G.R. No.

201787               September 25, 2013

ANALITA P. INOCENCIO, substituting for RAMON INOCENCIO (Deceased), Petitioner,

vs.
HOSPICIO DE SAN JOSE, Respondent.

DECISION

CARPIO, J.:

The Case

This petition for review seeks to annul and set aside the Decision1 dated 12 January 2012 and the
Resolution2 dated 9 May 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 117009. The
Decision dismissed Analita P. Inocencio’s (Analita) petition for review and affirmed with modification
the Decision3 dated 21 January 2009 of the Regional Trial Court of Pasay, Branch 119 (RTC-Pasay).
The Resolution denied Analita’s motion for reconsideration.

The Facts

On 1 March 1946, Hospicio de San Jose (HDSJ) leased a parcel of land located in Pasay City to
German Inocencio (German).4 The lease contract was effective for a period of one year, and was
renewed for one-year periods several times. The last written contract was executed on 31 May
1951.5 Section 6 of the lease contract provides:

Este contrato es intransferible, a menos que para ello se obtenga elconsentimiento escrito del
arrendador. (This contract is nontransferable unless prior consent of the lessor is obtained in
writing.)6

In 1946, German constructed two buildings on the parcel of land7 which he subleased. He also
designated his son Ramon Inocencio (Ramon)to administer the said property.8

On 21 September 1990, German received a letter from HDSJ informing him that the increased
rentals shall take effect in November 1990instead of August 1990, "to give him ample time to make
the necessary rental adjustments with his sublessees."9

German passed away in 1997. Evidence on record shows that Ramon did not notify HDSJ of
German’s death. After German’s passing, Ramon collected the rentals from the sublessees, and
paid the rentals to HDSJ, and the taxes on the property.

On 1 March 2001, HDSJ’s property administrator, Five Star Multi-Services, Inc., notified Ramon that
HDSJ is terminating the lease contract effective 31 March 2001:

We acknowledge the fact that Hospicio de San Jose has been accepting the payment of your rentals
since the demise of Mr. German Inocencio. Hence, an implied contract of lease between the two of
you exists. However, since there is no stipulation as to the period of the contract and you are paying
a monthly rental to our client, the period for the lease is on a month-to-month basis (Art. 1687). Thus
as of this date, your contract should expire on March 31, 2001.10

Ramon then sent a letter to HDSJ dated 12 March 2001, suggesting that the lease contract be
renegotiated for the welfare of the sublessees occupying the parcel of land.11 

On 3 April 2001, HDSJ notified Ramon that the lease contract shall not be renewed because Ramon
has "continually subleased the subject premises to about 20 families (in addition to a commercial
establishment) x x x without the knowledge and consent of the essor, [HDSJ]."12 Thereafter, HDSJ
refused to accept Ramon’s tender of payment of rentals.13

On 3 March 2005, HDSJ sent a letter to Ramon: (1) reiterating its stand that the lease contract was
terminated effective 31 March 2001;(2) demanding payment of ₱756,449.26 as unrealized fruits; and
(3) giving him 30 days to vacate the property.14 The sublessees were given written notices to vacate
within 30 days.15 HDSJ also posted a Patalastas stating that it is willing to work out an amicable
arrangement with the sublessees, although the latter are not considered as legal occupants or
tenants of the property.16 Because of this, some of the sublessees refused to pay rentals to Ramon.17

HDSJ also entered into lease contracts with: (1) Harish Chetandas on 25 May 2005;18 (2) Enrique
Negare on 12 April 2005;19 (3) Lamberto Estefa on 25 May 2005;20 and (4) Sofronio Chavez, Jr. on
21 May 2005.21
On 28 June 2005, HDSJ filed a Complaint before Branch 48 of the Metropolitan Trial Court of Pasay
(MeTC-Pasay) for unlawful detainer against Ramon and his sublessees.22 The complaint alleged that
Ramon and his sublessees have been illegally occupying the leased premises since 31 March 2001.
HDSJ sought the following damages:

17.1 Actual damages, in the amount of Php552,195.36, equivalent to the reasonable value of the
use and occupation of the premises from the period of 31 March 2001 until the present; and

17.2 Attorney’s fees in the amount of Php50,000.00, for defendants’ refusal to vacate the property
and for compelling plaintiff to incur expenses to protect its interests. Furthermore, it is clear that
defendants acted in gross and evident bad faith in refusing to satisfy plaintiff’s plainly valid, just, and
demandable claim.23

In his Answer dated 1 August 2005,24 Ramon claimed that:

(1) German was the owner of the two buildings constructed on the leased property as evidenced by
the building permits obtained from the government agencies and the tax declarations covering the
buildings;

(2) The Spanish lease contract, which was not translated into English or Filipino should not be
admitted as evidence in view of Section 33 of Rule 133 of the Rules on Evidence;

(3) HDSJ is estopped from raising the issue of non-transferability of the lease contract because it
admitted in its letter to Ramon that there is an existing lease agreement between the parties, even
after German’s death:

Your Lease Contract with [HDSJ], which is an implied month-to-month contract, has to be terminate
defective March 31, 2001, because by your own admission, you have continuously subleased the
subject premises to about 20 families including a commercial establishment).This was done without
the knowledge and consent of the lessor, [HDSJ], and is in violation of the Lease Contract your
father signed with them.25 x x x.

(4) There is no prohibition against subleasing in the lease contract. Thus, under Article 1650 of the
Civil Code, Ramon is permitted to sublease the premises; and

(5) The letters sent by HDSJ to the Inocencios sometime in1990 revealed that the former already
knew that the premises were being subleased.

Ramon also claimed that HDSJ interfered with the contractual relations between him and his
sublessees.26

While the case was being tried before the MeTC-Pasay, Ramon passed away.

