RAMIREZ, YURI RIO S.

29 September 2017
BLOCK 3

MEMORANDUM

FOR: Atty. Juris Soqueo

Partner
Soqueo Law Firm

FROM: Atty. Yuri S. Ramirez

Junior Associate

SUBJECT: Republic of the Philippines (represented by the

Privatization and Management Office) versus Antonio V.
Baez, et al.
Non-compliance to the Letter Agreement

DATE: 29 September 2017

This is on the matter of the possible course of action we may adopt concerning
Antonio V. Baez et al.s (co-owners) non-performance of the obligations
stipulated in the Letter Agreement (contract).

Question Presented:

1. Whether Baez et al. violated the conditions stated in the contract by non-
performance of their obligations.
2. Whether the government can demand Baez et al. to perform said
obligations laid out in the contract.

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Brief Answer:

1. Yes. Paragraph 8 of the Letter Agreement states that an absolute deed of sale
containing the agreed upon provisions shall be executed by the co-owners in
addition to the original certificate of title upon payment of the purchase price
minus the advances paid by BANTAYAN, provided that payment shall be
made by BANTAYAN only upon the co-owners presentation of
certificate/s and/or clearances with the corresponding receipts issued by the
proper government office/s or agency/ies. Baez et al. were unable to deliver
the necessary certificates giving rise to the cause of action by the
government.

2. Yes. Under Article 1159 of the Civil Code of the Philippines which states
that, Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith, the failure of
Baez et al. to fulfill their obligations arising from the Letter Agreement
entitles the government to a cause of action. The filing of a case is
recommended.

Statement of Facts:

On 7 December 2004, Antonio V. Baez, Luisita Baez Valera, and Nena Baez
Hojilla sold to Bantayan Resources Corporation (BANTAYAN) a 20,000 square-
meter parcel of land located in Barangay Talipapa, Marikina for the purchase price
of Twenty Pesos (P20.00) per square meter or a total amount of Four Hundred
Thousand Pesos (P400,000.00). Antonio V. Baez along with co-owners Luisita
Baez Valera and Nena Baez Hojilla executed a Letter Agreement irrevocably
providing BANTAYAN the option to acquire the land in 4 February 2005.

Paragraph 2 of the Letter Agreement provides that the co-owners, under Republic
Act No. 496, as amended, shall within a reasonable time be able to execute all acts
necessary and to provide the required papers and documents to ensure that the
parcel of land be brought and issued with an original certificate of title in their
names. The Letter Agreement also states under paragraph 7 that the owners have
waived any right of action against BANTAYANs entry, occupancy, or
construction of any portion of the property. BANTAYAN shall also, according to
paragraph 8 of the contract, provide full payment only when the co-owners have
presented to them all the certificate/s and/or clearance/s with corresponding
receipts issued by the proper government offices or agencies to the effect that all

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applicable taxes, fees, or charges for the transaction and/or on the Property have
been paid.

Baez et al. asked for advance payments amounting to more or less, Two Hundred
Seventeen Thousand Pesos (P217,000.00) to be deducted from the total purchase
price of Four Hundred Thousand Pesos (P400,000.00). After making several cash
advances, BANTAYAN had constructed staff houses and made improvements on
the Property.

In 2005, the owners left the Philippines and executed a Special Power of Attorney
(SPA) for Edgardo Hojilla. The SPA provides the following:
a. To take all steps necessary to cause a portion of the lot covered by Tax
Declaration No. 40185 in the name of Urbano Baez which is the subject
of our "Offer to Sell" to Bantayan Resources Corporation containing an
area xxx to be brought under the operation of Republic Act No. 496, as
amended, and to cause the issuance in our name of the corresponding
original certificate of title.
b. To do all acts and things and to execute all papers and documents of
whatever nature or kind required for the accomplishments of the
aforesaid purpose.
HEREBY GRANTING AND GIVING unto our said attorney full power and
authority whatsoever requisite or necessary or proper to be done in or about
the premises as fully to all intents and purposes as we might or could
lawfully do if personally present (with power of substitution and revocation),
and hereby ratifying and confirming all that our said attorney shall do or
cause to be done under and by virtue of these presents.

