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

LIMKETKAI SONS MILLING INC., petitioner, vs. COURT OF APPEALS, ET AL., respondents.



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

The Court is swayed to reconsider.

The bottomline issue is whether or not a contract of sale of the subject parcel of land existed between the petitioner and respondent BPI. A re-evaluation of the attendant facts and the evidence on record, specifically petitioners Exhibits A to I, yields the negative. To elaborate:

Exhibit A[2] 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)[3] has [been] assigned, transferred, conveyed and set over unto the Trustee[4] expressly authorizing and empowering the same in its own name to sell and dispose of said trust property or any lot or parcel thereof[5] and to facilitate [the] sale of the trust property, the Trustee may engage the services of real estate broker or brokers, under such terms and conditions which the Trustee may deem proper, to sell the Trust property or any lot or parcel thereof.[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


70 San Francisco St.

Capitol Subdivision

Pasig, Metro Manila

Attention: Mr. Pedro P. Revilla, Jr.

Managing Partner .


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 : 2%

Others : 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 non-exclusive and on a first come first-serve basis.

Very truly yours,


as trustee of

Philippine Remnants Co., Inc.

(Sgd.) (Sgd.)


Assistant Vice-President Vice President

[Note: Italics supplied]

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

Exhibit D is a letter addressed by Pedro Revilla, Jr. to respondent BPI informing the latter that he has procured a prospective buyer.[8]

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

Exhibit F is respondent BPIs letter addressed to petitioner pointing out that petitioners proposal embodied in its Letter (Exhibit E) has been rejected by the respondent BPIs Trust Committee.[10]

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

Exhibit H refers to respondent BPIs another rejection of petitioners offer to buy the property at P1,000/sq. m.[12]

And finally, Exhibit I is a letter by petitioner addressed to respondent BPI claiming the existence of a perfected contract of sale of the subject property between them.[13]

These exhibits, either scrutinized singly or collectively, do not reveal a perfection of the purported contract of sale. Article 1458 of the Civil Code defines a contract of sale as follows:

ART. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

Article 1475 of the same code specifically provides when a contract of sale is deemed perfected, to wit:

ART. 1475. The contract of sale is perfected at the moment there is meeting of minds upon the thing which is the object of the contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.

The Court in Toyota Shaw, Inc. v. Court of Appeals[14] had already ruled that a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. Petitioners exhibits did not establish any definitive agreement or meeting of the minds between the concerned parties as regards the price or term of payment. Instead, what merely appears therefrom is respondent BPIs repeated rejection of the petitioners proposal to buy the property at P1,000/ sq.m.[15] 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[16] to which respondent BPI must first agree with.

On the subject of consent as an essential element of contracts, Article 1319 of the Civil Code has this to say:

ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

xxx xxx 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.[17] 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.[18] 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.

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.[19] 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:

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.[21] 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,[22] and Abrenica v. Gonda and de Gracia[23] 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,[24] and that if not so made it will be understood to have been waived, do not apply as these two cases involved facts[25] different from the case at bench. More importantly, here, the direct testimonies of the witnesses were presented in affidavit-form where prompt objection to inadmissible evidence is hardly possible, whereas the direct testimonies in these cited cases were delivered orally in open court. The best that counsels could have done, and which they did, under the circumstances was to preface the cross-examination with objection. Thus:


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 x x x x x x.


Objection overruled.


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.


Go ahead, that has been already overruled.


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


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)


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.


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

Panganiban, J., joins Justice Melos dissent.

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

[1] In a Memorandum dated March 18, 1996, addressed to the members of the Courts Third Division, the Honorable Chief Justice Andres Narvasa noted petitioners baseless motion. Thus:

2. The information upon which petitioner relies is utterly without foundation in fact and is nothing but pure speculation or wishful yearning. The Chief Justice wishes to state for the record that while still in private practice, he never had occasion to represent the National Bookstore and/or its principal owner, the Ramos family, in any case or matter whatsoever; that he has never had any transaction at all with them and that indeed, he has no recollection of ever having even purchased anything from said store; and that he does not know, and as far as he knows he never met, any member of the Ramos family described as principal owners of the National Bookstore.

3. There is thus absolutely no reason for the inhibition of the Chief Justice in this case, and he will continue to take part in all subsequent deliberations in this case.

[2] Records, pp. 10-14.

[3] Complaint, p.2; Records, p. 2.

[4] Deed of Trust, p. 2; Records, p. 11.

[5] Id.

[6] Id.

