[G.R. No. 129008.

January 13, 2004]

issued Certificates of Titles Nos. 63983, 63984 and 63985 in favor of petitioners Teodora Rioferio, Veronica Orfinada-Evangelista, Alberto Orfinada and Rowena Orfinada-Ungos. Respondents also found out that petitioners were able to obtain a loan of P700,000.00 from the Rural Bank of Mangaldan Inc. by executing a Real Estate Mortgage over the properties subject of the extrajudicial settlement.[7] On December 1, 1995, respondent Alfonso “Clyde” P. Orfinada III filed a Petition for Letters of Administration docketed as S.P. Case No. 5118 before the Regional Trial Court of Angeles City, praying that letters of administration encompassing the estate of Alfonso P. Orfinada, Jr. be issued to him.[8] On December 4, 1995, respondents filed a Complaint for the Annulment/Rescission of Extra Judicial Settlement of Estate of a Deceased Person with Quitclaim, Real Estate Mortgage and Cancellation of Transfer Certificate of Titles with Nos. 63983, 63985 and 63984 and Other Related Documents with Damages against petitioners, the Rural Bank of Mangaldan, Inc. and the Register of Deeds of Dagupan City before the Regional Trial Court, Branch 42, Dagupan City.[9] On February 5, 1996, petitioners filed their Answer to the aforesaid complaint interposing the defense that the property subject of the contested deed of extra-judicial settlement pertained to the properties originally belonging to the parents of Teodora Riofero[10] and that the titles thereof were delivered to her as an advance inheritance but the decedent had managed to register them in his name.[11]Petitioners also raised the affirmative defense that respondents are not the real parties-in-interest but rather the Estate of Alfonso O. Orfinada, Jr. in view of the pendency of the administration proceedings. [12] On April 29, 1996, petitioners filed a Motion to Set Affirmative Defenses for Hearing[13] on the aforesaid ground. The lower court denied the motion in its Order[14] dated June 27, 1996, on the ground that respondents, as heirs, are the real parties-in-interest especially in the absence of an administrator who is yet to be appointed in S.P. Case No. 5118. Petitioners moved for its reconsideration[15] but the motion was likewise denied.[16] This prompted petitioners to file before the Court of Appeals their Petition for Certiorari under Rule 65 of the Rules of Court docketed as CA G.R. S.P. No. 42053.[17] Petitioners averred that the RTC committed grave abuse of discretion in issuing the assailed order which denied the dismissal of the case on the ground that the proper party to file the complaint for the annulment of the extrajudicial settlement of the estate of the deceased is the estate of the decedent and not the respondents.[18] The Court of Appeals rendered the assailed Decision[19] dated January 31, 1997, stating that it discerned no grave abuse of discretion amounting to lack or excess of jurisdiction by the public respondent judge when he denied

TEODORA A. RIOFERIO, VERONICA O. EVANGELISTA assisted by her husband ZALDY EVANGELISTA, ALBERTO ORFINADA, and ROWENA O. UNGOS, assisted by her husband BEDA UNGOS, petitioners, vs. COURT OF APPEALS, ESPERANZA P. ORFINADA, LOURDES P. ORFINADA, ALFONSO ORFINADA, NANCY P. ORFINADA, ALFONSO JAMES P. ORFINADA, CHRISTOPHER P. ORFINADA and ANGELO P. ORFINADA, respondents. DECISION TINGA, J.: Whether the heirs may bring suit to recover property of the estate pending the appointment of an administrator is the issue in this case. This Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeks to set aside the Decision[1] of the Court of Appeals in CA-G.R. SP No. 42053 dated January 31, 1997, as well as itsResolution[2] dated March 26, 1997, denying petitioners’ motion for reconsideration. On May 13, 1995, Alfonso P. Orfinada, Jr. died without a will in Angeles City leaving several personal and real properties located in Angeles City, Dagupan City and Kalookan City.[3] He also left a widow, respondent Esperanza P. Orfinada, whom he married on July 11, 1960 and with whom he had seven children who are the herein respondents, namely: Lourdes P. Orfinada, Alfonso “Clyde” P. Orfinada, Nancy P. Orfinada-Happenden, Alfonso James P. Orfinada, Christopher P. Orfinada, Alfonso Mike P. Orfinada (deceased) and Angelo P. Orfinada.[4] Apart from the respondents, the demise of the decedent left in mourning his paramour and their children. They are petitioner Teodora Riofero, who became a part of his life when he entered into an extra-marital relationship with her during the subsistence of his marriage to Esperanza sometime in 1965, and co-petitioners Veronica[5], Alberto and Rowena.[6] On November 14, 1995, respondents Alfonso James and Lourdes Orfinada discovered that on June 29, 1995, petitioner Teodora Rioferio and her children executed an Extrajudicial Settlement of Estate of a Deceased Person with Quitclaim involving the properties of the estate of the decedent located in Dagupan City and that accordingly, the Registry of Deeds in Dagupan

