G.R. No. 118248, 5 April 2000


DKC Holdings Corporation entered into a Contract of Lease with Option to Buy with Encarnacion Bartolome, 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 of its desire to exercise its option.

When Encarnacion died, petitioner coursed its payment to private respondent Victor Bartolome, being the sole heir of Encarnacion. Victor, however, refused to accept the payments. Subsequently, petitioner served upon Victor, via registered mail, notice that it was exercising its option to lease the property, tendering the amount of P15,000.00 as rent. Again, Victor refused to accept the tendered rental fee and to surrender possession of the property to petitioner. On April 23, 1990, petitioner filed a complaint for specific performance and damages against Victor and the Register of Deeds


Whether or not the rights under a Contact of Lease with Option to Buy were transmissible.


Article 1311 of the Civil Code states that 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. The Court held that there is neither contractual stipulation nor legal provision making the rights and obligations under the lease contract intransmissible. More importantly, the nature of the rights and obligations therein are transmissible.

In the case at bar, the subject matter of the contract is a lease, which is a property right. The death of a party does not excuse nonperformance of a contract which involves a property right and the rights and obligations thereunder pass to the personal representatives of the deceased. Similarly, nonperformance is not excused by the death of the party when the other party has a property interest in the subject matter of the contract.

Therefore, Victor is bound by the subject Contract of Lease with Option to Buy.

 * Case digest by Cherry Mae Aguilla-Granada, LLB-1, Andres Bonifacio Law School, SY 2017-2018