POLYTECHNIC UNIVERSITY OF THE PHILIPPINES vs. CA & FIRESTONE

FACTS:

(Let's digest quick.. I have a class today)

Petitioner NDC (National Development Corp.)  a GOCC owned & had in its disposal a 10 hectar property  which is the NDC Compound.  

A portion of which was leased to private respondent FIRESTONE CORPORATION for ceramic manufacturing business. Both parties entered into a contract of lease for a term of 10 years renewable for another 10 years. Firestone built several warehouses and facilities therein. 

Prior to the expiration of the said lease contract, Firestone wrote NDC requesting for an extension of their lease agreement. Since business between NDC and FIRESTONE went smooth, the lease was twice renewed, this time conferring upon Firestone an express grant the first option to purchase the leased premise in the event that NDC decided to dispose and sell the properties including the lot. So Firestone now has the right of first refusal. 

Eventually though, a Memorandum Order No. 214 was issued by then President Corazon Aquino ordering the transfer of the whole NDC compound to the National Government.  The order of conveyance would automatically result in the cancellation of NDC's total obligation in favor of the National Government. The memorandum order was in consideration of NDC’s P57M debt. 

And so, pursuant thereto, NDC had no choice but to transfer the property to Polytechnic University of the Philippines, another GOCC, and in need of expansion.  

Firestone therefore instituted an action for specific performance to compel NDC to sell the leased property in its favor. 

ISSUE:

Whether or not there is a valid sale between NDC and PUP. 

The answer is: WELL YES, BUT...

RULING:

All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the "disposition" and "transfer" of the property from NDC to PUP - consent of the parties, determinate subject matter, and consideration therefor.

1. consent is manifested by the Memo Order No. 214, 

2. the subject matter was the property subject of the dispute.

3. the cancellation of liabilities constituted consideration

But the argument of PUP and NDC was untenable.  GOCCs have personalities separate and distinct from the government. “Sale” brings within its grasp the whole gamut of transfers where ownership of a thing is ceded for consideration.  

Since a sale was involved, the right of first refusal in favor of Firestone must be respected. It forms an integral part of the lease and is supported by consideration—Firestone having made substantial investments therein. 

Only when Firestone fails to exercise such right may the sale to PUP proceed.

So here we see that GOCCs even though ‘government owned & controlled’ has a personality of its own distinct and separate from that of the government. 

And the intervention in a transaction of the Office of the President thru the Executive Secretary DOES NOT CHANGE THE INDEPENDENT EXISTENCE of a government entity as it deals with another government entity. 

LIMKETKAI vs. CA (250 SCRA 523)

Had it ever happened to you. When something youve read somewhat unexpectedly pops up and rose from its pages. Sophomore 2nd year law. Naglalakad kame sa I think Binondo or Avenida ba yun o Sta. Cruz Manila nung nakita namen old dilpidated building may sirasirang engraving sa taas nakalagay 'LIMKETKAI'. "Ooyy Limketkaiii!!.. yan yung nasa kaso sa Sales ah!!!". Sabay turo.. tuwang-tuwa pa.. parang mga engots.. yun pala tumatawid ng kalye, intersection pa nampu.. ops!  'I remember the stupid things. The mood rings, the bracelet and the beads, nickels and dimes, yours and mine. Did you cash in all your dreams.'

Tsk tsk, the after effect of copiously reading the SCRA, you are ushered in to all the gooey stuffs and  juicy inside stories. And best of it is you get to smile when what you see confirms what you've read.

This is a sales case. On 1976, Philippine Remnants Company constituted BPI as its trustee to manage, administer, and sell its real estate property. It must have been included together with the BPI list of foreclosed properties just for the sake of selling I guess. The land property was 33,000 sqm., located at barrio Bagong Ilog, Pasig. Covered by a TCT numbe… hmhmhm 