In an Order dated 23 August 2006, the MeTC-Pasay allowed the substitution of Ramon by his wife,
Analita.27

The Ruling of the MeTC-Pasay

The MeTC-Pasay ruled in favor of HDSJ. In its Decision dated 22May 2008, the MeTC-Pasay held
that the lease contract could not be transmitted to Ramon as German’s heir in view of the express
stipulation found therein. Since there was "no lease contract between [HDSJ] and Ramon x x x the
latter cannot sublease the property."28 The dispositive portion of the MeTC-Pasay Decision reads:

Premises considered, judgment is hereby rendered in favor of plaintiff and against defendant as
follows:

1. Ordering defendant Ramon Inocencio, substituted by AnalitaP. Inocencio, and Felipe Enar, and all
persons claiming rights under them to immediately vacate the premises located at 61-CSta.
Escolastica cor. F.B. Harrison St., Pasay City and to peacefully turn over the same to plaintiff;

2. Ordering the defendants to pay plaintiff reasonable compensation of ₱552,195.36 for the use and
occupation of the property from 01 April 2001 to 31 March 2005, and the amount of ₱10,512.00 a
month from 01 April 2005 up to the present, plus twelve per cent 12% interest per annum until the
premises shall have been vacated;

3.Ordering the defendants to pay plaintiff the amount of ₱50,000.00 as attorney’s fees and costs of
suit.29
Aggrieved, Analita filed an appeal before the RTC-Pasay.

The Ruling of the RTC-Pasay

On 21 January 2009, the RTC-Pasay dismissed Analita’s appeal and affirmed in toto the decision of
the MeTC-Pasay.30 It held that "even before the termination of the contract, [Ramon] had no right to
sublease the said property due to the intransferability clause in the contract."31

Analita moved for reconsideration, but it was denied in an Order dated 25 October 2010.32 Analita
then filed a petition for review under Rule 42 of the Rules of Court before the CA.

The Ruling of the CA

The CA affirmed the decision of the RTC-Pasay but modified the award for damages. The
dispositive portion of the Decision reads:

WHEREFORE, foregoing considered, the assailed Decision dated21 January 2009 of the Regional
Trial Court, Branch 119, Pasay City is AFFIRMED with the MODIFICATION that the award for
reasonable compensation in paragraph 2 is pegged at Five Hundred Four Thousand Five Hundred
Seventy Six Pesos (₱504,576.00) representing the accumulated rentals for the period from 01 April
2001 up to 31 March2005 with six percent (6%) interest per annum, plus the further amount of Ten
Thousand Five Hundred Twelve Pesos (₱10,512.00) per month from 01 April 2005 until possession
is restored to respondent, also with six percent (6%) interest per annum, up to the finality of this
Decision. Thereafter, the interest shall be twelve percent (12%) until the amount is fully paid.33

Hence, this petition.

The Issues

The petition questions the following rulings made by the CA:

(1) The sublease contracts were invalid;

(2) There was no tortious interference on the part of HDSJ;

(3) Ramon did not own the buildings erected on the leased premises;

(4) HDSJ is entitled to reasonable compensation in the amount of ₱504,576.00 and

attorney’s fees; and

(5) HDSJ’s action for unlawful detainer was not barred by prescription.

The Ruling of this Court

Whether or not the lease contract is transmitted to ramon as german inocencensios here?

(1) The sublease contracts were invalid;

Article 1311 of the Civil Code provides:

Art. 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.

xxxx

We have previously ruled that lease contracts, by their nature, are not personal. The general rule,
therefore, is lease contracts survive the death of the parties and continue to bind the heirs except if
the contract states otherwise.34 In Sui Man Hui Chan v. Court of Appeals,35 we held that:

A lease contract is not essentially personal in character. Thus, the rights and obligations therein are
transmissible to the heirs. 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. In the subject Contract of
Lease, not only were there no stipulations prohibiting any transmission of rights, but its very terms
and conditions explicitly provided for the transmission of the rights of the lessor and of the lessee to
their respective heirs and successors. The contract is the law between the parties. 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 successors or 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.

IN THE PRESENT CASE

Section 6 of the lease contract provides that "this contract is nontransferable unless prior consent of
the lessor is obtained in writing."36 Section 6 refers to transfers inter vivos(takes effect during the
lifetime of the donor, independently of his death) and not transmissions mortis causa. What
Section 6 seeks to avoid is for the lessee to substitute a third party in place of the lessee without the
lessor’s consent. This merely reiterates what Article 1649 of the Civil Code provides:

Art. 1649. The lessee cannot assign the lease without the consent of the lessor, unless there is a
stipulation to the contrary.

In any case, HDSJ also acknowledged that Ramon is its month-to-month lessee. Thus, the death of
German did not terminate the lease contract executed with HDSJ, but instead continued with Ramon
as the lessee. HDSJ recognized Ramon as its lessee in a letter dated 1 March 2001:

We acknowledge the fact that Hospicio de San Jose has been accepting the payment of your rentals
since the demise of Mr. [German] Inocencio. Hence, an implied contract of lease between the two of
you exists. However, since there is no stipulation as to the period of the contract and you are paying
a monthly rental to our client, the period for the lease is on a month-to-month basis (Art. 1687). Thus
as of this date, your contract should expire on March 31, 2001.37

Section 6 of the lease contract requires written consent of the lessor before the lease may be
assigned or transferred. In Tamio v. Tecson,38 we explained the nature of an assignment of lease:

In the case of cession or assignment of lease rights on real property, there is a novation by the
substitution of the person of one of the parties — the lessee. The personality of the lessee, who
dissociates from the lease, disappears; only two persons remain in the juridical relation — the lessor
and the assignee who is converted into the new lessee.39

Assignment or transfer of lease, which is covered by Article 1649 of the Civil Code, is different from
a sublease arrangement, which is governed by Article 1650 of the same Code.

In a sublease, the lessee becomes in turn a lessor to a sublessee. The sublessee then becomes
liable to pay rentals to the original lessee.

However, the juridical relation between the lessor and lessee is not dissolved. The parties continue
to be bound by the original lease contract. Thus, in a sublease arrangement, there are at least three
parties and two distinct juridical relations.40

Ramon had a right to sublease the premises since the lease contract did not contain any stipulation
forbidding subleasing.

Article 1650 of the Civil Code states:

Art. 1650. When in the contract of lease of things there is no express prohibition, the lessee may
sublet the thing leased, in whole or in part, without prejudice to his responsibility for the performance
of the contract toward the lessor.