[28] this Court recognized the legal standing of the heirs to represent the rights and properties of the decedent under administration pending the appointment of an administrator. the necessity for the heirs to seek judicial relief to recover property of the estate is as compelling when there is no appointed administrator. These rules are easily applicable to cases in which an administrator has already been appointed.Any of the grounds for dismissal provided for in this rule. This is clear from the Rules of Court. Even if there is an appointed administrator. viz: (1) if the executor or administrator is unwilling or refuses to bring suit. the petition before this Court.[21] Petitioners vehemently fault the lower court for denying their motion to set the case for preliminary hearing on their affirmative defense that the proper party to bring the action is the estate of the decedent and not the respondents. As the appellate court did not commit an error of law in upholding the order of the lower court. may be pleaded as an affirmative defense.[29] while permitting an executor or administrator to represent or to bring suits on behalf of the deceased. The word denotes discretion and cannot be construed as having a mandatory effect. In such instances. WHEREFORE. But no rule categorically addresses the situation in which special proceedings for the settlement of an estate have already been instituted.[32] Evidently. in the case of Gochan v. and a preliminary hearing may be had thereon as if a motion to dismiss had been filed. except improper venue. as where there is an appointed administrator but he is either disinclined to bring suit or is one of the guilty parties himself. Rule 87[27] of the Rules of Court.. the petition for review is DENIED. the rule that the heirs have no legal standing to sue for the recovery of property of the estate during the pendency of administration proceedings has three exceptions. rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law. the third being when there is no appointed administrator such as in this case. SO ORDERED.[22] (Emphasis supplied. the electivity of the proceeding was firmed up beyond cavil by the 1997 Rules of Civil Procedure with the inclusion of the phrase “in the discretion of the Court”. 5.[20] Hence. then wait further to see if the administrator appointed would care enough to file a suit to protect the rights and the interests of the deceased.[23] Subsequently. recourse to this Court is not warranted. the heirs without doubt have legal personality to bring suit in behalf of the estate of the decedent in accordance with the provision of Article 777 of the New Civil Code “that (t)he rights to succession are transmitted from the moment of the death of the decedent. Thus: The above-quoted rules. the heirs cannot be expected to wait for the appointment of an administrator. Young. it cannot likewise be faulted for recognizing the legal standing of the respondents as heirs to bring the suit. and in the meantime do nothing while the rights and the properties of the decedent are violated or dissipated. the heirs may still bring the suit if an administrator has not yet been appointed.) Certainly.[24] in Rule 16 thereof. All told. Just as no blame of abuse of discretion can be laid on the lower court’s doorstep for not hearing petitioners’ affirmative defense.[30] and (2) when the administrator is alleged to have participated in the act complained of[31] and he is made a party defendant. Pending the filing of administration proceedings. yet no administrator has been appointed. It must be stressed that the holding of a preliminary hearing on an affirmative defense lies in the discretion of the court. Rule 3 [26] and Section 2. namely Section 3. A Motion for Reconsideration was filed by petitioners but it was denied. The assailed decision and resolution of the Court of Appeals are hereby AFFIRMED.petitioners’ motion to set affirmative defenses for hearing in view of its discretionary nature. do not prohibit the heirs from representing the deceased. apart from the retention of the word “may” in Section 6.[25] Even if administration proceedings have already been commenced. the incorporation of the word “may” in the provision is clearly indicative of the optional character of the preliminary hearing. Pleadings grounds as affirmative defenses. No costs. . This is the proper modality despite the total lack of advertence to the heirs in the rules on party representation. In fact. The issue presented by the petitioners before this Court is whether the heirs have legal standing to prosecute the rights belonging to the deceased subsequent to the commencement of the administration proceedings. if not more. therefore. jurisprudence recognizes two exceptions. thus: SEC.” The provision in turn is the foundation of the principle that the property.

