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