THEREFORE, WE HOLD THAT THE SUBLEASE CONTRACTS EXECUTED BY RAMON WERE

VALID.

(2) There was no tortious interference on the part of HDSJ;

We also find that HDSJ DID NOT COMMIT TORTIOUS INTERFERENCE. Article1314 of the Civil
Code states:

Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to
the other contracting party.
As correctly pointed out by the Inocencios, tortious interference has the following elements: (1)
existence of a valid contract; (2) knowledge on the part of the third person of the existence of the
contract; and (3) interference of the third person without legal justification or excuse.41

The facts of the instant case show that there were valid sublease contracts which were known to
HDSJ. However, we find that the third element is lacking in this case.

In So Ping Bun v. Court of Appeals, we held that there was no tortious interference if the intrusion
was impelled by purely economic motives. In So Ping Bun, we explained that:

Authorities debate on whether interference may be justified where the defendant acts for the sole
purpose of furthering his own financial or economic interest. One view is that, as a general rule,
justification for interfering with the business relations of another exists where the actor’s motive is to
benefit himself. Such justification does not exist where his sole motive is to cause harm to the other.
Added to this, some authorities believe that it is not necessary that the interferer’s interest outweighs
that of the party whose rights are invaded, and that an individual acts under an economic interest
that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived,
for he acts in self- protection. Moreover, justification for protecting one’s financial position should not
be made to depend on a comparison of his economic interest in the subject matter with that of
others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in
wrongful motives.43

The evidence shows that HDSJ entered into agreements with Ramon’s former sublessees for purely
economic reasons (payment of rentals). HDSJ had a right to collect the rentals from the sublessees
upon termination of the lease contract. It does not appear that HDSJ was motivated by spite or ill will
towards the Inocencios.

Ramon did not own the buildings erected on the leased premises;

The Inocencios claim ownership over the buildings since these are separate and distinct from the
land on which they are erected. Thus, as owners of the buildings, they have a right to lease the
buildings to third persons, even after termination of the lease contract with HDSJ. To bolster their
claim of ownership, the Inocencios presented the following evidence: (1) the building permit;44(2) the
receipt for the payment of the permit fee;45 (3) the Tax Declarations; and (4) the proof of payment of
insurance.46 The Inocencios also claimed that:

as the Inocencios owned the Subject Buildings, it is respectfully submitted, and it should be clear
that when they entered into lease contracts with tenants for the lease of portions of the said
buildings, these contracts were independent contracts of lease over their own building and not sub-
leases of the parcel of land which they leased from Respondent. It is Respondent’s inaccurate
characterization of the leasing by the Inocencios of portions of their own building that has obfuscated
the legal issues in this case and partially led to the incorrect decisions of the courts a quo.47

WE DO NOT AGREE. In Duellome v. Gotico48 and Caleon v. Agus Development Corporation,49

we held that the lease of a building includes the lease of the lot and consequently, the rentals of the
building include the rentals of the lot. As correctly pointed out by HDSJ in its Comment:50

x x x When the Inocencios leased the buildings to third parties, they also "leased" to the third parties
the plot of land on which the buildings stood — either by implied transfer of the lease covering the
plot of the land, or by sublease. Either way, x x x the Inocencios themselves must have a valid lease
contract with [HDSJ] over the land. However, when the lease contract x x x with HDSJ ended on
31March 2001, Ramon lost his status as lessee of the land, and therefore, had no authority to
transfer the lease or sublease the land. x x x.51

However, we find that the CA erred in not applying Article 1678 of the Civil Code which provides:

Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for
which the lease is intended, without altering the form or substance of the property leased, the lessor
upon the termination of the lease shall pay the lessee one-half of the value of the improvements at
that time. Should the lessor refuse to reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer damage thereby. He shall not, however,
cause any more impairment upon the property leased than is necessary.

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he
may remove the ornamental objects, provided no damage is caused to the principal thing, and the
lessor does not choose to retain them by paying their value at the time the lease is extinguished.
The foregoing provision applies if the improvements were: (1) introduced in good faith; (2) useful;
and (3) suitable to the use for which the lease is intended, without altering the form and substance.52

We find that the aforementioned requisites are satisfied in this case.  The buildings were constructed
1âwphi1

before German’s demise, during the subsistence of a valid contract of lease. It does not appear that
HDSJ prohibited German from constructing the buildings. Thus, HDSJ should have reimbursed
German (or his estate) half of the value of the improvements as of 2001. If HDSJ is not willing to
reimburse the Inocencios, then the latter should be allowed to demolish the buildings.

HDSJ’s action for unlawful detainer was not barred by prescription.

We also find that the action for unlawful detainer was not barred by prescription. Section 1, Rule 70
of the Rules of Court provides that actions for unlawful detainer must be filed "within one (1) year
after such unlawful deprivation or withholding of possession." In interpreting the foregoing provision,
this Court, in Republic v. Sunvar Realty Development Corporation,53 held that:

The one-year period to file an unlawful detainer case is not counted from the expiration of the lease
contract on 31 December 2002. Indeed, the last demand for petitioners to vacate is the reckoning
period for determining the one-year period in an action for unlawful detainer. "Such one year period
should be counted from the date of plaintiff’s last demand on defendant to vacate the real property,
because only upon the lapse of that period does the possession become unlawful."54

HDSJ’s last demand was made on 3 March 2005, and it filed the complaint for unlawful detainer on
28 June 2005. Thus, the complaint was filed within the period provided under the Rules of Court.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated 12 January 2012 of the
Court of Appeals in CA-G.R. SP No. 117009 is AFFIRMED with modification. The case is hereby
REMANDED to the Metropolitan Trial Court of Pasay, Branch 48, for determination of the value or
the improvements to be paid to the lnocencios, if Hospicio de San Jose desires to keep the
improvements. Otherwise, the Inocencios shall be allowed to demolish the buildings at their
expense.