00 as attorney’s fees. petitioner. Petitioner also tried to register and annotate the Contract on the title of Victor to the property.00 as rent for the month of March. P500. iska Meanwhile. B-37615 and issued Transfer Certificate of Title No. 1990. Bartolome. 1988.00 rental fee for March as well as P6.000. however. 2000] DKC HOLDINGS CORPORATION. and the monthly rental fee shall be P15. J. in case of renewal.00 as exemplary damages and P300. petitioner served upon Victor.00 provided for by the Contract to Encarnacion until her death in January 1990.00 a month as consideration for the reservation of its option.000. Within the two-year period. 1990.021 square meter parcel of land located in Malinta. petitioner coursed its payment to private respondent Victor Bartolome. the lower court issued another Order[6] referring the case to Branch 172 of the RTC of Valenzuela which was designated to hear cases involving agrarian land. Petitioner regularly paid the monthly P3. BARTOLOME and REGISTER OF DEEDS FOR METRO MANILA. On March 16. Meanwhile. it may take actual possession of the premises.00 for the first six years and P18. including the subject lot. petitioner undertook to pay P3.000. 1994 Decision of the Court of Appeals in CA-G. Branch 172.00 as attorney’s fees. 1990. notice that it was exercising its option to lease the property.". COURT OF APPEALS.[2] which dismissed Civil Case No.[3] docketed as Civil Case No. Victor executed an Affidavit of SelfAdjudication over all the properties of Encarnacion. On July 4. This lot was in front of one of the textile plants of petitioner and.00 reservation fees for the months of February and March. Metro Manila which was originally owned by private respondent Victor U.000. tendering the amount of P15. on May 8. Victor U.[G. In turn. was seen by the latter as a potential warehouse site.R. Although respondent Register of Deeds accepted the required fees. The contract also provided that in case petitioner chose to lease the property. 1-04-02558-I-1 with the China Banking Corporation. 3337-V-90 which was raffled off to Branch 171 of the Regional Trial Court of Valenzuela. Encarnacion Bartolome. whereby petitioner was given the option to lease or lease with purchase the subject land.00 as actual damages. a Motion for Intervention with Motion to Dismiss[4] was filed by one Andres Lanozo. Thus.000.000. francis DECISION YNARES_SANTIAGO.000. after the Department of Agrarian Reform issued a . On March 14. on April 23. Victor refused to accept the tendered rental fee and to surrender possession of the property to petitioner. in the name of Victor Bartolome and deposited therein the P15. P500.000. he nevertheless refused to register or annotate the same or even enter it in the day book or primary register. the lower court issued an Order[5] referring the case to the Department of Agrarian Reform for preliminary determination and certification as to whether it was proper for trial by said court.: This is a petition for review on certiorari seeking the reversal of the December 5.00 as moral damages. VICTOR U. District III. and the payment of P500. et al. Again. petitioner entered into a Contract of Lease with Option to Buy with Encarnacion Bartolome. Thereafter. which option must be exercised within a period of two years counted from the signing of the Contract. refused to accept these payments. under Transfer Certificate of Title No.R. renewable for another six years. B-37615 of the Register of Deeds of Metro Manila. 118248.000.000. Valenzuela. 40849 entitled "DKC Holdings Corporation vs. Victor. which was agricultural riceland. on January 10. who claimed that he was and has been a tenant-tiller of the subject property.respondents. Cubao Branch. the lease shall be for a period of six years. Petitioner prayed for the surrender and delivery of possession of the subject land in accordance with the Contract terms.000. Petitioner thus opened Savings Account No. respondent Register of Deeds cancelled Transfer Certificate of Title No. being the sole heir of Encarnacion.000. 1993 Decision of the Regional Trial Court of Valenzuela. DISTRICT III. 1990. 1990. V-14249 in the name of Victor Bartolome. He questioned the jurisdiction of the lower court over the property and invoked the Comprehensive Agrarian Reform Law to protect his rights that would be affected by the dispute between the original parties to the case. 1990. petitioner shall serve formal written notice upon the lessor Encarnacion Bartolome of its desire to exercise its option. via registered mail. April 5. No. for forty-five years. the surrender of title for registration and annotation thereon of the Contract.00 for the next six years. as such. Bartolome’s deceased mother. CV No. ella On May 18. Accordingly. petitioner filed a complaint for specific performance and damages against Victor and the Register of Deeds. vs. 3337-V-90 and ordered petitioner to pay P30. In such an event. The subject of the controversy is a 14.[1] affirming in toto the January 4.

