UP Law BGC Eve 2024 Limketkai vs.
CA
OBLICON Statute of Frauds 1995 Melo
SUMMARY DOCTRINE
BPI sold a real property through its broker to Limketkai. It There are exceptions to the applicability of
was initially on cash basis, however, the parties later agreed the statutes of frauds:
on a term agreement: 10% downpayment, 90% payable in
90 days. Days later, Limketkai learned that BPI froze its 1) Abrenica rule - contracts infringing
offer to pay in term. It immediately tendered the balance of the Statute of Frauds are ratified
90%, however, BPI refused. At this time, no written contract when the defense fails to object, or
was made as evidence of sale. When the case reached the CA, asks questions on cross examination.
CA ruled that there was no perfected contract of sale due to
applicability of Statutes of Frauds. The Supreme Court ruled 2) Article 1403 of NCC - existence of a
reversed CA’s judgment and held that there are exceptions written note or memorandum
to the applicability of Statutes of Frauds: Abrenica rule and evidencing the contract.
Arti. 1403 of the NCC.
FACTS
May 14, 1976, Philippine Remnants Co., Inc. constituted BPI as its trustee to manage, administer, and sell
its real estate property.
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, concurred by Philippine Remnants.
Broker Revilla contacted Alfonso Lim of Limketkai who agreed to buy the land. On July 8, 1988,
petitioner's officials 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, Alfonso Lim and Albino Limketkai, went to BPI to confirm 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 finally agreed that the lot would be sold at P1,000.00 per square meter to be paid in cash.
Notwithstanding the final 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 officials 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, but was
refused.
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.
Limketkai:
o 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.
BPI:
o what transpired on this date were part of continuing negotiations to buy the land and not the
perfection of the sale.
o Vice-Presidents Aromin and Albano had no authority to bind BPI on this particular transaction
o 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.
Court of Appeals:
o because the sale involved real property, the statute of frauds is applicable.
o No contract of sale perfected.
RATIO
WON there was a perfected contract of sale between BPI and Limketkai? YES
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 efficacy 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
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).
WON the Statute of Frauds is applicable to the case? NO
Exceptions to the applicability of Statutes of Frauds
Abrenica Rule
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 ratified 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 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."
Article 1403 of NCC
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.
FALLO
Judgment of CA reversed.