SO ORDERED
 G.R. No. 118248             April 5, 2000

DKC HOLDINGS CORPORATION,petitioner,

vs.
COURT OF APPEALS, VICTOR U. BARTOLOME and REGISTER OF DEEDS FOR METRO
MANILA, DISTRICT III, respondents.

YNARES-SANTIAGO, J.:

This is a petition for review on certiorari seeking the reversal of the December 5, 1994 Decision of
the Court of Appeals in CA-G.R. CV No. 40849 entitled "DKC Holdings Corporation vs. Victor U.
Bartolome, et al.", affirming in toto the January 4, 1993 Decision of the Regional Trial Court of
1 

Valenzuela, Branch 172, which dismissed Civil Case No. 3337-V-90 and ordered petitioner to pay
2 

P30,000.00 as attorney's fees.

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.

On March 16, 1988, petitioner entered into a Contract of Lease with Option to Buy with Encarnacion
Bartolome, whereby petitioner 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, petitioner undertook to pay P3,000.00 a month as consideration for the reservation
of its option. Within the two-year period, petitioner shall serve formal written notice upon the lessor
Encarnacion Bartolome of its desire to exercise its option. The contract also provided that in case
petitioner 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.

Petitioner regularly paid the monthly P3,000.00 provided for by the Contract to Encarnacion until her
death in January 1990.

Thereafter, petitioner coursed its payment to private respondent Victor Bartolome, being the sole
heir of Encarnacion. Victor, however, refused to accept these payments.

Meanwhile, on January 10, 1990, Victor executed an Affidavit of Self-Adjudication over all the
properties of Encarnacion, including the subject lot. Accordingly, respondent Register of Deeds
cancelled Transfer Certificate of Title No. B-37615 and issued Transfer Certificate of Title No. V-
14249 in the name of Victor Bartolome.

On March 14, 1990, 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 for the month of March.
Again, Victor refused to accept the tendered rental fee and to surrender possession of the property
to petitioner.

Petitioner thus opened Savings Account No. 1-04-02558-I-1 with the China Banking Corporation,
Cubao Branch, in the name of Victor Bartolome and deposited therein the P15,000.00 rental fee for
March as well as P6,000.00 reservation fees for the months of February and March.

Petitioner also tried to register and annotate the Contract on the title of Victor 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. 1âwphi1.nêt

Thus, on April 23, 1990, petitioner filed a complaint for specific performance and damages against
Victor and the Register of Deeds, docketed as Civil Case No. 3337-V-90 which was raffled off to
3 

Branch 171 of the Regional Trial Court of Valenzuela. Petitioner 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.
Meanwhile, on May 8, 1990, a Motion for Intervention with Motion to Dismiss was filed by one
4 

Andres Lanozo, who claimed that he was and has been a tenant-tiller of the subject property, which
was agricultural riceland, for forty-five years. 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.

On May 18, 1990, the lower court issued an Order referring the case to the Department of Agrarian
5 

Reform for preliminary determination and certification as to whether it was proper for trial by said
court.

On July 4, 1990, the lower court issued another Order referring the case to Branch 172 of the RTC
6 

of Valenzuela which was designated to hear cases involving agrarian land, after the Department of
Agrarian Reform issued a letter-certification stating that referral to it for preliminary determination is
no longer required.

On July 16, 1990, the lower court issued an Order denying the Motion to Intervene, holding that
7 

Lanozo's rights may well be ventilated in another proceeding in due time.

After trial on the merits, the RTC of Valenzuela, Branch 172 rendered its Decision on January 4,
1993, dismissing the Complaint and ordering petitioner to pay Victor P30,000.00 as attorney's fees.
On appeal to the CA, the Decision was affirmed in toto.

ISSUES

Hence, 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.

(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.

(C)

THIRD ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE CONTRACT

WAS ONE-SIDED AND ONEROUS IN FAVOR OF DKC.

(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.

(E)

FIFTH ASSIGNMENT OF ERROR

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT PLAINTIFF-

APPELLANT WAS LIABLE TO DEFENDANT-APPELLEE FOR ATTORNEY'S FEES. 8

MAIN ISSUE

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, Victor, even after her demise.
Held:

no

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.

Art. 1311 of the Civil Code provides, as follows —

Art. 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.

x x x           x x x          x x x

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.

In the case at bar, there is neither contractual stipulation nor legal provision making the rights and
obligations under the contract intransmissible. More importantly, the nature of the rights and
obligations therein are, by their nature, transmissible.

The nature of intransmissible rights as explained by Arturo Tolentino, an eminent civilist, is as

follows:

Among contracts which are intransmissible are those which are purely personal, either by
provision of law, such as in cases of partnerships and agency, or by the very nature of the
obligations arising therefrom, such as those requiring special personal qualifications of the
obligor.

It may also be stated that contracts for the payment of money debts are not transmitted to
the heirs of a party, but constitute a charge against his estate.

Thus, where the client in a contract for professional services of a lawyer died, leaving minor
heirs, and the lawyer, instead of presenting his claim for professional services under the
contract to the probate court, substituted the minors as parties for his client, it was held that
the contract could not be enforced against the minors; the lawyer was limited to a recovery
on the basis of quantum meruit. 9

In American jurisprudence, "(W)here acts stipulated in a contract require the exercise of special
knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity, or other personal
qualification of one or both parties, the agreement is of a personal nature, and terminates on the
death of the party who is required to render such service."  10

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. Contracts to perform personal acts which cannot be as well
performed by others are discharged by the death of the promissor. Conversely, where the service or
act is of such a character that it may as well be performed by another, or where the contract, by its
terms, shows that performance by others was contemplated, death does not terminate the contract
or excuse nonperformance.  11

In the case at bar, there is no personal act required from the late Encarnacion Bartolome. Rather,
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.