Geez,  I remember my Sales professor whose so particular with details. Aw! it was such a pain-in-the-ass when we were reciting. Like if you say “Facts states that Juan Manuel Antonio executed a Deed of Sale in favor of Ricardo De la Cruz selling to him his 2005 Ford Expedition in consideration of the amount of more than half a million” “How much?”  “Roughly 600 thousand” “How much Mr. Clavecilla?” “679.50 thousand pesos sir” “Continue” “Upon signing of the deed of sale De la Cruz handed to Antonio 250 thousand bills in cold cash sacked in a brown paper package and together with it right there and then executed  a promissory note amounting to the rest of the obligation” “Was the delivery effected?” “The car was parked at the… McDonalds?.... Jollibee parking lot” “And where is this parking lot located?” “Ahm Pasig?” “Where in Pasig?” “Ahh.. Libis? (Hahaha)” I look at my brods and their lips are moving but I couldn't understand a single word. “Sit down Mr. Clavecilla…. Mr. Conrado… what is the color of the car?” “Green sir” “What is the plate number?” (Hahaha.. nampu..).  Well of course it’s understandable, this is not criminal law, or  civil, or evidence were talking about. This is Sales, in sales you gotta be detailed. Undetailed transactions vitiates consent.     

Anyway. 1988, BPI formally authorized Revilla a licensed real estate broker to sell the lot for 1 grand per square meter. Of course if you’re a licensed broker the phone is your closest friend. So he conducted a series of calls to his string of clients and ended up with Lim of Limketkai.

July 11, 1998, Limketkai agreed to buy the land se he went to BPI to confirm the sale. The agreement was that the lot was to be sold at P1,000 per square meter and to be paid in cash. 

Now here comes Limketkai coming back. Notwithstanding the final agreement, Lim asked if it was possible to pay in terms. To which the bank officials said “well there’s no harm in trying.. it happened before in our previous transactions”.  It happens right? When you’ve just closed a deal you sometimes walk away with that notion that… “Dang! I should’ve haggled, or bargained, or negotiated further at least.” 

So Lim subsequently after the final agreement asked for easy terms, of which the bank officials agreed upon. And so BPI Vice President Albano dictated the terms. 10% initial payment, the remaining 90% will paid within a period of 90 days. Of course, the proposal would still be subject for BPI approval. At such occurrence the parties agreed that if it be disapproved Limketkai will be bound to pay the whole amount in cash.  

Here’s the controversy. About three days later Limketkai learned that BPI’s program offer to pay in terms had been frozen. Eh Limketkai wanted the property so much eh, so he went to the doorsteps of BPI the very first thing in the morning to tender the full amount of payment. Here’s the thing, the payment was refused. And VP Albano just stated that the authority to sell the subject land had been withdrawn from his unit.

So consequently action then was filed by Limketkai for specific performance with attached damages. Limketkai claims that the contract to sell and buy was perfected on July 11, 1998 as stated above. 

BPI countered that what transpired on July 11 was part of the continuing negotiations to buy the land and not the perfection of the sale. The subsequent attempt by Limketkai to pay under terms constitute a counter-offer which negates the existence of a contract. 

Here’s what made it more complicated. While the trial was pending at the lower court, BPI sold the subject land to National Bookstore. Booooh!!! (Laking National ah.. joke.. I love National). Of which NBS claims that it was an innocent purchaser for value. 

So what happened? How did the SC see all these? 

It favored Limketkai. Records did not sustain BPI’s contention that the VP and AVP had no authority to bind BPI on the particular transaction. Syempre naman di ba? If you’re a VP or AVP of the Real Property Management Department, eh di that means you directly supervise the department or unit. Besides you’re a Trust Officer, who else would be given trust by the company to manage the disposal of the bank foreclosed or entrusted properties than you. You’re the perfect man to make the decisions. (Parang sinabi mo lang sa nagpapala ng buhangin na gustong arkilahin service and equipment mo na tipong trabahador na biglang nag-subcontract, “di namin kaya yan eh” “sige bayaran na kita kahit kalahati na ng sweldo ko” “mahirap yan eh” tas sa likod mo may tractor. kasi gusto mo buong sweldo nya mapunta sayo, pano na kakaen yung tao). Besides, the Trust Committee they were talking about was all made up, and almost never existed.

It was also put on record that during the cross-examination in the lower court the AVP admitted there was meeting of the mind.  And that the parties agreed that should terms be disapproved, the same should be paid in full. 

Now regarding National Bookstore. Sorry kung laking National Bookstore ka  NBS is not an innocent purchaser for value here. NBS had knowledge of the pending suit. And it even asked Limketkai to drop the case. 

So, Limketkai wins this case.