FIRSTDIVISION

[G.R.No.118248.April5,2000]

DKCHOLDINGSCORPORATION,petitioner,vs.COURTOFAPPEALS,VICTORU.
BARTOLOMEandREGISTEROFDEEDSFORMETROMANILA,DISTRICTIII,
respondents.francis
DECISION
YNARES_SANTIAGO,J.:
ThisisapetitionforreviewoncertiorariseekingthereversaloftheDecember5,1994Decisionofthe
CourtofAppealsinCAG.R.CVNo.40849entitled"DKCHoldingsCorporationvs.VictorU.
Bartolome,etal.",[1]affirmingintototheJanuary4,1993DecisionoftheRegionalTrialCourtof
Valenzuela,Branch172,[2]whichdismissedCivilCaseNo.3337V90andorderedpetitionertopay
P30,000.00asattorneysfees.
Thesubjectofthecontroversyisa14,021squaremeterparceloflandlocatedinMalinta,Valenzuela,
MetroManilawhichwasoriginallyownedbyprivaterespondentVictorU.Bartolomesdeceased
mother,EncarnacionBartolome,underTransferCertificateofTitleNo.B37615oftheRegisterof
DeedsofMetroManila,DistrictIII.Thislotwasinfrontofoneofthetextileplantsofpetitionerand,as
such,wasseenbythelatterasapotentialwarehousesite.
OnMarch16,1988,petitionerenteredintoaContractofLeasewithOptiontoBuywithEncarnacion
Bartolome,wherebypetitionerwasgiventheoptiontoleaseorleasewithpurchasethesubjectland,
whichoptionmustbeexercisedwithinaperiodoftwoyearscountedfromthesigningoftheContract.
Inturn,petitionerundertooktopayP3,000.00amonthasconsiderationforthereservationofits
option.Withinthetwoyearperiod,petitionershallserveformalwrittennoticeuponthelessor
EncarnacionBartolomeofitsdesiretoexerciseitsoption.Thecontractalsoprovidedthatincase
petitionerchosetoleasetheproperty,itmaytakeactualpossessionofthepremises.Insuchan
event,theleaseshallbeforaperiodofsixyears,renewableforanothersixyears,andthemonthly
rentalfeeshallbeP15,000.00forthefirstsixyearsandP18,000.00forthenextsixyears,incaseof
renewal.
PetitionerregularlypaidthemonthlyP3,000.00providedforbytheContracttoEncarnacionuntilher
deathinJanuary1990.Thereafter,petitionercourseditspaymenttoprivaterespondentVictor
Bartolome,beingthesoleheirofEncarnacion.Victor,however,refusedtoacceptthesepayments.iska
Meanwhile,onJanuary10,1990,VictorexecutedanAffidavitofSelfAdjudicationoverallthe
propertiesofEncarnacion,includingthesubjectlot.Accordingly,respondentRegisterofDeeds
cancelledTransferCertificateofTitleNo.B37615andissuedTransferCertificateofTitleNo.V14249
inthenameofVictorBartolome.
OnMarch14,1990,petitionerserveduponVictor,viaregisteredmail,noticethatitwasexercisingits
optiontoleasetheproperty,tenderingtheamountofP15,000.00asrentforthemonthofMarch.
Again,Victorrefusedtoacceptthetenderedrentalfeeandtosurrenderpossessionofthepropertyto
petitioner.
PetitionerthusopenedSavingsAccountNo.10402558I1withtheChinaBankingCorporation,
CubaoBranch,inthenameofVictorBartolomeanddepositedthereintheP15,000.00rentalfeefor
MarchaswellasP6,000.00reservationfeesforthemonthsofFebruaryandMarch.