As early as 1903, it was held that "(H)e who contracts does so for himself and his heirs."  In 1952, it
12 

was ruled that if the predecessor was duty-bound to reconvey land to another, and at his
death the reconveyance had not been made, the heirs can be compelled to execute the
proper deed for reconveyance. 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.  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. 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.  14 

This is clear from Parañaque Kings Enterprises vs. Court of Appeals,  where this Court rejected a
15 

similar defense —

With respect to the contention of respondent Raymundo that he is not privy to the lease
contract, not being the lessor nor the lessee referred to therein, he could thus not have
violated its provisions, but he is nevertheless a proper party. Clearly, he stepped into the
shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the
obligations of the lessor under the lease contract. Moreover, he received benefits in the form
of rental payments. Furthermore, the complaint, as well as the petition, prayed for the
annulment of the sale of the properties to him. Both pleadings also alleged collusion between
him and respondent Santos which defeated the exercise by petitioner of its right of first
refusal.

In order then to accord complete relief to petitioner, respondent Raymundo was a necessary,
if not indispensable, party to the case. 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.

In the case at bar, the subject matter of the contract is likewise 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. 
16

UNDER BOTH ARTICLE 1311 OF THE CIVIL CODE AND JURISPRUDENCE, THEREFORE,
VICTOR IS BOUND BY THE SUBJECT CONTRACT OF LEASE WITH OPTION TO BUY.

whether petitioner had complied with its obligations under the contract and with the requisites to
exercise its option

That being resolved, 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. The payment by petitioner of the
reservation fees during the two-year period within which it had the option to lease or purchase the
property is not disputed. In fact, the payment of such reservation fees, except those for February and
March, 1990 were admitted by Victor.  This is clear from the transcripts, to wit —
17 

ATTY. MOJADO:

One request, Your Honor. The last payment which was allegedly made in January 1990 just
indicate in that stipulation that it was issued November of 1989 and postdated January 1990
and then we will admit all.

COURT:

All reservation fee?

ATTY. MOJADO:

Yes, Your Honor.

COURT:

All as part of the lease?

ATTY. MOJADO:

Reservation fee, Your Honor. There was no payment with respect to payment of rentals.  18

Petitioner also paid the P15,000.00 monthly rental fee on the subject property by depositing the
same in China Bank Savings Account No. 1-04-02558-I-1, in the name of Victor as the sole heir of
Encarnacion Bartolome,  for the months of March to July 30, 1990, or a total of five (5) months,
19 

despite the refusal of Victor to turn over the subject property. 20

Likewise, 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, 1990,  well within the two-year period for it to
21 

exercise its option. Considering that at that time Encarnacion Bartolome had already passed away, it
was legitimate for petitioner to have addressed its letter to her heir.
1âwphi1

It appears, therefore, that the exercise by petitioner of its option to lease the subject property
was made in accordance with the contractual provisions. Concomitantly, private respondent
Victor Bartolome has the obligation to surrender possession of and lease the premises to
petitioner for a period of six (6) years, pursuant to the Contract of Lease with Option to Buy.

issue of tenancy

Coming now to the issue of tenancy, we find that this is not for this Court to pass upon in the present
petition. We note that the Motion to Intervene and to Dismiss of the alleged tenant, Andres Lanozo,
was denied by the lower court and that such denial was never made the subject of an appeal. As the
lower court stated in its Order, the alleged right of the tenant may well be ventilated in another
proceeding in due time.

WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED. The Decision
of the Court of Appeals in CA-G.R. CV No. 40849 and that of the Regional Trial Court of Valenzuela
in Civil Case No. 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. V-14249 by way of lease to petitioner and to perform all obligations of his
predecessor-in-interest, Encarnacion Bartolome, under the subject Contract of Lease with
Option to Buy;

(b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249 to respondent
Register of Deeds for registration and annotation thereon of the subject Contract of Lease
with Option to Buy;

(c) pay costs of suit.

Respondent Register of Deeds is, accordingly, ordered to register and annotate the subject Contract
of Lease with Option to Buy at the back of Transfer Certificate of Title No. V-14249 upon submission
by petitioner of a copy thereof to his office.

SO ORDERED. 1âwphi1.nêt
G.R. Nos. 140371-72             November 27, 2006

DY YIENG SEANGIO, BARBARA D. SEANGIO and VIRGINIA D. SEANGIO, Petitioners,

vs.
HON. AMOR A. REYES, in her capacity as Presiding Judge, Regional Trial Court, National
Capital Judicial Region, Branch 21, Manila, ALFREDO D. SEANGIO, ALBERTO D. SEANGIO,
ELISA D. SEANGIO-SANTOS, VICTOR D. SEANGIO, ALFONSO D. SEANGIO, SHIRLEY D.
SEANGIO-LIM, BETTY D. SEANGIO-OBAS and JAMES D. SEANGIO, Respondents.

DECISION

AZCUNA, J.:

This is a petition for certiorari1 with application for the issuance of a writ of preliminary injunction
and/or temporary restraining order seeking the nullification of the orders, dated August 10, 1999 and
October 14, 1999, of the Regional Trial Court of Manila, Branch 21 (the RTC), dismissing the petition
for probate on the ground of preterition, in the consolidated cases, docketed as SP. Proc. No. 98-
90870 and SP. Proc. No. 99-93396, and entitled, "In the Matter of the Intestate Estate of Segundo C.
Seangio v. Alfredo D. Seangio, et al." and "In the Matter of the Probate of the Will of Segundo C.
Seangio v. Dy Yieng Seangio, Barbara D. Seangio and Virginia Seangio."

The facts of the cases are as follows:

On September 21, 1988, private respondents filed a petition for the settlement of the intestate estate
of the late Segundo Seangio, docketed as Sp. Proc. No. 98–90870 of the RTC, and praying for the
appointment of private respondent Elisa D. Seangio–Santos as special administrator and guardian
ad litem of petitioner Dy Yieng Seangio.

Petitioners Dy Yieng, Barbara and Virginia, all surnamed Seangio, opposed the petition. They
contended that: 1) Dy Yieng is still very healthy and in full command of her faculties; 2) the deceased
Segundo executed a general power of attorney in favor of Virginia giving her the power to manage
and exercise control and supervision over his business in the Philippines; 3) Virginia is the most
competent and qualified to serve as the administrator of the estate of Segundo because she is a
certified public accountant; and, 4) Segundo left a holographic will, dated September 20, 1995,
disinheriting one of the private respondents, Alfredo Seangio, for cause. In view of the purported
holographic will, petitioners averred that in the event the decedent is found to have left a will, the
intestate proceedings are to be automatically suspended and replaced by the proceedings for the
probate of the will.

