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because Albano stated that the authority to sell that particular piece of property in Pasig had been withdrawn
from his unit. The same check was tendered to BPI Vice-President Nelson Bona who also refused to receive
payment.
An action for specific performance with damages was thereupon filed on August 25, 1988 by petitioner
against BPI. In the course of the trial, BPI informed the trial court that it had sold the property under litigation
to NBS on July 14, 1989. The complaint was thus amended to include NBS.
On June 10, 1991, the trial court rendered judgment in the case as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants
Bank of the Philippine Islands and National Book Store, In.:
1.
Declaring the Deed of Sale of the property covered by T.C.T. No. 493122 in the
name of the Bank of the Philippine Islands, situated in Barrio Bagong Ilog, Pasig,
Metro Manila, in favor of National Book Store, Inc., null and void;
2.
Ordering the Register of Deeds of the Province of Rizal to cancel the Transfer
Certificate of Title which may have been issued in favor of National Book Store,
Inc. by virtue of the aforementioned Deed of Sale dated July 14, 1989;
3.
4.
Ordering the Register of Deeds of Pasig, upon registration of the said deed,
whether executed by defendant BPI or the Clerk of Court and payment of the
corresponding fees and charges, to cancel said T.C.T. No. 493122 and to issue,
in lieu thereof, another transfer certificate of tide in the name of plaintiff;
5.
Ordering defendants BPI and National Book Store, Inc. to pay, jointly and
severally, to the plaintiff the sums of P10,000,000.00 as actual and consequential
damages and P150,000.00 as attorney's fees and litigation expenses, both with
interest at 12% per annum from date hereof;
6.
On the cross-claim of defendant bank against National Book Store, ordering the
latter to indemnify the former of whatever amounts BPI shall have paid to the
plaintiff by reason hereof; and
7.
Dismissing the counterclaims of the defendants against the plaintiff and National
Book Store's cross-claim against defendant bank.
Was there a meeting of the minds between petitioner Limketkai and respondent
BPI as to the subject matter of the contract and the cause of the obligation?
Were the bank officials involved in the transaction authorized by BPI to enter into
the questioned contract?
Is there competent and admissible evidence to support the alleged meeting of
the minds?
Was the sale of the disputed land to the NBS during the pendency of trial
effected in good faith?
There is no dispute in regard to the following: (a) that BPI as trustee of the property of Philippine Remnant
Co. authorized a licensed broker, Pedro Revilla, to sell the lot for P1,000.00 per square meter; (1)) that
Philippine Remnants confirmed the authority to sell of Revilla and the price at which he may sell the lot; (c)
that petitioner and Revilla agreed on the former buying the property; (d) that BPI Assistant Vice-President
Rolando V. Aromin allowed the broker and the buyer to inspect the property; and (e) that BPI was formally
informed about the broker having procured a buyer.
The controversy revolves around the interpretation or the significance of the happenings or events at this
point.
Petitioner states that 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, however, contend that what transpired on this date were part of continuing negotiations to buy
the land and not the perfection of the sale. The arguments of respondents center on two propositions (1)
Vice-Presidents Aromin and Albano had no authority to bind BPI on this particular transaction and (2) the
subsequent attempts of petitioner to pay under terms instead of full payment in cash constitutes a counteroffer which negates the existence of a perfected contract.
The alleged lack of authority of the bank officials acting in behalf of BPI is not sustained by the record.
At the start of the transactions, broker Revilla by himself already had full authority to sell the disputed lot.
Exhibit B dated June 23, 1988 states, "this will serve as your authority to sell on an as is, where is basis the
property located at Pasig Blvd., Bagong Ilog . . . ." We agree with Revilla's testimony that the authority given
to him was to sell and not merely to look for a buyer as contended by respondents.
Revilla testified that at the time he perfected the agreement to sell the litigated property, he was acting for
and in behalf of the BPI as if he were the Bank itself. This notwithstanding and to firm up the sale of the land,
Revilla saw it fit to bring BPI officials into the transaction. If BPI could give the authority to sell to a licensed
broker, we see no reason to doubt the authority to sell of the two BPI Vice-Presidents whose precise job in
the Bank was to manage and administer real estate property.
