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Republic of the Philippines REGIONAL TRIAL COURT Manila BRANCH 19

Spouses Luz R. Tagle and Edilberto Tagle and the Government Service Insurance Corporation Plaintiff - Versus Maharlika Publishing Corporation, Angelica Calica, Adolfo Calica and the Heirs of the late Pio Calica Defendant x--------------------x

Civil Case No. 2010-06-0023

For RECOVERY OF POSSESSION WITH DAMAGES

MEMORANDUM FOR THE DEFENDANT

COMES NOW, the Defendant, through the undersigned counsel and unto this Honorable Court, most respectfully submits herein Memorandum, and avers: PREFARATORY STATEMENT The prohibitions on public officers imposed by Article 1491is grounded on public policy. The prohibition seeks to prevent frauds in the part of such persons and minimize temptations to the exertion of undue and improper influence. The law basically does not trust human nature to resists the temptation likely to arise out of antagonism between the interest of the seller and buyer.

STATEMENT OF FACTS

The Government Service Insurance System (GSIS) owns a 1,373 square meters parcel of land situated in the district of Paco covered by Transfer Certificate of Title No. 5986 issued by the Registry of Deeds of Manila. GSIS then entered into a conditional contract to sell with Maharlika Publishing Corporation, commonly known as Maharlika Publ., over the mentioned parcel of land together with the building thereon and the printing machinery and equipment therein. Amongst the condition in the sale provides that Maharlika Publ. shall pay GSIS a monthly installment of nine hundred sixty nine pesos and ninety four cents ( 969.94) and in case it fails to pay any monthly installment within ninety days from being due, the contract shall be deemed cancelled. After Maharlika Publ. fails to pay the installment for several months, GSIS then notified it in writing of its remaining debt and warned that the conditions of the contract would be enforced in case it fails to settle its account within fifteen (15) days. Still Maharlika Publ. fails to settle the unpaid account; GSIS then notified it for the second time stating therein that the conditional contract of sale is annulled and cancelled and further requiring Maharika Publ. to sign a lease contract. Maharlika refused to sign the lease contract and to vacate the premises.

Later, GSIS published an invitation to bid several of its acquired properties, among which is the property subject of the contract. But in the day before the scheduled public bidding, Maharlika Publ. through its president Adolfo Calica addressed to GSIS letter-proposal to repurchase their foreclose property. The letter proposal then was discussed by Adolfo Calica with GSIS Board Vice-Chairman Leonilo Ocampo who wrote a note to the General Manager Roman Cruz Jr., the last paragraph which reads as follows: It sounds fair and reasonable subject to your wise judgment, as ususal. (Exhibit 4, Maharlika) Mr. Calica brought the letter-proposal and Ocampos note to General Manager Cruz Jr., who in turn wrote on the face of Exhibit 4-Maharlika a note to one Mr. Ibanez which reads: Hold Bidding. Discuss with me. The letter-proposal with two (2) checks was submitted to the office of General Manager Cruz Jr., and was received by his Secretary. However, the public bidding of this particular property was held as scheduled prompting Adolfo Calica to submit his bid to the Bidding Committing represented by the same checks submitted to General Manager Cruz Jr., together with his letter-proposal. The proposal reads: I bid to match the highest bidder. The bidding committee rejected Maharlika Publ.s bid for being imperfect and recommend the acceptance Luz Tagles bid. Luz Tagle is the wife of Edilberto Tagle who is the Chief of the Retirement Division of GSIS. After approval and recommendation of the sale of the subject property to Luz Tagle, GSIS executed a Deed of Conditional Sale in favor of the Tagles. The Tagles then move for the surrender of the possession by Maharlika Publ. of the property. Maharlika Publ. refuses which prompted the Tagles to file a petition for the Recovery of Possession with Damages with the Regional Trial Court of Manila.

For reason of the above circumstance, Maharlika Publ. sought for the dismissal of the petition for the Recovery of Damages filed by the Tagles on the ground that the contract of sale is void because the contract of sale falls within the prohibition as provided in Article 1491 par. 4 of the New Civil Code with respect prohibition to public officials and employees.

