Author:

DKC Holdings Corporation v. CA

(2000)
Petition:Petition to review on certiorari the of the
Court of Appeals (seeking the reversal)
Petitioner: DKC Holdings Corporation
Respondent: CA, Victor Bartolome, Register of
Deeds for Metro Manila
Ponencia:Ynares-Santiago
DOCTRINE: (RelativityThe general rule 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 the
law.
FACTS:
1. Subject: 14,021 sq.meter parcel of land located
in Malinta, Valenzuela which was located infront
of one of the textile plants of the petitioner.
2. On March 16, 1988, petitioner entered into a
Contract of Lease with Option to Buy with
Encarnacion Bartolome. DKC was given the
option to lease or lease with option to buy.
(Note: option must be exercised within 2 years
from signing of contract and that DKC must
serve its written notice upon the lessor
Encarnacion of its desire to exercise its option)
3. Contract also provided that in case the petitioner
chose to lease the property, it may take actual
possession of the premises. Lease shall be for
period of 6 years at P15,000 per month rent,
renewable for another 6 years at P18,000 per
month.
4. As a consideration for the reservation of its
option, DKC undertook to pay P3,000 a month.
DKC regularly paid the monthly P3000
reservation fee until the death of Encarnacion in
January 1990.
5. After the death of Encarnacion, DKC coursed
its payment (reservation) to Victor Bartolome
being the sole heir of the deceased. Victor
refused to accept payments.
6. Victor then executed an Affidavit of SelfAdjudication over all the properties of
Encarnacion, including the subject lot, on
January 10, 1990.
7. On March 14, 1990, DKC, via registered mail,
served upon Victor a notice that it was
exercising its option to lease the property,
tendering 15,000 as rent for March. Victor
refused payment and likewise refused to
surrender the possession of property to
DKC.
8. DKC opened saving account in Chinabank in the
name of Victor Bartolome and deposited therein

the 15000 rental fee plus 2 months worth of

reservation fee. (DKC also tried to register and
annotate the Contract on the title but the
Register of Deeds refused)
9. On April 23, 1990, petitioner filed a complaint for
specific performance and damages against
Victor and the register of deeds.
10. TC dismissed complaint. CA affirmed.
ISSUES:
1. WoN the Contract of Lease with Option to
Buy entered into by DKC with Encarnacion
was terminated upon her death (WoN the
contract binds the sole heir even after her
death)
a. WoN DKC had complied with its
obligations under the Contract
PROVISIONs:

Article 1311. Contracts take effect only between

the parties, their assigns and heirs, except in
case where the rights and obligations arising from
the contract are not transmissible by their nature,
or by stipulation or by provision of law. The heir is
not liable beyond the value of the property he
received from the decedent.
If a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated his
acceptance to the obligor before its revocation. A
mere incidental benefit or interest of a person is
not sufficient. The contracting parties must have
clearly and deliberately conferred a favor upon a
third person.

RULING + RATIO:
1. No. The Contract still subsists and Victor
Bartolome, as the sole heir of
Encarnacion, is bound to the contract
(based on Art. 1311 and jurisprudence).
- From Art. 1311, the general rule 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 the law.
- In the case at bar, there is no
contractual stipulation or legal
provision making the
contract/obligation intransmissible.
Moreover, the nature of the rights and
obligations therein are, by their
nature, transmissible.
- A good measure for determining
whether or not a contract terminates
upon the death of one of the parties is
whether it is of such character that it

Author:
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may be performed by the promissors

personal representative.
Contracts to perform personal acts
which cannot be as well performed by
others are discharged by the death of
the promissory.
In this case, no personal act is
required from Encarnacion. The
obligation to deliver the possession of
the lot can be very well be performed by
her heir (property interest).
Being an heir of Encarnacion, there is
privity of interest between him and his
deceased mother. HE succeeds to what
rights his mother had and what is valid
to her and binding against her is also
valid and binding against him.

a) Yes. Regular
payments(reservation fee) were
made by the petitioner. Court
also appreciated the payment
done by DKC (opening the
savings account) as full
compliance of its obliugationj to
pay. As such, the Court held that
the exercise of DKC of its option
to lease was made in
accordance with the contractual
provisions.
DISPOSITION: Petition granted.
- Decision of RTC and CA
reversed.