Respondent BPI alleges that sales of trust property need the approval of a Trust Committee made up of top
bank officials. It appears from the record that this trust committee meets rather infrequently and it does not
have to pass on regular transactions.
Rolando Aromin was BPI Assistant Vice-President and Trust Officer. He directly supervised the BPI Real
Property Management Unit. He had been in the Real Estate Division since 1985 and was the head
supervising officer of real estate matters. Aromin had been with the BPI Trust Department since 1968 and
had been involved in the handling of properties of beneficial owners since 1975 (tsn., December 3, 1990, p.
5).
Exhibit 10 of BPI, the February 15, 1989 letter from Senior Vice-President Edmundo Barcelon, while
purporting to inform Aromin of his poor performance, is an admission of BPI that Aromin was in charge of
Torrens titles, lease contracts, problems of tenants, insurance policies, installment receivables, management
fees, quitclaims, and other matters involving real estate transactions. His immediate superior, Vice-President
Merlin Albano had been with the Real Estate Division for only one week but he was present and joined in the
discussions with petitioner.
There is nothing to show that Alfonso Lim and Albino Limketkai knew Aromin before the incident. Revilla
brought the brothers directly to Aromin upon entering the BPI premises. Aromin acted in a perfectly natural
manner on the transaction before him with not the slightest indication that he was acting ultra vires. This
shows that BPI held Aromin out to the public as the officer routinely handling real estate transactions and, as
Trust Officer, entering into contracts to sell trust properties.
Respondents state and the record shows that the authority to buy and sell this particular trust property was
later withdrawn from Trust Officer Aromin and his entire unit. If Aromin did not have any authority to act as
alleged, there was no need to withdraw authority which he never possessed.
Petitioner points to Areola vs. Court of Appeals (236 SCRA 643 [1994]) which cited Prudential Bank vs.
Court of Appeals (22 SCRA 350 [1993]), which in turn relied upon McIntosh vs. Dakota Trust Co. (52 ND
752, 204 NW 818, 40 ALR 1021), to wit:
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.
(at pp. 652-653.)
In the present case, the position and title of Aromin alone, not to mention the testimony and documentary
evidence about his work, leave no doubt that he had full authority to act for BPI in the questioned
transaction. There is no allegation of fraud, nor is there the least indication that Aromin was acting for his
own ultimate benefit. BPI later dismissed Aromin because it appeared that a top official of the bank was
personally interested in the sale of the Pasig property and did not like Aromin's testimony. Aromin was
charged with poor performance but his dismissal was only sometime after he testified in court. More than
two long years after the disputed transaction, he was still Assistant Vice-President of BPI.
The records show that the letter of instruction dated June 14, 1988 from the owner of Philippine Remnants
Co. regarding the sale of the firm's property was addressed to Aromin. The P1,000.00 figure on the first
page of broker Revilla's authority to sell was changed to P1,100.00 by Aromin. The price was later brought
down again to P1,000.00, also by Aromin. The permission given to petitioner to view the lot was signed by
Aromin and honored by the BPI guards. The letter dated July 9, 1988 from broker Revilla informing BPI that
he had a buyer was addressed to Aromin. The conference on July 11, 1988 when the contract was perfected
was with Aromin and Vice-President Albano. Albano and Aromin were the ones who assured petitioner
Limketkai's officers that term payment was possible. It was Aromin who called up Miguel Bicharra of
Philippine Remnants to state that the BPI rejected payment on terms and it was to Aromin that Philippine
Remnants gave the go signal to proceed with the cash sale. Everything in the record points to the full
authority of Aromin to bind the bank, except for the self-serving memoranda or letters later produced by BPI
that Aromin was an inefficient and undesirable officer and who, in fact, was dismissed after he testified in
this case. But, of course, Aromin's alleged inefficiency is not proof that he was not fully clothed with authority
to bind BPI.
Respondents' second contention is that there was no perfected contract because petitioner's request to pay
on terms constituted a counter-offer and that negotiations were still in progress at that point.
