Maharlika Publishing Corporation vs.

Tagle
No. L-65594. July 9, 1986
GUTIERREZ, JR., J.:
Facts:
The Government Service Insurance System (GSIS) entered into a conditional contract to
sell the parcel of land as well as the printing machinery and equipment therein, to petitioner
Maharlika Publishing Corporation. Petitioner shall pay in monthly installment the amount of
P969.94 until fully paid and failure to pay within 90 days from due date shall cancel the contract.
Maharlika, then, failed to pay the installment for several months prompting GSIS to annul and
cancel the contract. Before the scheduled public bidding of the properties, Adolfo Calica,
president of petitioner, sent a letter with his intention to repurchase the foreclosed properties
which two checks were issued and submitted together with the proposal to the office of General
Manager. However, in the public bidding, Luz Tagle was held as the highest bidder since the
bidding committee rejected the petitioner’s bid. Petitioner refused to surrender the possession of
the property which prompted spouses Luz and Edilberto Tagle, respondents, to file a case for
recovery of possession which the CFI declared them entitled to the possession of the subject
land. Upon denial of motion for reconsideration, petitioner appeal to the CA which affirmed the
CFI. Thus, this petition.
Issue:
Whether Edilberto Tagle, a GSIS Division Chief, allowed to participate and bid for the
property being sold by GSIS?
Rule of law:
Art 1491 (1)
Application:
We declare it to be a policy of the law that public officers who hold positions of trust may
not bid directly or indirectly to acquire properties foreclosed by their offices and sold at public
auction. In so providing, the Code (Art. 1491) tends to prevent fraud, or more precisely, tends
not to give occasion for fraud, which is what can and must be done. The point is that he is a
public officer and his wife acts for and in his name in any transaction with the GSIS. If he is
allowed to participate in the public bidding of properties foreclosed or confiscated by the GSIS,
there will always be the suspicion among other bidders and the general public that the insider
official had access to information and connections with his fellow GSIS officials as to allow him
to eventually acquire the property. It is precisely the need to forestall such suspicions and to
restore confidence in the public service that the Civil Code now declares such transactions to be
void from the beginning and not merely voidable (Rubias v. Batiller, 51 SCRA 120). The reasons
are grounded on public order and
public policy.
Conclusion:
WHEREFORE, the decision and resolution of the Intermediate Appellate Court subject
of the instant petition for review on certiorari are hereby SET ASIDE. The conditional sale
entered into between public respondent GSIS and private respondents Luz and Edilberto Tagle is
declared NULL and VOID for being contrary to public policy.