PetitioneralsotriedtoregisterandannotatetheContractonthetitleofVictortotheproperty.Although
respondentRegisterofDeedsacceptedtherequiredfees,heneverthelessrefusedtoregisteror
annotatethesameorevenenteritinthedaybookorprimaryregister.
Thus,onApril23,1990,petitionerfiledacomplaintforspecificperformanceanddamagesagainst
VictorandtheRegisterofDeeds,[3]docketedasCivilCaseNo.3337V90whichwasraffledoffto
Branch171oftheRegionalTrialCourtofValenzuela.Petitionerprayedforthesurrenderanddelivery
ofpossessionofthesubjectlandinaccordancewiththeContracttermsthesurrenderoftitlefor
registrationandannotationthereonoftheContractandthepaymentofP500,000.00asactual
damages,P500,000.00asmoraldamages,P500,000.00asexemplarydamagesandP300,000.00as
attorneysfees.
Meanwhile,onMay8,1990,aMotionforInterventionwithMotiontoDismiss[4]wasfiledbyone
AndresLanozo,whoclaimedthathewasandhasbeenatenanttillerofthesubjectproperty,which
wasagriculturalriceland,forfortyfiveyears.Hequestionedthejurisdictionofthelowercourtoverthe
propertyandinvokedtheComprehensiveAgrarianReformLawtoprotecthisrightsthatwouldbe
affectedbythedisputebetweentheoriginalpartiestothecase.ella
OnMay18,1990,thelowercourtissuedanOrder[5]referringthecasetotheDepartmentofAgrarian
Reformforpreliminarydeterminationandcertificationastowhetheritwasproperfortrialbysaid
court.
OnJuly4,1990,thelowercourtissuedanotherOrder[6]referringthecasetoBranch172oftheRTC
ofValenzuelawhichwasdesignatedtohearcasesinvolvingagrarianland,aftertheDepartmentof
AgrarianReformissuedalettercertificationstatingthatreferraltoitforpreliminarydeterminationisno
longerrequired.
OnJuly16,1990,thelowercourtissuedanOrderdenyingtheMotiontoIntervene,[7]holdingthat
Lanozosrightsmaywellbeventilatedinanotherproceedinginduetime.
Aftertrialonthemerits,theRTCofValenzuela,branch172rendereditsDecisiononJanuary4,1993,
dismissingtheComplaintandorderingpetitionertopayVictorP30,000.00asattorneysfees.On
appealtotheCA,theDecisionwasaffirmedintoto.
Hence,theinstantPetitionassigningthefollowingerrors:
(A)
FIRSTASSIGNMENTOFERROR
THEHONORABLECOURTOFAPPEALSERREDINRULINGTHATTHEPROVISION
ONTHENOTICETOEXERCISEOPTIONWASNOTTRANSMISSIBLE.
(B)
SECONDASSIGNMENTOFERROR
THEHONORABLECOURTOFAPPEALSERREDINRULINGTHATTHENOTICEOF
OPTIONMUSTBESERVEDBYDKCUPONENCARNACIONBARTOLOME
PERSONALLY.
(C)nigel
THIRDASSIGNMENTOFERROR