Asst. Vice-President Aromin was subpoenaed as a hostile witness for petitioner during trial. Among his
statements is one to the effect that
. . . Mr. Lim offered to buy the property at P900.00 per square meter while Mr. Albano
counter-offered to sell the property at P1,100.00 per square meter but after the usual
haggling, we finally agreed to sell the property at the price of P100.0 per square meter . . .
(tsn, 12-3-90, p. 17; Emphasis supplied.)
Asked if there was a meeting of the minds between the buyer and the bank in respect to the price of
P1,000.00 per square meter, Aromin answered:
Yes, sir, as far as my evaluation there was a meeting of the minds as far as the price is
concerned, sir.
(Ibid, p. 17.)
The requirements in the payment of the purchase price on terms instead of cash were suggested by BPI
Vice-President Albano. Since the authority given to broker Revilla specified cash payment, the possibility of
paying on terms was referred to the Trust Committee but with the mutual agreement that "if the proposed
payment on terms will not be approved by our Trust Committee, Limketkai should pay in cash . . . the
amount was no longer subject to the approval or disapproval of the Committee, it is only on the terms." (Ibid,
p. 19) This is incontrovertibly established in the following testimony of Aromin:
A.
After you were able to agree on the price of P1,000.00/sq. m., since the letter or
authority says the payment must be in cash basis, what transpired later on?
B.
After we have agreed on the price, the Lim brothers inquired on how to go about
submitting the covering proposal if they will be allowed to pay on terms. They
requested us to give them a guide on how to prepare the corresponding letter of
proposal. I recall that, upon the request of Mr. Albino Limketkai, we dictated a
guide on how to word a written firm offer that was to be submitted by Mr. Lim to
the bank setting out the terms of payment but with the mutual agreement that if
his proposed payment on terms will not be approved by our trust committee.
Limketkai should pay the price in cash.
Q.
A.
And did buyer Limketkai agree to pay m cash in case the offer of terms will be
cash (disapproved).
Yes. sir.
Q.
A.
Q.
You said that the agreement on terms was to be submitted to the trust committee
for approval, are you telling the Court that what was to be approved by the trust
committee was the provision on the payment on terms?
Yes. sir.
A.
Q.
But in more graphic prose, we turn to Ang Yu Asuncion, per Justice Vitug:
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 nterest in the contract to the time the contract is
concluded (perfected) The perfection of the contract takes place upon the concurrence of
xxx
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"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" (Art. 1319, Civil
Code). "An acceptance may be express or implied" (Art. 1320, Civil Code).
xxx
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xxx
"It is true that an acceptance may contain a request for certain changes in the terms of the
offer and yet be a binding acceptance. 'So long as it is clear that the meaning of the
acceptance is positively and unequivocally to accept the offer. whether such request is
granted or not, a contract is formed."' (Stuart vs. Franklin Life Ins. Co., 105 Fed. 2nd 965,
citing Sec. 79, Williston on Contracts).
xxx
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xxx
. . . the vendor's change in a phrase of the offer to purchase, which change does not
essentially change the terms of the offer, does not amount to a rejection of the offer and
the tender or a counter-offer." (Stuart vs. Franklin Life Ins. Co., supra.)
(at pp. 362-363; 365-366.)
In the case at bench, the allegation of NBS that there was no concurrence of the offer and acceptance upon
the cause of the contract is belied by the testimony of the very BPI official with whom the contract was
perfected. Aromin and Albano concluded the sale for BPI. The fact that the deed of sale still had to be signed
and notarized does not mean that no contract had already been perfected. A sale of land is valid regardless
of the form it may have been entered into (Claudel vs. Court of Appeals, 199 SCRA 113, 119 [1991]). The
requisite form under Article 1458 of the Civil Code is merely for greater efficacy or convenience and the
failure to comply therewith does not affect the validity and binding effect of the act between the parties
(Vitug, Compendium of Civil Law and Jurisprudence, 1993 Revised Edition, p. 552). If the law requires a
document or other special form, as in the sale of real property, the contracting parties may compel each
other to observe that form, once the contract has been perfected. Their right may be exercised
simultaneously with action upon the contract (Article 1359, Civil Code).
