THIRD DIVISION

[G.R. No. 118509. December 1, 1995.]

LIMKETKAI SONS MILLING, INC. , petitioner, vs. COURT OF APPEALS,

BANK OF THE PHILIPPINE ISLANDS and NATIONAL BOOK STORE ,
respondents.

Amadeo D. Seno for petitioner.

Manahan, Cornago, De Vera, Aquino & Associates for respondent National Book Store, Inc.
Alfonso B. Verzosa for respondent Bank of P.I.

SYLLABUS

1. CIVIL LAW; CONTRACTS; PHASES AND PERFECTION; CASE AT BAR. The phases that
a contract goes through may be summarized as follows: a. preparation, conception or
generation, which is the period of negotiation and bargaining, ending at the moment of
agreement of the parties; b. perfection or birth of the contract, which is the moment when
the parties come to agree on the terms of the contract, and c. consummation or deaths,
which is the ful llment or performance of the terms agreed upon in the contract. In the
case at bar, the negotiation or preparation stage of the sale started with the authority
given by Philippine Remnants to BPI to sell the lot, followed by (a) the authority given by
BPI and con rmed by Philippine Remnants to broker Revilla to sell the property, (b) the
offer to sell to Limketkai, (c) the inspection of the property and nally (d) the negotiations
with Aromin and Albano at the BPI of ces. The perfection of the contract took place when
Aromin and Albano, acting 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.
2. ID.; ID.; SALE; VALIDITY NOT AFFECTED BY REQUISITE FORM. 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.
The requisite form under Article 1458 of the Civil Code is merely for greater ef cacy or
convenience as the failure to comply therewith does not affect the validity and binding
effect of the act between the parties. 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). IacHAE

3. ID.; ID.; ID.; REAL PROPERTY; STATUTE OF FRAUDS; WAIVED BY CROSS-EXAMINATION.

That the sale involved real property and therefore the statute of frauds is applicable, it
was held in Abrenica v. Gonda that contracts infringing the Statute of Frauds are rati ed
when the defense fails to object, or asks questions on cross-examination. 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
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 Revilla, and other details of the litigated contract. Under the Abrenica rule, 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. The reason for the rule is "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." 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.
4. ID.; ID.; ID.; BUYER IN BAD FAITH. NBS is not an innocent purchaser for value. 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 but 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.IDcAHT

5. REMEDIAL LAW; EVIDENCE; WITNESS; CREDIBILITY; FINDINGS OF TRIAL COURT

RESPECTED AS AGAINST THAT OF APPELLATE COURT. On the matter of credibility of
witnesses where the ndings or conclusions of the Court of Appeals and the trial court are
contrary to each other, We held: The trial court directly observed the demeanor and manner
of testifying of the witnesses while the Court of Appeals relied merely on the transcript of
stenographic notes.

