MAHARLIKA PUBLISHING CORP V TAGLE
FACTS
GSIS owned a parcel of land with a building and printing equipment in Paco, Manila. It was sold to Maharlika in a Conditional Contract of Sale with the stipulation that if Maharlika failed to pay monthly installments in 90 days, the GSIS would automatically cancel the contract. Because Maharlika failed to pay several monthly installments, GSIS demanded that Maharlika vacate the premises. Even though Maharlika refused to do so, the GSIS published an advertisement inviting the public to bid in a public auction. A day before the scheduled bidding, Adolfo Calica, the President of Maharlika, gave the GSIS head office 2 checks worth 11,000 and a proposal for a compromise agreement. The GSIS General Manager Roman Cruz gave a not to Maharlika saying “Hold Bidding. Discuss with me.” However, the public bidding took place as scheduled and the property was subsequently awarded to Luz Tagle, the wife of the GSIS Retirement Division Chief. Maharlika demanded that the sale be considered null and void, as Mrs. Tagle should have been disqualified from bidding for the GSIS property. RTC and CA both ruled that the Tagles were entitled to the property and Maharlika should vacate the premises.
ISSUE
Whether or not Tagle are entitled to the property ?
HELD
NO. The sale to them was against public policy. First of all, the GSIS head office was stopped from claiming that they did not give the impression to Maharlika that they were accepting the proposal for a compromise agreement. The act of the general manager is binding on GSIS. Second, Article 1491 (4) of the CC provides that public officers and employees are prohibited from purchasing the property of the state or any GOCC or institution, the administration of which has been entrusted to them cannot purchase, even at public or judicial auction, either in person or through the mediation of another. The SC held that as an employee of the GSIS, Edilberto Tagle and his wife are disqualified from bidding on the property belonging to the GSIS because it gives the impression that there was politics involved in the sale. It is not necessary that actual fraud be shown, for a contract which tends to injure the public service is void although the parties entered into it honestly and proceeded under it in good faith.