the lower court issued an Order denying the Motion to Intervene. or by stipulation or by provision of law. After trial on the merits. even after her demise. branch 172 rendered its Decision on January 4. The heir is not liable beyond the value of the property he received from the decedent. 1993. their assigns and heirs. On July 16. On appeal to the CA.letter-certification stating that referral to it for preliminary determination is no longer required. (C) nigel THIRD ASSIGNMENT OF ERROR THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE CONTRACT WAS ONE-SIDED AND ONEROUS IN FAVOR OF DKC. the nature of the rights and obligations therein are. Article 1311 of the Civil Code provides. transmissible. 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. 1990. (E) FIFTH ASSIGNMENT OF ERROR THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PLAINTIFF-APPELLANT WAS LIABLE TO DEFENDANTAPPELLEE FOR ATTORNEY’S FEES. . Both the lower court and the Court of Appeals held that the said contract was terminated upon the death of Encarnacion Bartolome and did not bind Victor because he was not a party thereto. as follows"ART. Victor. there is neither contractual stipulation nor legal provision making the rights and obligations under the contract intransmissible. More importantly. In the case at bar. Hence. 1311. (B) SECOND ASSIGNMENT OF ERROR THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE NOTICE OF OPTION MUST BE SERVED BY DKC UPON ENCARNACION BARTOLOME PERSONALLY. dismissing the Complaint and ordering petitioner to pay Victor P30. brnado x x x x x x x x x. the RTC of Valenzuela. the Decision was affirmed in toto. the instant Petition assigning the following errors: (A) FIRST ASSIGNMENT OF ERROR THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PROVISION ON THE NOTICE TO EXERCISE OPTION WAS NOT TRANSMISSIBLE.000.[7] holding that Lanozo’s rights may well be ventilated in another proceeding in due time. by their nature.[8] The issue to be resolved in this case is whether or not 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. Contracts take effect only between the parties. (D) FOURTH ASSIGNMENT OF ERROR THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE EXISTENCE OF A REGISTERED TENANCY WAS FATAL TO THE VALIDITY OF THE CONTRACT. therefore. except in case where the rights and obligations arising from the contract are not transmissible by their nature.00 as attorney’s fees. (2) stipulation or (3) provision of law." The general rule.

it was held that "(H)e who contracts does so for himself and his heirs. or where the contract. [15] where this Court rejected a similar defense-alonzo With respect to the contention of respondent Raymundo that he is not privy to the lease contract. Both pleadings also alleged collusion between him and respondent Santos which defeated the exercise by petitioner of its right of first refusal. which is a property right. and the lawyer. therefore. if not indispensable. In the case at bar. 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. substituted the minors as parties for his client. such as those requiring special personal qualifications of the obligor. Rather. "(W)here acts stipulated in a contract require the exercise of special knowledge. respondent Raymundo was a necessary. prayed for the annulment of the sale of the properties to him. there is no personal act required from the late Encarnacion Bartolome. he stepped into the shoes of the owner-lessor of the land as. judgment. and the rights and obligations thereunder pass to the personal representatives of the deceased. by its terms. Furthermore. but he is nevertheless a proper party. leaving minor heirs. the obligation of Encarnacion in the contract to deliver possession of the subject property to petitioner upon the exercise by the latter of its option to lease the same may very well be performed by her heir Victor. instead of presenting his claim for professional services under the contract to the probate court. there is privity of interest between him and his deceased mother.[14] This is clear from Parañaque Kings Enterprises vs. experience. 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. In order then to accord complete relief to petitioner. discretion. such as in cases of partnerships and agency. the complaint. not being the lessor nor the lessee referred to therein. A favorable judgment for the petitioner will necessarily affect the rights of respondent Raymundo as the buyer of the property over which petitioner would like to assert its right of first option to buy. we now rule on the issue of whether petitioner had complied with its obligations under the contract and with the requisites to exercise its option. Contracts to perform personal acts which cannot be as well performed by others are discharged by the death of the promissor. where the service or act is of such a character that it may as well be performed by another. it was ruled that if the predecessor was duty-bound to reconvey land to another. It may also be stated that contracts for the payment of money debts are not transmitted to the heirs of a party. he received benefits in the form of rental payments. the agreement is of a personal nature. Similarly. and terminates on the death of the party who is required to render such service.[11] In the case at bar. and at his death the reconveyance had not been made. either by provision of law. being an heir of Encarnacion."[10] marinella It has also been held that a good measure for determining whether a contract terminates upon the death of one of the parties is whether it is of such a character that it may be performed by the promissor’s personal representative. genius. Victor is bound by the subject Contract of Lease with Option to Buy.[13] 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. The payment by petitioner of the reservation fees during the . the lawyer was limited to a recovery on the basis of quantum meruit. skill. as well as the petition. Clearly."[9] In American jurisprudence. the heirs can be compelled to execute the proper deed for reconveyance. Court of Appeals. where the client in a contract for professional services of a lawyer died. integrity. is as follows: "Among contracts which are intransmissible are those which are purely personal. taste. it was held that the contract could not be enforced against the minors. ability. he could thus not have violated its provisions. but constitute a charge against his estate. by virtue of his purchase. That being resolved.[16] Under both Article 1311 of the Civil Code and jurisprudence. death does not terminate the contract or excuse nonperformance. This was grounded upon the principle that heirs cannot escape the legal consequence of a transaction entered into by their predecessor-in-interest because they have inherited the property subject to the liability affecting their common ancestor. he assumed all the obligations of the lessor under the lease contract. As early as 1903. or other personal qualification of one or both parties. shows that performance by others was contemplated. The death of a party does not excuse nonperformance of a contract which involves a property right. Conversely. or by the very nature of the obligations arising therefrom. Thus.The nature of intransmissible rights as explained by Arturo Tolentino. Indeed."[12] In 1952. an eminent civilist. the subject matter of the contract is likewise a lease. Moreover. party to the case.