On April 7, 1999, a petition for the probate of the holographic will of Segundo, docketed as SP. Proc.
No. 99–93396, was filed by petitioners before the RTC. They likewise reiterated that the probate
proceedings should take precedence over SP. Proc. No. 98–90870 because testate proceedings
take precedence and enjoy priority over intestate proceedings.2

The document that petitioners refer to as Segundo’s holographic will is quoted, as follows:

Kasulatan sa pag-aalis ng mana

Tantunin ng sinuman

Ako si Segundo Seangio Filipino may asawa naninirahan sa 465-A Flores St., Ermita, Manila at
nagtatalay ng maiwanag na pag-iisip at disposisyon ay tahasan at hayagang inaalisan ko ng lahat at
anumang mana ang paganay kong anak na si Alfredo Seangio dahil siya ay naging lapastangan sa
akin at isan beses siya ng sasalita ng masama harapan ko at mga kapatid niya na si Virginia
Seangio labis kong kinasama ng loob ko at sasabe rin ni Alfredo sa akin na ako nasa ibabaw gayon
gunit daratin ang araw na ako nasa ilalim siya at siya nasa ibabaw.

Labis kong ikinasama ng loob ko ang gamit ni Alfredo ng akin pagalan para makapagutang na
kuarta siya at kanya asawa na si Merna de los Reyes sa China Bangking Corporation na millon
pesos at hindi ng babayad at hindi ng babayad ito ay nagdulot sa aking ng malaking kahihiya sa
mga may-ari at stockholders ng China Banking.

At ikinagalit ko pa rin ang pagkuha ni Alfredo at ng kanyang asawa na mga custome[r] ng Travel
Center of the Philippines na pinagasiwaan ko at ng anak ko si Virginia.
Dito ako nagalit din kaya gayon ayoko na bilanin si Alfredo ng anak ko at hayanan kong inaalisan ng
lahat at anoman mana na si Alfredo at si Alfredo Seangio ay hindi ko siya anak at hindi siya makoha
mana.

Nila[g]daan ko ngayon ika 20 ng Setyembre 1995 sa longsod ng Manila sa harap ng tatlong saksi. 3

(signed)

Segundo Seangio

Nilagdaan sa harap namin

(signed)

Dy Yieng Seangio (signed)

Unang Saksi ikalawang saksi

(signed)

ikatlong saksi

On May 29, 1999, upon petitioners’ motion, SP. Proc. No. 98–90870 and SP. Proc. No. 99–93396
were consolidated.4

On July 1, 1999, private respondents moved for the dismissal of the probate proceedings5 primarily
on the ground that the document purporting to be the holographic will of Segundo does not contain
any disposition of the estate of the deceased and thus does not meet the definition of a will under
Article 783 of the Civil Code. According to private respondents, the will only shows an alleged act of
disinheritance by the decedent of his eldest son, Alfredo, and nothing else; that all other compulsory
heirs were not named nor instituted as heir, devisee or legatee, hence, there is preterition which
would result to intestacy. Such being the case, private respondents maintained that while
procedurally the court is called upon to rule only on the extrinsic validity of the will, it is not barred
from delving into the intrinsic validity of the same, and ordering the dismissal of the petition for
probate when on the face of the will it is clear that it contains no testamentary disposition of the
property of the decedent.

Petitioners filed their opposition to the motion to dismiss contending that: 1) generally, the authority
of the probate court is limited only to a determination of the extrinsic validity of the will; 2) private
respondents question the intrinsic and not the extrinsic validity of the will; 3) disinheritance
constitutes a disposition of the estate of a decedent; and, 4) the rule on preterition does not apply
because Segundo’s will does not constitute a universal heir or heirs to the exclusion of one or more
compulsory heirs.6

On August 10, 1999, the RTC issued its assailed order, dismissing the petition for probate
proceedings:

A perusal of the document termed as "will" by oppositors/petitioners Dy Yieng Seangio, et al., clearly
shows that there is preterition, as the only heirs mentioned thereat are Alfredo and Virginia. [T]he
other heirs being omitted, Article 854 of the New Civil Code thus applies. However, insofar as the
widow Dy Yieng Seangio is concerned, Article 854 does not apply, she not being a compulsory heir
in the direct line.

As such, this Court is bound to dismiss this petition, for to do otherwise would amount to an abuse of
discretion. The Supreme Court in the case of Acain v. Intermediate Appellate Court [155 SCRA 100
(1987)] has made its position clear: "for … respondents to have tolerated the probate of the will and
allowed the case to progress when, on its face, the will appears to be intrinsically void … would have
been an exercise in futility. It would have meant a waste of time, effort, expense, plus added futility.
The trial court could have denied its probate outright or could have passed upon the intrinsic validity
of the testamentary provisions before the extrinsic validity of the will was resolved (underscoring
supplied).

WHEREFORE, premises considered, the Motion to Suspend Proceedings is hereby DENIED for
lack of merit. Special Proceedings No. 99–93396 is hereby DISMISSED without pronouncement as
to costs.

SO ORDERED.7
Petitioners’ motion for reconsideration was denied by the RTC in its order dated October 14, 1999.