DECISION

MELO, J : p

The issue in the petition before us is whether or not there was a perfected contract
between petitioner Limketkai Sons Milling, Inc. and respondent Bank of the Philippine
Islands (BPI) covering the sale of a parcel of land, approximately 3.3 hectares in area, and
located in Barrio Bagong Ilog, Pasig City, Metro Manila.
Branch 151 of the Regional Trial Court of the National Capital Region stationed in Pasig
ruled that there was a perfected contract of sale petitioner and BPI. It stated that there
was mutual consent between the parties; the subject matter is de nite; and the
consideration was determined. It concluded that all the elements of a consensual contract
are attendant. It ordered the cancellation of a sale effected by BPI to respondent National
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 Book Store (NBS) while the case was pending and the nulli cation of a title issued in favor
of said respondent NBS.
Upon elevation of the case to the Court of Appeals, it was held that no contract of sale was
perfected because there was no concurrence of the three requisites enumerated in Article
1318 of the Civil Code. The decision of the trial court was reversed and the complaint
dismissed.
Hence, the instant petition.
Shorn of the interpretations given to the acts of those who participated in the disputed
sale, the ndings of facts of the trial court and the Court of Appeals narrate basically the
same events and occurrences. The records show that on May 14, 1976, Philippine
Remnants Co., Inc. constituted BPI as its trustee to manage, administer, and sell its real
estate property. One such piece of property placed under trust was the disputed lot, a
33,056-square meter lot at Barrio Bagong Ilog, Pasig, Metro Manila covered by Transfer
Certificate of Title No. 493122.
On June 23, 1988, Pedro Revilla, Jr., a licensed real estate broker was given formal
authority by BPI to sell the lot for P1,000.00 per square meter. This arrangement was
concurred in by the owners of the Philippine Remnants.
Broker Revilla contacted Alfonso Lim of petitioner company who agreed to buy the land.
On July 8, 1988, petitioner's of cials and Revilla were given permission by Rolando V.
Aromin, BPI Assistant Vice-President, to enter and view the property they were buying.
On July 9, 1988, Revilla formally informed BPI that he had procured a buyer, herein
petitioner. On July 11, 1988, petitioner's of cials, Alfonso Lim and Albino Limketkai, went
to BPI to con rm the sale. They were entertained by Vice-President Merlin Albano and
Asst. Vice-President Aromin. Petitioner asked that the price of P1,000.00 per square
meter be reduced to P900.00 while Albano stated the price to be P1,100.00. The parties
nally agreed that the lot would be sold at P1,000.00 per square meter to be paid in cash.
Since the authority to sell was on a rst come, rst served and non-exclusive basis, it may
be mentioned at this juncture that there is no dispute over petitioner's being the rst
comer and the buyer to be first served.
Notwithstanding the nal agreement to pay P1,000.00 per square meter on a cash basis,
Alfonso Lim asked if it was possible to pay on terms. The bank of cials stated that there
was no harm in trying to ask for payment on terms because in previous transactions, the
same had been allowed. It was the understanding, however, that should the term payment
be disapproved, then the price shall be paid in cash.
It was Albano who dictated the terms under which the installment payment may be
approved, and acting thereon, Alfonso Lim, on the same date, July 11, 1988, wrote BPI
through Merlin Albano embodying the payment initially of 10% and the remaining 90%
within a period of 90 days.
Two or three days later, petitioner learned that its offer to pay on terms had been frozen.
Alfonso Lim went to BPI on July 18, 1988 and tendered the full payment of
P33,056,000.00 to Albano. The payment was refused 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.

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 An action for speci c performance with damages was thereupon led 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
Certi cate 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. Ordering defendant BPI, upon receipt by it from plaintiff of the sum of

P33,056,000,00 to execute a Deed of Sale in favor of plaintiff of the
aforementioned property at the price of P1,000.00 per square meter; in default
thereof, the Clerk of this Court is directed to execute the said deed;
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.
Costs against defendants.
(pp. 44-45, Rollo.)

As earlier intimated, upon the decision being appealed, the Court of Appeals (Buena [P],
Rasul, and Mabutas, JJ.), on August 12, 1994, reversed the trial court's decision and
dismissed petitioner's complaint for specific performance and damages.
The issues raised by the parties revolve around the following four questions:
(1) 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?
(2) Were the bank of cials involved in the transaction authorized by BPI to enter into the
questioned contract?
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 (3) Is there competent and admissible evidence to support the alleged meeting of the
minds?
(4) 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 con rmed 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 of cials and broker Revilla nalized 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 counter-offer
which negates the existence of a perfected contract.
The alleged lack of authority of the bank of cials 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 testi ed 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 rm up the sale of the land, Revilla saw it t to bring BPI of cials
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 of cials. 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 Of cer. He directly
supervised the BPI Real Property Management Unit. He had been in the Real Estate
Division since 1985 and was the head supervising of cer 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).

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 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 of cer routinely handling real estate transactions and, as Trust Of cer,
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 Of cer 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 bene t. BPI later dismissed Aromin
because it appeared that a top of cial 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 testi ed 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 rm's property was addressed to
Aromin. The P1,000.00 gure on the rst 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 of cers 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
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 of Aromin to bind the bank, except for the self-serving memoranda or letters later
produced by BPI that Aromin was an inef cient and undesirable of cer and who, in fact,
was dismissed after he testi ed in this case. But, of course, Aromin's alleged inef ciency
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 nally 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
speci ed 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 rm 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. And did buyer Limketkai agree to pay m cash in case the offer of terms will be
cash (disapproved).