COURT: All as part of the lease? ATTY. 1-04-02558-I-1. Your Honor. There was no payment with respect to payment of rentals. MOJADO: Reservation fee. 3337-V-90 are both SET ASIDE and a new one rendered ordering private respondent Victor Bartolome to: (a) surrender and deliver possession of that parcel of land covered by Transfer Certificate of Title No. that the exercise by petitioner of its option to lease the subject property was made in accordance with the contractual provisions. (b) surrender and deliver his copy of Transfer Certificate of Title No. petitioner complied with its duty to inform the other party of its intention to exercise its option to lease through its letter dated Match 12. ordered to register and annotate the subject Contract of Lease with Option to Buy at the back of Transfer Certificate of Title No.000. MOJADO: Yes. We note that the Motion to Intervene and to Dismiss of the alleged tenant. or a total of five (5) months."[18] Petitioner also paid the P15. under the subject Contract of Lease with Option to Buy. . 1990 were admitted by Victor. V-14249 by way of lease to petitioner and to perform all obligations of his predecessor-in-interest. V-14249 to respondent Register of Deeds for registration and annotation thereon of the subject Contract of Lease with Option to Buy.[21] well within the two-year period for it to exercise its option. except those for February and March. Your Honor. it was legitimate for petitioner to have addressed its letter to her heir. despite the refusal of Victor to turn over the subject property. 1990. to wit"ATTY. the payment of such reservation fees. In fact. the instant Petition for Review is GRANTED. rodp. The last payment which was allegedly made in January 1990 just indicate in that stipulation that it was issued November of 1989 and postdated Janaury 1990 and then we will admit all.[17] This is clear from the transcripts. micks Coming now to the issue of tenancy. Considering that at that time Encarnacion Bartolome had already passed away. we find that this is not for this Court to pass upon in the present petition. in the name of Victor as the sole heir of Encarnacion Bartolome.[19] for the months of March to July 30. Scä Respondent Register of Deeds is. pursuant to the Contract of Lease with Option to Buy.fo COURT: All reservation fee? ATTY. 1990. in view of the foregoing. Your Honor.two-year period within which it had the option to lease or purchase the property is not disputed. The Decision of the Court of Appeals in CA-G. (c) pay costs of suit.00 monthly rental fee on the subject property by depositing the same in China Bank Savings Account No. As the lower court stated in its Order. was denied by the lower court and that such denial was never made the subject of an appeal. therefore.[20] Likewise. SO ORDERED. accordingly. Concomitantly. CV No. V-14249 upon submission by petitioner of a copy thereof to his office. Andres Lanozo. Encarnacion Bartolome.R. the alleged right of the tenant may well be ventilated in another proceeding in due time. 40849 and that of the Regional Trial Court of Valenzuela in Civil Case No. It appears. WHEREFORE. private respondent Victor Bartolome has the obligation to surrender possession of and lease the premises to petitioner for a period of six (6) years. MOJADO: One request.

Sign up to vote on this title
UsefulNot useful