[7] The Full Text of Exhibit C is as follows:

Trust Account No. 75-11

08 July 1988

The Security Guard

On Detail

Universal Security &

Investigation Agency

c/o Phil. Remnants Co., Inc.

Pasig Blvd., Bagong Ilog

Pasig. Metro Manila

Dear Sir:

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

Kindly extend to Mr. Revilla your usual courtesies and assistance on this matter. Thank you.

Very truly yours,


As Trustees For

Philippine Remnants Co., Inc.




Assistant Vice-President



[8] Exhibit D reads as follows:

July 9, 1988

Bank of the Philippine Islands

Bank of P.I. Building

Ayala Avenue, Makati,

Metro Manila

ATTN: Mr. Alfonso R. Zamora

Vice President


Mr. Fernando J. Sison III

Asst. Vice President


I refer to the authority you gave me on June 23, 1988, in your capacity as Trustee of the Philippine Remnants Co., Inc., in connection with the sale of one (1) parcel of land, located along Pasig Boulevard, Bagong Ilog, Pasig, Metro Manila, with an area of 33,056 square meters and covered by Transfer Certificate of Title No. 493122.

I am pleased to inform you that I have procured a buyer for the above described property in the name of Limketkai Sons Milling Inc., with office address at Limketkai Building, Greenhills, San Juan, Metro Manila and represented by its Executive Vice President, Mr. Alfonso Lim.

It is understood therefore, that pursuant to my authority, I shall be paid a brokers fee of 2% of the gross purchase price in the event the sale to the above named buyer is consummated.

Very truly yours,


Pedro P. Revilla, Jr.

[Note: Italics supplied]

[9] Exhibit E has these salient portions:


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

a) We are to give an initial amount equivalent to Ten (10%) Percent of the total purchase price as earnest money;

b) The balance is to be paid by us within ninety (90) days from the execution of the agreement;

c) If the balance is not paid within the above-stated period, by reason of any cause other than those mentioned in paragraphs

(d), (e) and (f) below, Twenty (20%) Percent of The Ten (10%) Percent paid under paragraph (a) shall be forfeited in your favor, the remaining Eighty (80%) is to be refunded to us; in the event the non-payment of the said balance is caused by non-performance of any of the stipulations in paragraphs (d), (e) and (f) below, the entire sum paid as earnest money shall be refunded to us;

d) The Title of the property shall be free from all liens and encumbrances and the property itself free from all squatters;

e) The BPI as trustee - title holder is to warrant that it the legal right and title to transfer ownership to us;

f) Physical possession by us upon the payment of the Ten (10%) Percent referred to in paragraph (a) above

Anticipating your favorable action, we thank you for your prompt attention and early reply.

Very truly yours,


[Note: Italics added] (Sgd.)


Executive Vice President

[10] Exhibit F states:

Attention: Mr. Alfonso U. Lim

Executive Vice President


Re: Bo. Bagong Ilog (Pasig) Property

In connection with subject property, we regret to inform you that the Banks Trust Committee did not approve your proposal to purchase said property under the terms and conditions of your letter to our Mr. Merlin A. A lbano dated 11 July 1988. instead, the Trust Committee instructed us to consider offers from other interested parties.

In a meeting held on 20 July 1988, Senior Management instructed us to offer the same property to all interested buyers under the following terms and conditions:

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

b. balance payable upon signing of the Deed of Sale;

c. price to BPI shall be net of brokers commission;

d. the party with the best price shall have five (5) days within which to pay the downpayment, otherwise, the party with the next best price shall be entertained.

Should you still be interested in subject property, kindly submit to us not later than 12:00 noon of 22 July 1988 your written offer together with the price per square meter. The Bank shall not entertain proposals received after said cut-off time.

It is understood, however, that acceptance of any offer is still subject to the approval of the Beneficial Owner of the property as well as the Trust Committee of the Bank.

Very truly yours,

(Sgd.) (Sgd.)


Vice President Asst. Vice President

[Note: Italics added]

[11] Exhibit G quoted in full is as follows:

July 22, 1988

The Chairman

Trust Committee

Bank of the Philippine Islands

Makati, Metro Manila

Dear Sir:

We are, in receipt of the letter dated July 20, 1988, signed by Mr. Alfonso Zamora and Mr. Fernando J. Sison III, copy of which we are hereto attaching.

Please consider our letter of July 21, 1988 addressed to Mr. Xavier P. Loinaz, Bank President, and copy furnished your committee, as our reply thereto.

