counsels as early as the first scheduled hearing. While
said counsels cross-examined the witnesses, this, to our view, did not
constitute a waiver of the parol evidence rule. The Talosig v. Vda. de Nieba,
and Abrenica v. Gonda and de Gracia cases cited by the Court in its initial
decision, which ruled to the effect that an objection against the admission of
any evidence must be made at the proper time, i.e., x x x at the time question
is asked, and that if not so made it will be understood to have been waived,
do not apply as these two cases involved facts different from the case at
bench. More importantly, here, the direct testimonies of the witnesses were
presented in affidavit-form where prompt objection to inadmissible evidence
is hardly possible, whereas the direct testimonies in these cited cases were
delivered orally in open court. The best that counsels could have done, and
[21]

[22]

[23]

[24]

[25]

which they did, under the circumstances was to preface the cross-examination
with objection. Thus:
ATTY. VARGAS:
Before I proceed with the cross-examination of the witness, your Honor, may we
object to the particular portion of the affidavit which attempt to prove the existence of
a verbal contract to sell more specifically the answers contained in page 3, Par. 1, the
whole of the answer.
x x x

xxx

x x x.

COURT:
Objection overruled.
Atty. VARGAS.
Your Honor, what has been denied by the Court was the motion for preliminary
hearing on affirmative defenses. The statement made by the witness to prove that there
was a verbal contract to sell is inadmissible in evidence in this case because an
agreement must be in writing.
COURT:
Go ahead, that has been already overruled.
ATTY. VARGAS:
So may we reiterate our objection with regards to all other portions of the affidavit
which deal on the verbal contract. (TSN, Feb. 28, 1989, pp. 3-5; Italics supplied.)

[26]

xxx

xxx

xxx

ATTY. CORNAGO:
Before we proceed, we would like to make of record our continuing objection insofar
as questions and answers propounded to Pedro Revilla dated February 27, 1989, in so
far as questions would illicit (sic) answers which would be violative of the best

evidence rule in relation to Art. 1403. I refer to questions Nos. 8, 13, 16 and 19 of the
affidavit of this witness which is considered as his direct testimony. (T.S.N., June 29,
1990, p. 2)
ATTY. CORNAGO:
May we make of record our continued objection on the testimony which is violative of
the best evidence rule in relation to Art. 1403 as contained in the affidavit particularly
questions Nos. 12, 14, 19 and 20 of the affidavit of Alfonso Lim executed on February
24, 1989 x x x. (T.S.N., June 28, 1990, p. 8).
[27]

Counsels should not be blamed and, worst, penalized for taking the path of
prudence by choosing to cross-examine the witnesses instead of keeping
mum and letting the inadmissible testimony in affidavit form pass without
challenge. We thus quote with approval the observation of public respondent
Court of Appeals on this point:
As a logical consequence of the above findings, it follows that the court a quo erred
in allowing the appellee to introduce parol evidence to prove the existence of a
perfected contract of sale over and above the objection of the counsel for the
defendant-appellant. The records show that the court a quo allowed the direct
testimony of the witnesses to be in affidavit form subject to cross-examination by the
opposing counsel. If the purpose thereof was to prevent the opposing counsel from
objecting timely to the direct testimony, the scheme failed for as early as the first
hearing of the case on February 28, 1989 during the presentation of the testimony in
affidavit form of Pedro Revilla, Jr., plaintiff-appellees first witness, the presentation
of such testimony was already objected to as inadmissible.
[28]

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