A. Yes. sir.
Q. At the start, did they show their willingness to pay cash?
A. Yes sir.
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 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?
A. Yes. sir.
Q. So the amount was no longer subject to the approval or disapproval of the
committee, it is only on the terms?
A. Yes sir.
(tsn, Dec. 3, 1990, pp. 18-19; Emphasis supplied.)

The record shows that if payment was in cash, either broker Revilla or Aromin had full
authority. But because petitioner took advantage of the suggestion of Vice-President
Albano, the matter was sent to higher of cials. Immediately upon learning that payment on
terms was frozen and/or denied, Limketkai exercised his right within the period given to
him and tendered payment in full. The BPI rejected the payment.
In its Comment and Memorandum, respondent NBS cites Ang Yu Asuncion vs. Court of
Appeals (238 SCRA 602 [1994]) to bolster its case. Contrariwise, it would seem that the
legal principles found in said case strengthen and support petitioner's submission that the
contract was perfected upon the meeting of the minds of the parties.
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 con rmed by
Philippine Remnants to broker Revilla to sell the property, (b) the offer to sell to Limketkai,
(c) the inspection of the property and nally (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 phases that a contract goes through may be summarized as follows:
a. preparation, conception or generation, which is the period of negotiation and
bargaining, ending at the moment of agreement of the parties;
b. perfection or birth of the contract, which is the moment when the parties come
to agree on the terms of the contract; and
c. consummation or death, which is the ful llment or performance of the terms
agreed upon in the contract (Toyota Shaw Inc. vs. Court of Appeals, G.R. No.
116650, May 23, 1995).

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, nally, its consummation. Negotiation covers the period from the
time the prospective contracting parties indicate interest in the contract t o 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.
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 A contract which requires, in addition to the above, the delivery of the object of the
agreement, as in a pledge or commodatum, is commonly referred to as a real
contract. In a solemn contract, compliance with certain formalities prescribed by
law, such as in a donation of real property, is essential in order to make the act
valid, the prescribed form being thereby an essential element thereof. The stage
of consummation begins when the parties perform their respective undertakings
under the contract culminating in the extinguishment thereof.

Until the contract is perfected, it cannot, as an independent source of obligation,

serve as a binding juridical relation. In sales, particularly, to which the topic for
discussion about the case at bench belongs, the contract is perfected when a
person, called the seller, obligates himself, for a price certain, to deliver and to
transfer ownership of a thing or right to another, called the buyer, over which the
latter agrees.
(238 SCRA 602; 611 [1994].)

I n Villonco Realty Company vs. Bormaheco (65 SCRA 3 5 2 [1975]), bearing factual
antecedents similar to this case, the Court, through Justice Aquino (later to be Chief
Justice), quoting authorities, upheld he perfection of the contract of sale thusly:
"The contract of sale is perfected at the moment there is a 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." (Art. 1475 Ibid).

xxx xxx xxx

"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 quali ed acceptance constitutes a
counter-offer" (Art. 1319, Civil Code). "An acceptance may be express or implied"
(Art. 1320, Civil Code).
xxx xxx 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 xxx 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
of cial 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
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 requisite form under Article 1458 of the Civil Code is merely for greater ef cacy 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 rati ed when the defense fails to object,
or asks questions on cross-examination. 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.

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 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 suf ces to make the verbal agreement enforceable, taking it out of the
operation of the statute. (Emphasis supplied)
xxx xxx xxx
"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.

([Footnote 26, Paredes vs. Espino, 22 SCRA 1000 [1968]).