Petitioners contend that:

THE RESPONDENT JUDGE ACTED IN EXCESS OF HER JURISDICTION OR WITH GRAVE

ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND
DECIDED A QUESTION OF LAW NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN
ISSUING THE QUESTIONED ORDERS, DATED 10 AUGUST 1999 AND 14 OCTOBER 1999
(ATTACHMENTS "A" AND "B" HEREOF) CONSIDERING THAT:

THE RESPONDENT JUDGE, WITHOUT EVEN COMPLYING WITH SECTIONS 3 AND 4 OF RULE
76 OF THE RULES OF COURT ON THE PROPER PROCEDURE FOR SETTING THE CASE FOR
INITIAL HEARING FOR THE ESTABLISHMENT OF THE JURISDICTIONAL FACTS, DISMISSED
THE TESTATE CASE ON THE ALLEGED GROUND THAT THE TESTATOR’S WILL IS VOID
ALLEGEDLY BECAUSE OF THE EXISTENCE OF PRETERITION, WHICH GOES INTO THE
INTRINSIC VALIDITY OF THE WILL, DESPITE THE FACT THAT IT IS A SETTLED RULE THAT
THE AUTHORITY OF PROBATE COURTS IS LIMITED ONLY TO A DETERMINATION OF THE
EXTRINSIC VALIDITY OF THE WILL, I.E., THE DUE EXECUTION THEREOF, THE TESTATOR’S
TESTAMENTARY CAPACITY AND THE COMPLIANCE WITH THE REQUISITES OR
SOLEMNITIES PRESCRIBED BY LAW;

II

EVEN ASSUMING ARGUENDO THAT THE RESPONDENT JUDGE HAS THE AUTHORITY TO

RULE UPON THE INTRINSIC VALIDITY OF THE WILL OF THE TESTATOR, IT IS INDUBITABLE
FROM THE FACE OF THE TESTATOR’S WILL THAT NO PRETERITON EXISTS AND THAT THE
WILL IS BOTH INTRINSICALLY AND EXTRINSICALLY VALID; AND,

III

RESPONDENT JUDGE WAS DUTY BOUND TO SUSPEND THE PROCEEDINGS IN THE

INTESTATE CASE CONSIDERING THAT IT IS A SETTLED RULE THAT TESTATE
PROCEEDINGS TAKE PRECEDENCE OVER INTESTATE PROCEEDINGS.

Petitioners argue, as follows:

First, respondent judge did not comply with Sections 3 and 4 of Rule 76 of the Rules of Court which
respectively mandate the court to: a) fix the time and place for proving the will when all concerned
may appear to contest the allowance thereof, and cause notice of such time and place to be
published three weeks successively previous to the appointed time in a newspaper of general
circulation; and, b) cause the mailing of said notice to the heirs, legatees and devisees of the testator
Segundo;

Second, the holographic will does not contain any institution of an heir, but rather, as its title clearly
states, Kasulatan ng Pag-Aalis ng Mana, simply contains a disinheritance of a compulsory heir.
Thus, there is no preterition in the decedent’s will and the holographic will on its face is not
intrinsically void;

Third, the testator intended all his compulsory heirs, petitioners and private respondents alike, with
the sole exception of Alfredo, to inherit his estate. None of the compulsory heirs in the direct line of
Segundo were preterited in the holographic will since there was no institution of an heir;

Fourth, inasmuch as it clearly appears from the face of the holographic will that it is both intrinsically
and extrinsically valid, respondent judge was mandated to proceed with the hearing of the testate
case; and,

Lastly, the continuation of the proceedings in the intestate case will work injustice to petitioners, and
will render nugatory the disinheritance of Alfredo.

The purported holographic will of Segundo that was presented by petitioners was dated, signed and
written by him in his own handwriting. Except on the ground of preterition, private respondents did
not raise any issue as regards the authenticity of the document.

The document, entitled Kasulatan ng Pag-Aalis ng Mana, unmistakably showed Segundo’s intention

of excluding his eldest son, Alfredo, as an heir to his estate for the reasons that he cited therein. In
effect, Alfredo was disinherited by Segundo.
For disinheritance to be valid, Article 916 of the Civil Code requires that the same must be effected
through a will wherein the legal cause therefor shall be specified. With regard to the reasons for the
disinheritance that were stated by Segundo in his document, the Court believes that the incidents,
taken as a whole, can be considered a form of maltreatment of Segundo by his son, Alfredo, and
that the matter presents a sufficient cause for the disinheritance of a child or descendant under
Article 919 of the Civil Code:

Article 919. The following shall be sufficient causes for the disinheritance of children and
descendants, legitimate as well as illegitimate:

(1) When a child or descendant has been found guilty of an attempt against the life of the
testator, his or her spouse, descendants, or ascendants;

(2) When a child or descendant has accused the testator of a crime for which the law
prescribes imprisonment for six years or more, if the accusation has been found groundless;

(3) When a child or descendant has been convicted of adultery or concubinage with the
spouse of the testator;

(4) When a child or descendant by fraud, violence, intimidation, or undue influence causes
the testator to make a will or to change one already made;

(5) A refusal without justifiable cause to support the parents or ascendant who disinherit such
child or descendant;

(6) Maltreatment of the testator by word or deed, by the child or descendant; 8

(7) When a child or descendant leads a dishonorable or disgraceful life;

(8) Conviction of a crime which carries with it the penalty of civil interdiction.

Now, the critical issue to be determined is whether the document executed by Segundo can be
considered as a holographic will.

A holographic will, as provided under Article 810 of the Civil Code, must be entirely written, dated,
and signed by the hand of the testator himself. It is subject to no other form, and may be made in or
out of the Philippines, and need not be witnessed.

Segundo’s document, although it may initially come across as a mere disinheritance instrument,
conforms to the formalities of a holographic will prescribed by law. It is written, dated and signed by
the hand of Segundo himself. An intent to dispose mortis causa[9] can be clearly deduced from the
terms of the instrument, and while it does not make an affirmative disposition of the latter’s property,
the disinheritance of Alfredo, nonetheless, is an act of disposition in itself. In other words, the
disinheritance results in the disposition of the property of the testator Segundo in favor of those who
would succeed in the absence of Alfredo.10

Moreover, it is a fundamental principle that the intent or the will of the testator, expressed in the form
and within the limits prescribed by law, must be recognized as the supreme law in succession. All
rules of construction are designed to ascertain and give effect to that intention. It is only when the
intention of the testator is contrary to law, morals, or public policy that it cannot be given effect.11

Holographic wills, therefore, being usually prepared by one who is not learned in the law, as
illustrated in the present case, should be construed more liberally than the ones drawn by an expert,
taking into account the circumstances surrounding the execution of the instrument and the intention
of the testator.12 In this regard, the Court is convinced that the document, even if captioned
as Kasulatan ng Pag-Aalis ng Mana, was intended by Segundo to be his last testamentary act and
was executed by him in accordance with law in the form of a holographic will. Unless the will is
probated,13 the disinheritance cannot be given effect.14