Regarding the admissibility and competence of the evidence adduced by petitioner, respondent Court of
Appeals ruled that because the sale involved real property, the statute of frauds is applicable.
In any event, petitioner cites Abrenica vs. Gonda (34 Phil. 739 [1916]) wherein it was held that contracts
infringing the Statute of Frauds are ratified when the defense fails to object, or asks questions on crossexamination. The succinct words of Justice Araullo still ring in judicial cadence:
As no timely objection or protest was made to the admission of the testimony of the
plaintiff with respect to the contract; and as the motion to strike out said evidence came
too late; and, furthermore, as the defendants themselves, by the cross-questions put by
their counsel to the witnesses in respect to said contract, tacitly waived their right to have
it stricken out, that evidence, therefore, cannot be considered either inadmissible or illegal,
and court, far from having erred in taking it into consideration and basing his judgment
thereon, notwithstanding the fact that it was ordered to be stricken out during the trial,
merely corrected the error he committed in ordering it to be so stricken out and complied
with the rules of procedure hereinbefore cited.
(at p. 748.)
In the instant case, counsel for respondents cross-examined petitioner's witnesses at length on the contract
itself, the purchase price, the tender of cash payment, the authority of Aromin and Revilla, and other details
of the litigated contract. Under the Abrenica rule (reiterated in a number of cases, among them Talosig vs.
Vda. de Nieba, 43 SCRA 472 [1972]), even assuming that parol evidence was initially inadmissible, the
same became competent and admissible because of the cross-examination, which elicited evidence proving
the evidence of a perfected contract. The cross-examination on the contract is deemed a waiver of the
defense of the Statute of Frauds (Vitug, Compendium of Civil Law and Jurisprudence, 1993 Revised Edition,
supra p. 563).
The reason for the rule is that as pointed out in Abrenica "if the answers of those witnesses were stricken
out, the cross-examination could have no object whatsoever and if the questions were put to the witnesses
and answered by them, they could only be taken into account by connecting them with the answers given by
those witnesses on direct examination" (pp. 747-748).
Moreover, under Article 1403 of the Civil Code, 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 or
memoranda is/are written evidence that such a contract was entered into.
We cite the findings of the trial court on this matter:
In accordance with the provisions of Art. 1403 of the Civil Code, the existence of a written contract of the
sale is not necessary so long as the agreement to sell real property is evidenced by a written note or
memorandum, embodying the essentials of the contract and signed by the party charged or his agent. Thus,
it has been held:
"The Statute of Frauds, embodied in Article 1403 of the Civil Code of the Philippines, does
not require that the contract itself be written. The plain test of Article 1403 paragraph (2) is
clear that a written note or memorandum, embodying the essentials of the contract and
signed by the party charges, or his agent suffices to make the verbal agreement
enforceable, taking it out of the operation of the statute. (Emphasis supplied)
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"In the case at bar, the complaint in its paragraph 3 pleads that the deal had been closed
by letter and telegram (Record on Appeal, p. 2), and the letter referred to was evidently
the one copy of which was appended as Exhibit A to plaintiffs opposition to the motion to
dismiss. The letter, transcribed above in part, together with the one marked as Appendix
B, constitute an adequate memorandum of the transaction. They are signed by the
defendant-appellant; refer to the property sold as a Lot in Puerto Princesa, Palawan,
covered by T.C.T. No. 62, give its area as 1,825 square meters and the purchase price of
four (P4.00) pesos per square meter payable in cash. We have in them, therefore, all the
essential terms of the contract and they satisfy the requirements of the Statute of Frauds.
While Alfredo Ramos of NBS insisted that he did not know personally and was not
acquainted with Edmundo Barcelon, the latter categorically admitted that Alfredo Ramos
was his friend and that they have even discussed in one of the luncheon meetings the
matter of the sale of the Pasig property to NBS. George Feliciano emphatically said that
he was not a consultant of Mr. Ramos nor was he connected with him in any manner, but
his calling card states that he was a consultant to the chairman of the Pacific Rim Export
and Holdings Corp. whose chairman is Alfredo Ramos. This deliberate act of Mr. Feliciano
of concealing his being a consultant to Mr. Alfredo Ramos evidently was done by him to
avoid possible implication that he committed some underhanded maneuvers in
manipulating to have the subject property sold to NBS, instead of being sold to the
plaintiff.