While there is no written contract of sale of the Pasig property executed by BPI in
favor of plaintiff, there are abundant notes and memoranda extant in the records
of this case evidencing the elements of a perfected contract. There is Exhibit P,
the letter of Kenneth Richard Awad addressed to Roland Aromin, authorizing the
sale of the subject property at the price of P1,000.00 per square meter giving 2%
commission to the broker and instructing that the sale be on cash basis.
Concomitantly, on the basis of the instruction of Mr. Awad, (Exh. P), an authority
to sell, (Exh. B) was issued by BPI to Pedro Revilla, Jr., representing Assetrade Co.,
authorizing the latter to sell the property at the initial quoted price of P1,000.00
per square meter which was altered on an unaccepted offer by Technoland. After
the letter authority was issued to Mr. Revilla, a letter authority was signed by Mr.
Aromin allowing the buyer to enter the premises of the property to inspect the
same (Exh. C). On July 9, 1938, Pedro Revilla, Jr., acting as agent of BPI, wrote a
letter to BPI informing it that he had procured a buyer in the name of Limketkai
Sons Milling, Inc. with of ces at Limketkai Bldg., Greenhills, San Juan, Metro
Manila, represented by its Exec. Vice-President, Alfonso Lim (Exh. D). On July 11,
1988, the plaintiff, through Alfonso Lim, wrote a letter to the bank, through Merlin
Albano, con rming their transaction regarding the purchase of the subject
property (Exh. E). On July 18, 1988, the plaintiff tendered upon the of cials of the
bank a check for P33,056,000.00 covered by Check No. CAS 10883, dated July 18,
1988. On July 1, 1988, Alfonso Zamora instructed Mr. Aromin in a letter to
resubmit new offers only if there is no transaction closed with Assetrade Co. (Exh.
S). Combining all these notes and memoranda, the Court is convinced of the
existence of perfected contract of sale. Aptly, the Supreme Court, citing American
cases with approval, held:
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 "'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 satis es all the requirements of the
statute as to contents and signature, as discussed respectively infra secs. 178-
200, and infra sec. 201-205, is a suf cient memorandum or note. A memorandum
may be written as well with lead pencil as with pen and ink. It may also be lled in
on a printed form.' (37 C.J.S., 653-654).

"'The note or memorandum required by the statute of frauds need not be

contained in a single document, nor, when contained in two or more papers, need
each paper be suf cient as to contents and signature to satisfy the statute. Two
or more writings properly connected may be considered together, matters missing
or uncertain in one may be supplied or rendered certain by another, and their
suf ciency will depend on whether, taken together, they meet the requirements of
the statute as to contents and the requirements of the statutes as to signature, as
considered respectively infra secs. 179-200 and secs. 201-215."'
(pp. 460-463, Original RTC Record)

The credibility of witnesses is also decisive in this case. The trial court directly observed
the demeanor and manner of testifying of the witnesses while the Court of Appeals relied
merely on the transcript of stenographic notes.
In this regard, the court of origin had this to say:
Apart from weighing the merits of the evidence of the parties, the Court had
occasion to observe the demeanor of the witnesses they presented. This is one
important factor that inclined the Court to believe in the version given by the
plaintiff because its witnesses, including hostile witness Roland V. Aromin, an
assistant vice-president of the bank, were straight forward, candid and
unhesitating in giving their respective testimonies. Upon the other hand, the
witnesses of BPI were evasive, less than candid and hesitant in giving their
answers to cross examination questions. Moreover, the witnesses for BPI and
NBS contradicted each other. Fernando Sison III insisted that the authority to sell
issued to Mr. Revilla was merely an evidence by which a broker may convince a
prospective buyer that he had authority to offer the property mentioned therein for
sale and did not bind the bank. On the contrary, Alfonso Zamora, a Senior Vice-
President of the bank, admitted that the authority to sell issued to Mr. Pedro
Revilla, Jr. was valid, effective and binding upon the bank being signed by two
class "A" signatories and that the bank cannot back out from its commitment in
the authority to sell to Mr. Revilla.

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 Paci c 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.
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 (pp. 454-455, Original RTC Record.)

On the matter of credibility of witnesses where the ndings 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 of cials 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 of ce 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
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 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
ling 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 pro ts and opportunity losses caused to petitioner's business
in the amount of P10,000,000.00.
We rule that the pro ts and the use of the land which were denied to petitioner because of
the non-compliance 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 of cials 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.

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