With regard to the issue on preterition,15 the Court believes that the compulsory heirs in the direct
line were not preterited in the will. It was, in the Court’s opinion, Segundo’s last expression to
bequeath his estate to all his compulsory heirs, with the sole exception of Alfredo. Also, Segundo did
not institute an heir16 to the exclusion of his other compulsory heirs. The mere mention of the name
of one of the petitioners, Virginia, in the document did not operate to institute her as the universal
heir. Her name was included plainly as a witness to the altercation between Segundo and his son,
Alfredo.1âwphi1
Considering that the questioned document is Segundo’s holographic will, and that the law favors
testacy over intestacy, the probate of the will cannot be dispensed with. Article 838 of the Civil Code
provides that no will shall pass either real or personal property unless it is proved and allowed in
accordance with the Rules of Court. Thus, unless the will is probated, the right of a person to
dispose of his property may be rendered nugatory.17

In view of the foregoing, the trial court, therefore, should have allowed the holographic will to be
probated. It is settled that testate proceedings for the settlement of the estate of the decedent take
precedence over intestate proceedings for the same purpose.18

WHEREFORE, the petition is GRANTED. The Orders of the Regional Trial Court of Manila, Branch
21, dated August 10, 1999 and October 14, 1999, are set aside. Respondent judge is directed to
reinstate and hear SP Proc. No. 99-93396 for the allowance of the holographic will of Segundo
Seangio. The intestate case or SP. Proc. No. 98-90870 is hereby suspended until the termination of
the aforesaid testate proceedings.

No costs.

SO ORDERED.

In Dy Yieng Seangio, et al. v. Hon. Amor Reyes, et al., G.R. No. 140371-72, November
27, 2006, there was a petition for the probate of an alleged holographic will which was
denominated as “Kasulatan sa pag-aalis ng mana.” The private respondents moved for
the dismissal of the probate proceedings primarily on the ground that the document
purporting to be the holographic will of Segundo did not contain any disposition of the
estate of the deceased and thus did not meet the definition of a will under Article 783 of
the Civil Code. According to private respondents, the will only showed an alleged act of
disinheritance by the decedent of his eldest son, Alfredo, and nothing else; that all other
compulsory heirs were not named nor instituted as heir, devisee or legatee, hence there
was preterition which would result to intestacy. Such being the case, private
respondents maintained that while procedurally the court is called upon to rule only on
the extrinsic validity of the will, it is not barred from delving into the intrinsic validity of
the same, and ordering the dismissal of the petition for probate when on the face of the
will it is clear that it contains no testamentary disposition of the property of the decedent.

             Petitioners filed their opposition to the motion to dismiss contending that: (1)
generally, the authority of the probate court is limited only to a determination of the
extrinsic validity of the will; (2) private respondents question the intrinsic and not the
extrinsic validity of the will; (3) disinheritance constitutes a disposition of the estate of a
decedent; and (4) the rule on preterition did not apply because Segundo’s will did not
constitute a universal heir or heirs to the exclusion of one or more compulsory heirs.

The RTC issued an order dismissing the petition for probate proceedings, hence, a
petition for certiorari was filed where petitioners argued as follows:

  First, respondent judge did not comply with Sections 3 and 4 of the Rule 76 of the
Rules of Court which respectively mandate the court to: (a) fix the time and place for
proving the will when all concerned may appear to contest the allowance thereof, and
cause notice of such time and place to be published three weeks successively previous
to the appointed time in a newspaper of general circulation; and (b) cause the mailing of
said notice to the heirs, legatee and devisees of the testator Segundo;
             Second, the holographic will does not contain any institution of an heir, but
rather, as its title clearly states, Kasulatan ng Pag-alis ng Mana, simply contains a
disinheritance of a compulsory heir. Thus, there is no preterition in the decedent’s will
and the holographic will on its face is not intrinsically void;

             Third, the testator intended all his compulsory heirs, petitioners and private
respondents alike, with the sole exception of Alfredo, to inherit his estate. None of the
compulsory heirs in the direct line of Segundo were preterited in the holographic will
since there was no institution of an heir;

             Fourth, as it clearly appears from the face of the holographic will that it is both
intrinsically and extrinsically valid, respondent judge was mandated to proceed with the
hearing of the testate case; and,

             Lastly, the continuation of the proceedings in the intestate case will work
injustice to petitioners, and will render nugatory the disinheritance of Alfredo.

 ISSUE:  

   Now, the critical issue to be determined is whether the document executed by

Segundo can be considered as a holographic will.

 Held: A holographic will, as provided under Article 810 of the Civil Code, must be
entirely written, dated, and signed by the hand of the testator himself. It is subject to no
other form, and may be made in or out of the Philippines, and need not be witnessed.

             The document, although it may initially come across as a mere disinheritance

instrument, conforms to the formalities of a holographic will prescribed by law. It is
written, dated and signed by the hand of the testator himself. An intent to dispose mortis
causa (Article 783) can be clearly deduced from the terms of the instrument, and while it
does not make an affirmative disposition of the latter’s property, the disinheritance of the
son nonetheless, is an act of disposition in itself. In other words, the disinheritance
results in the disposition of the property of the testator in favor of those who would
succeed in the absence of the eldest son.

             Moreover, it is a fundamental principle that the intent or the will of the testator,
expressed in the form and within the limits prescribed by law, must be recognized as the
supreme law in succession. All rules of construction are designed to ascertain and give
effect to that intention. It is only when the intention of the testator is contrary to law,
morals, or public policy that it cannot be given effect.

             Holographic wills, therefore, being usually prepared by one who is not learned
in the law should be construed more liberally than the ones drawn by an expert, taking
into account the circumstances surrounding the execution of the instrument and the
intention of the testator. In this regard, the document, even if captioned as Kasulatan ng
Pag-alis ng Mana, was intended by the testator to be his last testamentary act and was
executed by him in accordance with law in the form of a holographic will. Unless the will
is probated, the disinheritance cannot be given effect.