THEHONORABLECOURTOFAPPEALSERREDINRULINGTHATTHECONTRACT
WASONESIDEDANDONEROUSINFAVOROFDKC.
(D)
FOURTHASSIGNMENTOFERROR
THEHONORABLECOURTOFAPPEALSERREDINRULINGTHATTHEEXISTENCE
OFAREGISTEREDTENANCYWASFATALTOTHEVALIDITYOFTHECONTRACT.
(E)
FIFTHASSIGNMENTOFERROR
THEHONORABLECOURTOFAPPEALSERREDINRULINGTHATPLAINTIFF
APPELLANTWASLIABLETODEFENDANTAPPELLEEFORATTORNEYSFEES.[8]
TheissuetoberesolvedinthiscaseiswhetherornottheContractofLeasewithOptiontoBuy
enteredintobythelateEncarnacionBartolomewithpetitionerwasterminateduponherdeathor
whetheritbindshersoleheir,Victor,evenafterherdemise.
BoththelowercourtandtheCourtofAppealsheldthatthesaidcontractwasterminateduponthe
deathofEncarnacionBartolomeanddidnotbindVictorbecausehewasnotapartythereto.
Article1311oftheCivilCodeprovides,asfollows
"ART.1311.Contractstakeeffectonlybetweentheparties,theirassignsandheirs,
exceptincasewheretherightsandobligationsarisingfromthecontractarenot
transmissiblebytheirnature,orbystipulationorbyprovisionoflaw.Theheirisnotliable
beyondthevalueofthepropertyhereceivedfromthedecedent.brnado
xxxxxxxxx."
Thegeneralrule,therefore,isthatheirsareboundbycontractsenteredintobytheirpredecessorsin
interestexceptwhentherightsandobligationsarisingtherefromarenottransmissibleby(1)their
nature,(2)stipulationor(3)provisionoflaw.
Inthecaseatbar,thereisneithercontractualstipulationnorlegalprovisionmakingtherightsand
obligationsunderthecontractintransmissible.Moreimportantly,thenatureoftherightsand
obligationsthereinare,bytheirnature,transmissible.
ThenatureofintransmissiblerightsasexplainedbyArturoTolentino,aneminentcivilist,isasfollows:
"Amongcontractswhichareintransmissiblearethosewhicharepurelypersonal,either
byprovisionoflaw,suchasincasesofpartnershipsandagency,orbytheverynature
oftheobligationsarisingtherefrom,suchasthoserequiringspecialpersonal
qualificationsoftheobligor.Itmayalsobestatedthatcontractsforthepaymentof
moneydebtsarenottransmittedtotheheirsofaparty,butconstituteachargeagainst
hisestate.Thus,wheretheclientinacontractforprofessionalservicesofalawyerdied,
leavingminorheirs,andthelawyer,insteadofpresentinghisclaimforprofessional
servicesunderthecontracttotheprobatecourt,substitutedtheminorsaspartiesforhis
client,itwasheldthatthecontractcouldnotbeenforcedagainsttheminorsthelawyer
waslimitedtoarecoveryonthebasisofquantummeruit."[9]
InAmericanjurisprudence,"(W)hereactsstipulatedinacontractrequiretheexerciseofspecial