ISSUE

WHETHER OR NOT THE CONDITIONAL CONTRACT OF SALE BETWEEN MRS. LUZ TAGLE AND GSIS FALL WITHIN THE PROHIBITION WITH RESPECT TO PUBLIC OFFICIALS AND EMPLOYEES AS PROVIDED IN ARTICLE 1491 OF THE NEW CIVIL CODE, MR. EDILBERTO TAGLE BEING THE RETIREMENT DIVISION CHIEF OF GSIS. DISCUSSION AND ARGUMENTS

The conditional contract of sale between Mrs. Luz Tagle and GSIS fall within the prohibition with respect to public officials and employees as provided in Article 1491 of the New Civil Code, Mr. Edilberto Tagle being the Retirement Division Chief of GSIS.

Article XI, Section 1 of the 1987 Constitution states that: Public Office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives. Further stated in Ancheta vs. Hilario (96 SCRA 62) xxx xxx xxx A public servant must exhibit at all times the highest sense of honesty and integrity Under Article 1491 of the Civil Code the following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: xxx xxx xxx 4) Public officers and employees, the property of the State or of any subdivisions thereof, or of any government owned and controlled corporation, or institution, the administration of which has been entrusted to them; this provision shall apply to judges and government of which has been entrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; xxx xxx xxx The above article provides for persons by reason of the relation of trust with the persons under their charge or their peculiar control over the property, are prohibited from acquiring said property, either directly or indirectly, and whether in private or public sale. (Rubias vs. Batiller, 51 SCRA 120) [1973]) In the case at hand, Mr. Edilberto Tagle, being the Chief of the Retirement Division of GSIS is definitely not an ordinary employee without influence and authority. The mere fact that he exercises ample authority with respect to a particular activity that is the retirement of government employees, definitely evidence that his influence cannot be dispensed with. In addition his wife merely acts for and in his behalf in its transaction with GSIS. Furthermore, the fact that he has been allowed to participate in the public bidding of properties foreclosed or confiscated by the GSIS creates the suspicion among other bidders and the general public, that being an insider official, he has 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 declares such transactions to be void from the beginning and not merely voidable. The disqualification imposed by Article 1491 on the person enumerated is grounded on public policy considerations which disallow the transactions entered into by them, whether directly or indirectly, in view of the fiduciary relationship involved or the peculiar control exercised by these individuals over the properties or rights covered. (Mananquil vs. Villegas, 189 SCRA 335 [1990]) The prohibitions seek to prevent frauds on the part of such persons and minimize temptations to the exertion of undue and improper influence. (It is grounded in) the fear that greed might get the better of the sentiments of loyalty and disinterestedness is the reason underlying Article 1491. The law does not trust human nature to resist the temptations likely to

arise out of antagonism between the interest of the seller and buyer. (Gregorio Araneta Inc. vs. Tuazon de Paterno, 91 Phil 786) [1952]) Having established that Mr. Tagle falls within the definition of public officers prohibited in Article 1491 of the Civil Code, there is no need to pass upon the issue of irregularity in the appearance of the private respondents bid and the alleged inference of fraud flowing from it. The contract of sale between Luz Tagle and GSIS then being prohibited as provided in Article 1491 is null and void. The action then filed by Spouses Tagle for Recovery of Possession with Damages.

PRAYER

WHEREFORE, prescinding from the foregoing, it is most respectfully prayed of this Honorable Court that the prayer in stated in the memorandum be granted. The plaintiffs further pray for such other relief and remedies that are deemed just and equitable under premises. Puerto Princesa City, 20 August 2011

ARIEL A. ABIS Counsel for the Defendant Guinto Bldg. Maj. Escano Street Tiniguiban, Puerto Princesa City PTR No. _______________, PPC IBP No. ________________, PPC

Copy Furnished: Counsel for the Plaintiff Abis Bldg. Gonzales Street Poblacion, Taytay, Palawan

EXPLANATION OF SERVICE

Copy of the Memorandum was served to the Defendants counsel by registered mail due to time and distance constraints, and for lack of the undersigneds staff who can serve the same in person.