IN THE MATTER OF THE INTESTATE ESTATE OF THE DECEASE GO FOOK. LIANE C. GOMEZ, ADMINISTRATRIX AND APPELLEE, VS. AUGUSTO G. SYJUCO, ET AL., CREDITORS, CLAIMANTS AND APPELLANTS; ME…

Appeal taken by Augusto G. Syjuco and others from
an order issued on November 14, 1958 by the Court of First Instance of Baguio City in the Intestate Estate of the Deceased Go Fook (Special Proceedings No. 263) declaring their claim for
unpaid rentals on a property leased to said deceased not entitled to preference
with respect to the proceeds of the sale of movable properties found in the
leased premises. The appealed order reads as follows:

“3. Claim of Augusto Syjuco et al. for unpaid
rentals for one year. Under Art. 2211 CCP, the claim
for unpaid rentals must have been incurred by the deceased himself. It is
admitted that up to the. death of Go Fook—rentals were
paid—what remains unpaid are rentals that accrued when the Administratrix went ahead with the lease with the approval
of this Court, Following the strict construction of the law, this Court must
hold that insofar as the property of Go Fook is
concerned, the lease entered into by his Administratrix cannot enjoy preference over property that
belonged to him, so that this claim must also be denied
preference.”

It is not disputed that on March
20, 1954, Go Fook leased from the Security Investment
Corporation, for a period of two years, renewable for another like period, at
the option of the parties, and at a monthly rental of P2,000.00, a parcel of land, with the building existing
thereon, situated in the City of Baguio, where the
lessee ran a hotel business under the name of St. Francis Hotel. On July 12,
1954, the lessor sold the property to appellants who agreed to recognize the lease
aforesaid.

On September 14,
1954, Go
Fook died intestate in the City of
Baguio and his estate—consisting solely
of furnishings used in the operation of the St. Francis Hotel— was placed under
administration, with the People’s Bank and Trust Co. as judicial
administrator.

On December 20, 1954, appellants
filed a claim against the Estate for the sum of P4,180.00 representing unpaid rentals on the leased premises
for the months of August and September, 1954, plus interest. They also filed an
action for ejectment against the Administrator of the
Estate in which case the Municipal Court of Baguio
City rendered judgment ordering the latter to vacate the premises and pay
appellants the sum of P6,000.00 for unpaid rentals for
the months of October, November and December, 1954, with legal interest from
December 25, 1954, and the further sum of P2,000.00 monthly beginning January,
1955 until the property is vacated, plus attorney’s fees and costs. By reason of
this judgment, appellants filed an amended and supplemental claim against the
Estate for the total sum of P14,251.70, representing unpaid rentals from August,
1954 to January, 1955, inclusive, at the rate of P2,000.00 a month, plus
interest, costs and attorney’s fees.

In its order of February 26,
1955, the probate court appointed Liane Gomez to
replace the People’s Bank & Trust Co. as administrator, at the same time
authorizing her to continue running the St. Francis Hotel for the purpose of
paying the back and future rentals to appellants, for the period and under the
terms and conditions set forth in the “Memorandum of Agreement of Lease”, signed
by the parties concerned and attached to said order.

Despite the aforementioned order,
on June 29, 1955 the Court disallowed appellants’ claim “on the ground that
having raised the issue of the existence of a partnership between the deceased
Go Fook and the Pacific Exchange Corporation these
claims should properly be brought before the surviving partner as liquidator of
the alleged partnership.” Subsequently, however, the Court reconsidered its
ruling and allowed their claim in the sum of P14,180.00. Thereafter, upon authority of the court, the movable
properties found within the premises of the St. Francis Hotel were sold at
public auction for the sum of P14,143.40. The majority
thereof were bought by appellants who, instead of paying cash therefor, filed a bond to secure payment of the purchase
price.

On March 2, 1956, appellants
filed a motion asking that their claim for unpaid rents, which as of that date
totalled P19,750.00, be
declared a preferred claim with respect to the proceeds of the sale of movables
in the property leased, to the exclusion of other creditors, under the
provisions of Article 2241, paragraph 12, Civil Code of the Philippines. This
motion was denied; hence the present appeal.

In denying appellants’ claim for
preference in relation to unpaid rentals, the lower court held that the
provisions of Article 2241 of the New Civil Code, providing as they do for an
exception to the general rule, must be strictly construed, and that a strict
construction thereof requires that the preference established be applied only to
unpaid rentals due from the deceased Go Fook
himself.

We can not agree with this
view.

In the first place, the contested
ruling would seem to read into the law something that is not there, because
Article 2241, paragraph 12 of the New Civil Code establishes a preference in
favor of “credits for rent for one year upon the personal property of the lessee
existing on the immovable leased, and on the fruits of the same” without
imposing the condition that the rent should have been incurred personally by the
lessee—in this case, the now deceased Go Fook—and not
by the Executor or Administrator of his Estate.

In the second place, even
admitting as correct the lower court’s view on the matter, its ruling can not
stand because it is not denied that the contract of lease of April 1,1954
between the Security Investment Corporation, as lessor, and Go Fook, as lessee,
was for a period of two years ending in the month of April 1956, and the one
year unpaid rentals for which preference is claimed by appellants cover the
period from February 1955 to January 1956—a period well within the term of the
lease. Said contract of lease not having been automatically extinguished by
reason of the death of Go Fook on September 14, 1954,
it is clear that, in truth and in fact, the rentals for which preference is
claimed fell due under the contract of lease entered into by him personally
during his lifetime.

In the third place, the contract
of lease entered into by the Administratrix—with court
authority—was on behalf of the Estate of the deceased Go Fook. Consequently, the rentals that fell due thereunder are, for all legal purposes, the same as those
provided for under the original contract of lease.

It is our opinion, therefore,
that the claim of appellants for unpaid rentals for one year in the total sum of
P19,750.00 covering the period from February 1955 to January 1956, is entitled
to the preference established by the provisions of paragraph 12, Article 2241 of
the New Civil Code.

Bengzon, C. J., Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Regala, Makalintal, Bengzon, J. P., Zaldivar, J.J., concur.