knowledge,genius,skill,taste,ability,experience,judgment,discretion,integrity,orotherpersonal
qualificationofoneorbothparties,theagreementisofapersonalnature,andterminatesonthe
deathofthepartywhoisrequiredtorendersuchservice."[10]marinella
Ithasalsobeenheldthatagoodmeasurefordeterminingwhetheracontractterminatesuponthe
deathofoneofthepartiesiswhetheritisofsuchacharacterthatitmaybeperformedbythe
promissorspersonalrepresentative.Contractstoperformpersonalactswhichcannotbeaswell
performedbyothersaredischargedbythedeathofthepromissor.Conversely,wheretheserviceor
actisofsuchacharacterthatitmayaswellbeperformedbyanother,orwherethecontract,byits
terms,showsthatperformancebyotherswascontemplated,deathdoesnotterminatethecontractor
excusenonperformance.[11]
Inthecaseatbar,thereisnopersonalactrequiredfromthelateEncarnacionBartolome.Rather,the
obligationofEncarnacioninthecontracttodeliverpossessionofthesubjectpropertytopetitioner
upontheexercisebythelatterofitsoptiontoleasethesamemayverywellbeperformedbyherheir
Victor.
Asearlyas1903,itwasheldthat"(H)ewhocontractsdoessoforhimselfandhisheirs."[12]In1952,it
wasruledthatifthepredecessorwasdutyboundtoreconveylandtoanother,andathisdeaththe
reconveyancehadnotbeenmade,theheirscanbecompelledtoexecutetheproperdeedfor
reconveyance.Thiswasgroundedupontheprinciplethatheirscannotescapethelegalconsequence
ofatransactionenteredintobytheirpredecessorininterestbecausetheyhaveinheritedtheproperty
subjecttotheliabilityaffectingtheircommonancestor.[13]
ItisfutileforVictortoinsistthatheisnotapartytothecontractbecauseoftheclearprovisionof
Article1311oftheCivilCode.Indeed,beinganheirofEncarnacion,thereisprivityofinterestbetween
himandhisdeceasedmother.Heonlysucceedstowhatrightshismotherhadandwhatisvalidand
bindingagainstherisalsovalidandbindingasagainsthim.[14]ThisisclearfromParaaqueKings
Enterprisesvs.CourtofAppeals,[15]wherethisCourtrejectedasimilardefensealonzo
WithrespecttothecontentionofrespondentRaymundothatheisnotprivytothelease
contract,notbeingthelessornorthelesseereferredtotherein,hecouldthusnothave
violateditsprovisions,butheisneverthelessaproperparty.Clearly,hesteppedintothe
shoesoftheownerlessorofthelandas,byvirtueofhispurchase,heassumedallthe
obligationsofthelessorundertheleasecontract.Moreover,hereceivedbenefitsinthe
formofrentalpayments.Furthermore,thecomplaint,aswellasthepetition,prayedfor
theannulmentofthesaleofthepropertiestohim.Bothpleadingsalsoallegedcollusion
betweenhimandrespondentSantoswhichdefeatedtheexercisebypetitionerofits
rightoffirstrefusal.
Inorderthentoaccordcompleterelieftopetitioner,respondentRaymundowasa
necessary,ifnotindispensable,partytothecase.Afavorablejudgmentforthepetitioner
willnecessarilyaffecttherightsofrespondentRaymundoasthebuyeroftheproperty
overwhichpetitionerwouldliketoassertitsrightoffirstoptiontobuy.
Inthecaseatbar,thesubjectmatterofthecontractislikewisealease,whichisapropertyright.The
deathofapartydoesnotexcusenonperformanceofacontractwhichinvolvesapropertyright,and
therightsandobligationsthereunderpasstothepersonalrepresentativesofthedeceased.Similarly,
nonperformanceisnotexcusedbythedeathofthepartywhentheotherpartyhasapropertyinterest
inthesubjectmatterofthecontract.[16]
UnderbothArticle1311oftheCivilCodeandjurisprudence,therefore,Victorisboundbythesubject
ContractofLeasewithOptiontoBuy.

Thatbeingresolved,wenowruleontheissueofwhetherpetitionerhadcompliedwithitsobligations
underthecontractandwiththerequisitestoexerciseitsoption.Thepaymentbypetitionerofthe
reservationfeesduringthetwoyearperiodwithinwhichithadtheoptiontoleaseorpurchasethe
propertyisnotdisputed.Infact,thepaymentofsuchreservationfees,exceptthoseforFebruaryand
March,1990wereadmittedbyVictor.[17]Thisisclearfromthetranscripts,towit
"ATTY.MOJADO:
Onerequest,YourHonor.ThelastpaymentwhichwasallegedlymadeinJanuary1990
justindicateinthatstipulationthatitwasissuedNovemberof1989andpostdated
Janaury1990andthenwewilladmitall.rodpfo
COURT:
Allreservationfee?
ATTY.MOJADO:
Yes,YourHonor.
COURT:
Allaspartofthelease?
ATTY.MOJADO:
Reservationfee,YourHonor.Therewasnopaymentwithrespecttopaymentofrentals."
[18]