(pp. 454-455, Original RTC Record.)
On the matter of credibility of witnesses where the findings or conclusions of the Court of Appeals and the
trial court are contrary to each other, the pronouncement of the Court in Serrano vs. Court of Appeals (196
SCRA 107 [1991]) bears stressing:
It is a settled principle of civil procedure that the conclusions of the trial court regarding
the credibility of witnesses are entitled to great respect from the appellate courts
because the trial court had an opportunity to observe the demeanor of witnesses while
giving testimony which may indicate their candor or lack thereof. While the Supreme
Court ordinarily does not rule on the issue of credibility of witnesses, that being a
question of fact not property raised in a petition under Rule 45, the Court has
undertaken to do so in exceptional situations where, for instance, as here, the trial court
and the Court of Appeals arrived at divergent conclusions on questions of fact and the
credibility of witnesses.
(at p. 110.)
On the fourth question of whether or not NBS is an innocent purchaser for value, the record shows that it is
not. It acted in bad faith.
Respondent NBS ignored the notice of lis pendens annotated on the title when it bought the lot. It was the
willingness and design of NBS to buy property already sold to another party which led BPI to dishonor the
contract with Limketkai.
Petitioner cites several badges of fraud indicating that BPI and NBS conspired to prevent petitioner from
paying the agreed price and getting possession of the property:
1.
The sale was supposed to be done through an authorized broker, but top officials of BPI
personally and directly took over this particular sale when a close friend became
interested.
2.
BPI Senior Vice President Edmundo Barcelon admitted that NBS's President, Alfredo
Ramos, was his friend; that they had lunch meetings before this incident and discussed
NB S's purchase of the lot. Barcelon's father was a business associate of Ramos.
3.
George Feliciano, in behalf of NBS, offered P5 million and later P7 million if petitioner
would drop the case and give up the lot. Feliciano went to petitioners office and haggled
with Alfonso Lim but failed to convince him inspite of various and increasing offers.
4.
In a place where big and permanent buildings abound, NBS had constructed only a
warehouse marked by easy portability. The warehouse is bolted to its foundations and can
easily be dismantled.
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 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, in its reply memorandum, does not refute or explain the above circumstance squarely. It simply cites
the badges of fraud mentioned in Oria vs. McMicking (21 Phil. 243 (1912]) and argues that the enumeration
there is exclusive. The decision in said case plainly states "the following are some of the circumstances
attending sales which have been denominated by courts (as) badges of fraud." There are innumerable
situations where fraud is manifested. One enumeration in a 1912 decision cannot possibly cover all
indications of fraud from that time up to the present and into the future.
The Court of Appeals did not discuss the issue of damages. Petitioner cites the fee for filing the amended
complaint to implead NBS, sheriff's fees, registration fees, plane fare and hotel expenses of Cebu-based
counsel. Petitioner also claimed, and the trial court awarded, damages for the profits and opportunity losses
caused to petitioner's business in the amount of P10,000,000.00.
We rule that the profits and the use of the land which were denied to petitioner because of the noncompliance or interference with a solemn obligation by respondents is somehow made up by the
appreciation in land values in the meantime.
Prescinding from the above, we rule that there was a perfected contract between BPI and petitioner
Limketkai; that the BPI officials who transacted with petitioner had full authority to bind the bank; that the
evidence supporting the sale is competent and admissible; and that the sale of the lot to NBS during the trial
of the case was characterized by bad faith.
WHEREFORE, the questioned judgment of the Court of Appeals is hereby REVERSED and SET ASIDE.
The June 10, 1991 judgment of Branch 151 of the Regional Trial Court of The National Capital Judicial
Region stationed in Pasig, Metro Manila is REINSTATED except for the award of Ten Million Pesos
(P10,000,000.00) damages which is hereby DELETED.
SO ORDERED.
Feliciano, Romero, Vitug and Panganiban, JJ ., concur.