Judicial Department

Section 4
LIMKETKAI SONS MILLING INC., petitioner, vs. COURT OF APPEALS, ET AL., respondents.
[G.R. No. 118509. March 29, 1996]
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

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 : 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,

BANK OF THE PHILIPPINE ISLANDS

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.
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]

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:

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.

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]

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]

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.