PetitioneralsopaidtheP15,000.00monthlyrentalfeeonthesubjectpropertybydepositingthesame
inChinaBankSavingsAccountNo.10402558I1,inthenameofVictorasthesoleheirof
EncarnacionBartolome,[19]forthemonthsofMarchtoJuly30,1990,oratotaloffive(5)months,
despitetherefusalofVictortoturnoverthesubjectproperty.[20]
Likewise,petitionercompliedwithitsdutytoinformtheotherpartyofitsintentiontoexerciseitsoption
toleasethroughitsletterdatedMatch12,1990,[21]wellwithinthetwoyearperiodforittoexerciseits
option.ConsideringthatatthattimeEncarnacionBartolomehadalreadypassedaway,itwas
legitimateforpetitionertohaveaddresseditslettertoherheir.
Itappears,therefore,thattheexercisebypetitionerofitsoptiontoleasethesubjectpropertywas
madeinaccordancewiththecontractualprovisions.Concomitantly,privaterespondentVictor
Bartolomehastheobligationtosurrenderpossessionofandleasethepremisestopetitionerfora
periodofsix(6)years,pursuanttotheContractofLeasewithOptiontoBuy.micks
Comingnowtotheissueoftenancy,wefindthatthisisnotforthisCourttopassuponinthepresent
petition.WenotethattheMotiontoInterveneandtoDismissoftheallegedtenant,AndresLanozo,
wasdeniedbythelowercourtandthatsuchdenialwasnevermadethesubjectofanappeal.Asthe
lowercourtstatedinitsOrder,theallegedrightofthetenantmaywellbeventilatedinanother
proceedinginduetime.
WHEREFORE,inviewoftheforegoing,theinstantPetitionforReviewisGRANTED.TheDecisionof
theCourtofAppealsinCAG.R.CVNo.40849andthatoftheRegionalTrialCourtofValenzuelain
CivilCaseNo.3337V90arebothSETASIDEandanewonerenderedorderingprivaterespondent
VictorBartolometo:

(a)surrenderanddeliverpossessionofthatparceloflandcoveredbyTransfer
CertificateofTitleNo.V14249bywayofleasetopetitionerandtoperformall
obligationsofhispredecessorininterest,EncarnacionBartolome,underthesubject
ContractofLeasewithOptiontoBuy
(b)surrenderanddeliverhiscopyofTransferCertificateofTitleNo.V14249to
respondentRegisterofDeedsforregistrationandannotationthereonofthesubject
ContractofLeasewithOptiontoBuy
(c)paycostsofsuit.Sc
RespondentRegisterofDeedsis,accordingly,orderedtoregisterandannotatethesubjectContract
ofLeasewithOptiontoBuyatthebackofTransferCertificateofTitleNo.V14249uponsubmission
bypetitionerofacopythereoftohisoffice.
SOORDERED.
Davide,Jr.,C.J.,(Chairman),Puno,Kapunan,andPardo,JJ.,concur.Scmis

[1] PennedbyAssociateJusticeCoronaIbaySomera,concurredinbyJusticesAsaaliS.IsnaniandCeliaLipanaReyes.
[2] PennedbyJudgeTeresitaDizonCapulong.
[3] Records,CivilCaseNo.3337V90,pp.128.
[4] Id.,pp.3543.
[5] Id.,p.60.
[6] Id.,p.129.
[7] Id.,p.130.
[8] PetitionforReview,pp.910Rollo,pp.1011.
[9] IVTolentino,CIVILCODEOFTHEPHILIPPINES,430(1986).
[10] KanawhaBanking&TrustCo.v.Gilbert,46S.E.2d225,131W.Va.88Rowev.CompensationResearchBureau,Inc.,62N.W.

2d581,265Wis.589Fressilv.Nichols,114So.431,94Fla.403Cutlerv.UnitedShoeManufacturingCorporation,174N.E.507,
274Mass.341,citedin17AC.J.S.Sec.465.
[11] 17Am.Jur.2d,Sec.413,p.866.
[12] Eleizeguiv.LawnTennisClub,G.R.No.967,2Phil.309,313(1903),citingArticle1257oftheoldCivilCode.
[13] Carillov.SalakdePaz,G.R.No.L4133,91Phil.265(1952).
[14] SeeGalsinaov.Austria,G.R.No.L7918,97Phil.82,87(1955).
[15] G.R.No.111538,268SCRA727,745(1997).
[16] 17AC.J.S.Section465,p.627.
[17] SeeT.S.N.,19October1991,pp.1112,14,16,19and2021.
[18] T.S.N.,29October1991,pp.2021.
[19] SeeExhibit"K"Records,CivilCaseNo.3337V90,pp.274276.
[20] SeeT.S.N.,9January1992,pp.1617.
[21] Exh."J",Records,CivilCaseNo.3337V90,pp.272273.