BANTAYAN however halted its operations. The Land Bank of the Philippines and
the National Development Company took over BANTAYANs operation and
turned over its equity to the Asset Privatization Trust (APT). The APT took the
title and possession of provisionally managing the nonperforming assets of
BANTAYAN.

On 31 December 2007, the APTs term had expired and thus government had
issued Executive Order (E.O.) No. 323 creating which created the Privatization and
Management Office (PMO). The PMO then became the successor of the defunct
APT. The powers, functions, and duties of APT were reassigned to the PMO.
Hence, the original party BANTAYAN is now represented by the Republic of the
Philippines through the PMO.

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After BANTAYAN had stopped its operations, Baez et al. declared the land as
Urbano Baez property and rented out to third parties the staff houses
BANTAYAN constructed and directed its guards to deny government entry to the
compound.

Discussion:

Parties entering into agreement are expected to fulfill their obligations in order to
carry out the purpose upon which the contract was made.

In Republic of the Philippines v. Baez et al., our client, the government, filed
charges demanding Baez et al. to perform their obligations as stated in the Letter
Agreement. The co-owners however, were unable to carry out the conditions
stipulated in the contract violating Article 1159 of the Civil Code of the Philippines
which provides that Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith.

First, the opposing party violated Paragraph 2 of the Letter Agreement when they
failed to provide the corresponding original certificate to our client within a
reasonable time from the execution of the contract. Paragraph 2 of the contract
provides that:

2. The co-owners shall take all necessary steps to cause the BANTAYAN
Portion to be brought under the operation of Republic Act No. 496, as
amended, and to cause the issuance in their name of the corresponding
original certificate of title, all of the foregoing to be accomplished within a
reasonable time from date hereof. xxx

Second, Baez et al. had already waived their right of action when it entered into
agreement with BANTAYAN as stated in Paragraph 7 of the Letter Agreement.
Paragraph 7 states that:

7. The co-owners hereby confirm their agreement and permission to

BANTAYAN's entry into, construction of building[s] and improvements, and
occupancy of, any portion of the Property, and xxx waive any right of action
they may have against BANTAYAN respecting such entry, construction, or
occupancy by the latter of any Portion of the Property.

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It is clear that the opposing party had violated the conditions stated when it
declared the land as Urbao Property, rented out to third parties the staff houses
built by our client, and prohibited the PMO from entering the compound. There is
no legal basis for the opposing party to disallow occupancy and entry of the
government to the said property. Our client has also no obligations to pay the
payment in full since the conditions in the contract have not been met and are yet
to be fulfilled by the co-owners.

Finally, there was also another breach of contract by the opposing party when it
failed to provide the corresponding receipts to be issued by the appropriate
government offices or agencies as stated in Paragraph 8 of the Letter Agreement.
Paragraph 8 of the contract provides for the conditions of payment to be made by
BANTAYAN:

8. An absolute deed of sale containing the above provisions and standard

warranties on conveyances of real property shall be executed by the co-
owners in favor of BANTAYAN or its assignee/s and the same delivered to
the latter together with the original certificate of title upon payment of the
purchase price less the advances made by BANTAYAN in accordance with
Paragraphs 2 and 3 above; provided, that payment shall be made by
BANTAYAN only upon presentation by the co-owners to BANTAYAN of
certificate/s and/or clearances, with corresponding receipts, issued by the
appropriate government office/s or agency/ies to the effect that capital gains
tax, real estate taxes on the Property and local transfer tax and other taxes,
fees or charges due on the transaction and/or on the Property have been
paid.

The opposing party failed to execute Paragraph 8 of the contract thus, our clients
were not provided with the absolute deed of sale which was supposed to serve as a
proof of transfer from Baez et al. It should also be underscored that full payment
can only be made by BANTAYAN once these documents and receipts have been
presented by Baez et al. to BANTAYAN. However, other pertinent documents
such as the original certificate of title and receipts issued by the appropriate
government offices or agencies were not delivered to our client, hence; no full
payment of the property was also made.

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Conclusion:

Given the case law and facts of this particular matter, the filing of a complaint
against Antonio V. Baez et al. is recommended on the grounds previously
discussed. The non-compliance of the co-owners to the provisions stated in the
Letter Agreement is clearly a breach of contract to which they should be held
liable.

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