Limketkai v.

CA
December 1, 1995 | Melo, J. | Unenforceable Contracts; Contracts covered by Statute of Frauds; Purpose of Statute of Frauds

PETITIONER: Limketkai Sons Milling, Inc.

RESPONDENT: CA, BPI, and National Bookstore
SUMMARY: Philippine Remnants Co. constituted BPI as its trustee and ordered it to sell its land (Barrio Bagong Ilog, Pasig). BPI
engaged the services of Pedro Revilla as its broker to be the one to sell the land. Revilla formally informed BPI when he finally
found a buyer. Negotiations between Limketkai and BPI officials were made and they agreed that the lot would be sold at 1K/sqm.
Lim asked if it was possible to pay initial 10% then 90% within 90 days, and if disapproved, price will be paid in cash.
Later, Limketkai found out that its offer to pay on terms had been frozen, so an officer went to BPI and paid the full amount of
33M. Payment was refused and Limketkai filed an action for specific performance and damages, and BPI issued a deed of sale to
NBS. It was rejected because allegedly, authority to sell the land had been withdrawn from that unit of BPI and the land was then
sold to National Bookstore. The issue then became WON there was actually a perfected contract between Limketkai and BPI.
Limketkai states that the contract to sell and to buy was perfected when top officials and broker finalized the details with BPI VPs,
while BPI alleged that this was only a part of continuing negotiations between the parties. SC held that there indeed was a
perfected contract (The contracted between Limketkai and BPI was perfected upon the concurrence of the essential elements
(agreement of the price of 1K/sqm). Cross-examination on the contract made initially inadmissible parol evidence competent and
admissible; and cross-examination is deemed a waiver of the defense of the Statute of Frauds.); the BPI officials who transacted
with Limketkai had full authority to bind the bank; the evidence supporting the sale is competent and admissible, and that the sale
to National Bookstore was done in bad faith.
DOCTRINE: Under Art. 1403, 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/a is/are written evidence that such a contract was entered into.
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, is a sufficient memorandum or
note.
FACTS:
1. May 14, 1976 Philippine Remnants Co., Inc. constituted
BPI as its trustee to manage, administer and sell its real
estate property. This includes the disputed parcel of land in
Bagong Ilog, Pasig.
2. June 23, 1988 Revilla, a licensed broker, was given the
authority by BPI to sell the land for P1000 per square
meter.
3. Lim of Limketkai Milling agreed to buy the property and
by July 1988, Lim and Limketkai visited BPI to confirm
the sale.
- They were entertained by BPI VP Albano and AVP
Aromin. Limketkai requested that the price be lowered to
P900 per square meter while Albano said that the price was
P1100 per square meter. They finally agreed to the price of
P1000 per square meter and that the payment be given in
cash.
4. Lim requested if it was possible to draw up payment terms,
despite the previous agreement to pay in cash. The BPI
officials responded by saying that it would be all right to
try to apply for payment terms but if the said payment
terms were to be disapproved, payment would have to be in
cash.
5. July 11, 1988 Albano dictated the terms through which
the installment payment would be approved. Lim wrote
BPI through Albano, embodying the initial payment at 10%
and the remaining 90% payable within 90 days.
- Lim later learned that his offer to pay on terms had been
frozen.
6. July 18, 1988 Lim went to BPI to pay the total amount
(P33,056,000) in cash to Albano but Albano refused to

accept it, saying that he no longer had the authority to sell

the property. Lim then went to VP Bona who also would
not accept the payment.
7. Aug. 25, 1988 Limketkai filed an action for specific
performance with damages. - BPI already issued a deed of
sale for the land to National Bookstore.
- Trial court ruling:
8. Declare the deed of sale to NBS null and void
9. Ordered BPI to issue deed of sale in favor or Limketkai Ordered BPI and NBS to pay actual and consequential
damages to Limketkai
10.The CA reversed the decision of the trial court thus the
appeal.

Petitioners Claim
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 Comments
What transpired on this date were part of continuing
negotiations to buy the land and not the perfection of the
sale. Vice-Presidents Aromin and Albano had no authority
to bind BPI on this particular transaction.
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.
ISSUE/S:
1. WON the contract between BPI and Limketkai had been
perfected - YES

2. WON the bank officials were authorized to transact and

enter into such contract - YES
3. WON competent evidence is available to support the
contention that the contract was indeed perfected - YES
4. WON the sale of the land to NBS pending litigation was
effected in good faith - YES

1. YES.
The contract had already been perfected.

A contract undergoes various stages that include its

negotiation or preparation, its perfection and, finally,
its consummation. Negotiation covers the period from
the time the prospective contracting parties indicate
interest in the contract to the time the contract is
concluded (perfected). The perfection of the contract
takes place upon 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.

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 fact that the deed of sale still had to be signed and
notarized does not mean that no contract had already
been perfected.
2. YES
The bank officials were authorized to transact with
Limketkai for the sale of the parcel of land.

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.

Revilla (the broker) was authorized by BPI to transact

business in their stead. If Revilla were given the
authority, it would be senseless to doubt whether or
not the bank officials were given the same authority.
Aromin had been with the bank for a relatively long
period of time (since 1969) and had handled real
estate matters since 1985. There is no proof that
Aromin was acting for his own benefit.
3. YES
The evidence presented was substantial.

Any document or writing which satisfies the

requirements of a statute as to content and signature
can be regarded as a memorandum or a note.
4. YES
The sale of the land to NBS was done in bad faith.

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 BPI's title be
found defective.

NBS ignored the notice of lis pendens when it bought

the lot.

NBS and BPU conspired to prevent Limketkai from

acquiring the property.

The sale was supposed to be done by a broker but top

BPI officials took over when a close friend became
interested.

BPI Senior VP Barcelon admitted that he and NBS

President Ramos were friends.

Feliciano, in behalf of NBS, tried to pay off Limketkai

so that the latter would drop the case
RULING: Judgment is affirmed.