We are therefore, hereby adopting and reiterating our former offer to buy the lot of P1,000.00 per square meter but on cash basis.

Very truly yours,





[Note: Italics added] Executive Vice-President

[12] Exhibit H's pertinent portions read as follows:

Attention: Mr. Alfonso U. Lim

Exec. Vice President


We reply to your letter dated 29 July 1988 addressed to the Chairman of our Trust Committee. We again regret to inform you that your offer to purchase the Bo. Bagong Ilog, Pasig property (TCT 493122) at P1,000.00 per square meter has not been approved, as previously communicated to you per our letter dated 20 July 1988.

Per the Deed of Trust entered into by and between the Grantor of said property and ourselves, the Bank as Trustee is duty-bound. in the event of sale of the property, to select the terms and consideration it deems to be most advantageous to the Grantor. The 30-day authority given to your broker also presupposed that during said period, the Bank on its own would also consider other offers. This is why no offer to purchase was deemed final and accepted until formally approved by the Trust Committee.

xxx xxx xxx

Very truly yours,

(Sgd.) (Sgd.)


Vice President Asst. Vice President

[Note: Emphasis added]

[13] Exhibit I pertinently provides:

August 8, 1988

Mr. Nelson M. Bona

Vice President


Mr. Fernando J. Sison III

Asst. Vice-President




This refers to your letter of 2 August 1988 regarding our agreement to purchase the Barrio Bagong flog property under TCT No. 493122 at P1,000.00 per square meter.

xxx xxx xxx

Under the aforequoted provision of the Deed of Trust, your Bank as Trustee, has the absolute authority to sell and dispose of the property under trust without consulting the Grantor as to price and terms. Moreover, under said quoted stipulation, the Bank may engage the services of a real estate broker or brokers under such terms and conditions which the Trustee may deem proper. Consequently, on 23 June 1988, you authorized Mr. Pedro P. Revilla, Jr. as broker to sell the property covered by Title No. 493122 on a first-come first-serve basis as per written authority signed by Mr. Fernando J. Sison III and Mr. Alfonso R. Zamora in behalf of the Bank as Trustee of Philippine Remnants Co., Inc.

We would like to invite your kind attention that we are the first-come offeror of the lot. And, while the price mentioned in the authority granted to Mr. Revilla is P1,000.00 per square meter, nonetheless, in the negotiations between us and your responsible bank officials done in the presence of Mr. Revilla, the price per square meter was finally agreed at P1,000.00.

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

xxx xxx xxx

Through this letter we would like to make known to your Bank that we maintain our position that there has been a perfected contract between your Bank as Trustee and our Corporation insofar as the sale of the property to us is concerned because in the written authority granted by you to Mr. Pedro P. Revilla, Jr. signed by no less than the Assistant Vice-President and Vice-President of the Bank as Trustee, there is no condition imposed that the sale of the property transacted by him under said authority is subject to the approval of the Trust Committee.

We hope your Bank will understand our position and we expect that the sale of the subject lot in our favor be consummated as early as possible.

Very truly yours,



Exec. Vice-President/Director

[14] 244 SCRA 320,328, citing Velasco v. Court of Appeals, 51 SCRA 439(1973).

[15] See Exhibits F and H.

[16] See Exhibit E.

[17] See Logan v. Phil. Acetylene Co., 33 Phil. 177; Beaumont v. Prieto, 41 Phil. 670; Zayco v. Serra, 44 Phil. 326.

[18] See Exhibit F.

[19] See Paredes v. Espino, 22 SCRA 1000.

[20] CA Decision, pp. 11-12; Rollo, pp. 54-55.

[21] Rule 130, Section 9, Rules of Court.

[22] 43 SCRA 473.

[23] 34 Phil. 739.

[24] Abrenica, (supra) at p. 746, citing Kreigh v. Sherman, 105 Ill. 49; 46 Am. Dig., Century Ed., 932.

[25] In Talosig v. Vda. de Nieba, for instance, a deed of sale executed between the parties was undisputed, as well as the existence of receipts evidencing payment; while in Abrenica v. Gonda and De Gracia, counsel for the defendant never raised any objection to the examination of the witnesses which elicited testimony tending to prove the contract. Only after the examination was terminated did counsel move to strike out all the given testimony.

[26] CA Decision, pp. 13-14; Rollo, pp. 56-57; Pedro Revilla, Jr., TSN, February 28, 1989, pp. 3-5.

[27] Memorandum For Respondent Bank of the Phil. Islands, April 24, 1995, p. 16; Rollo, p. 229.

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