THIRD DIVISION
[G.R. No. 118509.
LIMKETKAI SONS MILLING INC., petitioner, vs. COURT OF APPEALS, ET AL., respondents.
R E S O L U T I O N
FRANCISCO, J.:
In this motion for reconsideration, the Court* is called upon to take a second hard look on its December 1, 1995 decision reversing and setting aside respondent Court of Appeals’ judgment of August 12, 1994 that dismissed petitioner Limketkai Sons Milling Inc.’s complaint for specific performance and damages against private respondents Bank of the Philippine Islands (BPI) and National Book Store (NBS). Petitioner Limketkai Sons Milling, Inc., opposed the motion and filed its Consolidated Comment, to which private respondent NBS filed a Reply. Thereafter, petitioner filed its Manifestation and Motion for the voluntary inhibition of Chief Justice Andres R. Narvasa from taking part in any “subsequent deliberations in this case.” The Honorable Chief Justice declined.[1]
The Court is swayed to reconsider.
The bottomline issue is whether or not a contract of sale of the subject parcel of land existed between the petitioner and respondent BPI. A re-evaluation of the attendant facts and the evidence on record, specifically petitioner’s 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
ASSETRADE CO.
Capitol Subdivision
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
Price : P1,100.00
per sq. m. or P36,361,600.000.
Terms : Cash
Broker’s 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
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,
BANK OF THE PHILIPPINE
as trustee of
Philippine Remnants Co., Inc.
(Sgd.) (Sgd.)
FERNANDO J. SISON, III ALFONSO R. ZAMORA
Assistant Vice-President Vice President”
[Note: Italics supplied]
security guard on duty at subject property to allow him (Revilla, Jr.) and his companion to conduct an ocular inspection of the premises.[7]
Exhibit “D” is a letter addressed by Pedro Revilla, Jr. to respondent BPI informing the latter that he has procured a prospective buyer.[8]
Exhibit “E” is the written proposal submitted by Alfonso Y. Lim in behalf of petitioner Limketkai Sons Milling, Inc., offering to buy the subject property at P1,000.00/sq. m.[9]
Exhibit “F” is respondent BPI’s letter addressed to petitioner pointing out that petitioner’s proposal embodied in its Letter (Exhibit “E”) has been rejected by the respondent BPI’s Trust Committee.[10]
Exhibit “G” is petitioner’s letter dated
Exhibit “H” refers to respondent BPI’s another rejection of petitioner’s 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. Petitioner’s 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 BPI’s repeated rejection of the petitioner’s 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., petitioner’s 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 petitioner’s acceptance of the offer was qualified, which amounts to a rejection of the original offer.[17] And contrary to petitioner’s 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 petitioner’s 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 petitioner’s 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 petitioner’s documentary evidence floundered in establishing its claim of a perfected contract of sale.
Moreover, petitioner’s 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 Appeal’s 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 petitioner’s 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:
“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 x x x 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
“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-appellee’s 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
SO ORDERED.
Narvasa, C.J.
(Chairman) and Davide, Jr., J., concur.
Panganiban, J., joins Justice Melo’s dissent.
* The Third Division of
this Court was initially composed of Justices Feliciano, Romero, Melo, Vitug
and Panganiban. After the promulgation of the
[1]
In a Memorandum dated
“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]
[6]
[7] The Full Text of Exhibit “C” is as follows:
Trust Account No. 75-11
The Security Guard
On Detail
Universal Security &
Investigation Agency
c/o Phil. Remnants Co., Inc.
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,
BANK OF THE
PHILIPPINE
As Trustees For
Philippine Remnants Co., Inc.
By:
(Sgd.)
ROLANDO V. AROMIN
Assistant Vice-President
(Sgd.)
PEDRO REVILLA, JR.
[8] Exhibit “D” reads as follows:
Bank of the
Philippine
Bank of
Metro
ATTN: Mr. Alfonso R. Zamora
Vice President
and
Mr. Fernando J. Sison III
Asst. Vice President
Gentlemen:
I refer to the
authority you gave me on
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
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,
(Sgd.)
Pedro P. Revilla, Jr.
[Note: Italics supplied]
[9] Exhibit “E” has these salient portions:
Gentlemen:
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,
LIMKETKAI SONS MILLING, INC.
[Note: Italics added] (Sgd.)
ALFONSO U. LIM
Executive Vice President
[10] Exhibit “F” states:
Attention: Mr. Alfonso U. Lim
Executive Vice President
Gentlemen:
Re: Bo. Bagong Ilog
(
In connection with
subject property, we regret to inform you
that the Bank’s 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
In a meeting held
on
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 broker’s 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
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.)
ALFONSO R
Vice President Asst. Vice President
[Note: Italics added]
[11] Exhibit
“G” quoted in full is as follows:
The Chairman
Trust Committee
Bank of the Philippine
Dear Sir:
We are, in receipt
of the letter dated
Please consider our
letter of
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,
(Sgd.)
LIMKETKAI SONS MILLING, INC.
(Sgd.)
ALFONSO U. LIM
[Note: Italics added] Executive Vice-President
[12] Exhibit “H”'s pertinent portions read as
follows:
Attention: Mr. Alfonso U. Lim
Exec. Vice President
Gentlemen:
We reply to your letter
dated
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.)
NELSON M. BONA FERNANDO J. SISON III
Vice President Asst. Vice President
[Note: Emphasis added]
[13] Exhibit “I” pertinently provides:
Mr. Nelson M. Bona
Vice President
and
Mr. Fernando J. Sison III
Asst. Vice-President
BANK OF THE PHILIPPINE
Gentlemen:
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
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
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,
(Sgd)
ALFONSO U. LIM
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
[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.