DKC HOLDINGS CORPORATION vs COURT OF APPEALS G.R. No. 118248. April 5, 2000 case digest

Concept: Art. 1311

Facts

·         The subject of the controversy is a 14,021 square meter parcel of land located in Malinta, Valenzuela, Metro Manila which was originally owned by private respondent Victor U. Bartolome’s deceased mother, Encarnacion Bartolome, under Transfer Certificate of Title No. B-37615 of the Register of Deeds of Metro Manila, District III. This lot was in front of one of the textile plants of petitioner and, as such, was seen by the latter as a potential warehouse site.

·         March 16, 1988. DKC entered a contract of lease with option to buy with Encarnacion Bartolome (Victor’s deceased mom).  DKC was given the option to lease or lease with purchase the subject land, which option must be exercised within a period of two years counted from the signing of the Contract. In turn, DKC undertook to pay P3,000.00 a month as consideration for the reservation of its option. Within the two-year period, DKC shall serve formal written notice upon the lessor Encarnacion Bartolome of its desire to exercise its option. The contract also provided that in case DKC chose to lease the property, it may take actual possession of the premises. In such an event, the lease shall be for a period of six years, renewable for another six years, and the monthly rental fee shall be P15,000.00 for the first six years and P18,000.00 for the next six years, in case of renewal.

·         DKC regularly paid Encarnacion until her death in January 1990. DKC then directed its payment to the son of Enacarnacion who is the sole heir but Victor (Encarnacion’s son) refused the payment.

·         January 10, 1990. Victor executed an affidavit of Self Adjudication all over her deceased mom’s properties, including the subject lot. Victor the dick then cancelled the deed of transfer of DKC and then issued a transfer certificate under his name, what a dick.

·         March 14, 1990. DKC sent a notice to Victor the royal douche, stating that they are going to exercise their option to lease, tendering the amount of P15,000 as rent. Victor the douche, being a dick as he is, refused payment.

·         DKC then opened a saving account with the China Banking Corp. under the name of Victor and deposited the P15,000 as rental fee while also adding another P6000 for reservation fees

·         DKC also tried to register and annotate the Contract on the title of Victor the dick to the property. Although respondent Register of Deeds accepted the required fees, he nevertheless refused to register or annotate the same or even enter it in the day book or primary register.

·         April 23, 1990. DKC filed a complaint for specific performance and damages against Victor and the Register of Deeds. DKC prayed for the surrender and delivery of possession of the subject land in accordance with the Contract terms; the surrender of title for registration and annotation thereon of the Contract; and the payment of P500,000.00 as actual damages, P500,000.00 as moral damages, P500,000.00 as exemplary damages and P300,000.00 as attorney’s fees.

·         During the May of 1990, some guy named Andres Lonzano filed a motion for intervention with motion to dismiss for he was a tenant-tiller of the subject property, dude is under the Comprehensive Agrarian Reform Law, the motion was denied by the court, poor guy.

·         The lower court then rendered its decision, it dismissed the complaint and ordered DKC to pay Victor for P30,000 as attorney’s fee. On appeal, the CA affirmed the decision of the lower court

Issue: W/ON the Contract of Lease with Option to Buy entered into by the late Encarnacion Bartolome with petitioner was terminated upon her death or whether it binds her sole heir, Victor, even after her demise.

Held: No. Article 1311 of the Civil Code and jurisprudence, Victor is bound by the subject Contract of Lease with Option to buy executed by his predecessor-in-interest. It is futile for Victor to insist that he is not a party to the contract because of the clear provision of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there  is privity of interest between him and his deceased mother. He only succeeds to what rights his mother had and what is valid and binding against her is also valid and binding as against him. The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-interest except when the rights and obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3) provision of law.