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TICKLER: Void and Inexistent Contracts, Definition and Classes

G.R. No. L-65594 July 9, 1986

MAHARLIKA PUBLISHING CORPORATION, ANGELA CALICA, ADOLFO CALICA and the HEIRS OF THE LATE
PIO CALICA, petitioners,
vs.
SPOUSES LUZ R. TAGLE and EDILBERTO TAGLE and the GOVERNMENT SERVICE INSURANCE SYSTEM and
the HONORABLE INTERMEDIATE APPELLATE COURT, respondents.

DOCTRINE:

Under Article 1475 of the Civil Code, states that "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 law governing the form of
contracts. "

FACTS

The Respondent, Government Service Insurance System (GSIS) owned a parcel of land with a building and
printing equipment in Paco, Manila. The land 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. Hence, this petition.

ISSUE

Whether or not the contract is perfected between the parties

HELD

Yes, there was an earlier contract to sell the same properties to the petitioners and the contract was
perfected and there had been partial compliance with its terms. The petitioners are not complete
strangers entering into a contract with respondent GSIS for the first time. The transaction now under
question in this case merely referred to the curing of certain defects which led to the cancellation of the
earlier contract by GSIS. The acceptance of the petitioners' letter-proposal by Mr. Roman Cruz, Jr., the
person with authority to do so, and his order to his subordinates to stop the bidding so that they could
first discuss the matter with him, created an agreement of binding nature with the petitioners. 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.
The prayer of petitioners for the repurchase of the subject property in an amount equal to the amount
offered by private respondents and to retain ownership and possession of the disputed property is
GRANTED.

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