Analita Inocencio v.
Hospicio de San Jose
Ponente: Carpio, J.
Facts:
- Hospicio de San Jose (HDSJ) leased a parcel of land to German Inocencio (German).
German then constructed two buildings over the land which he subleased. Ramon, his
son, was designated to administer the properties)
- German died but Ramon did not inform HDSJ. Nonetheless, Ramon collected rentals from
the sublessees and paid rent to HDSJ.
- HDSJ acknowledged the existence of an implied lease between Ramon and HDSJ, as the
latter has been receiving rental payments from the former. HDSJ informed Ramon that
the contract shall expire on 31 March 2001 and it has no intention of renewing the same
since Ramon did not inform HDSJ of the sublease
- HDSJ then demanded Ramon to vacate the property within 30 days. HDSJ also entered
into lease agreements with other parties.
- HDSJ now filed a complaint for unlawful detainer. While pending, Ramon passed away
and substituted now by Analita Inocencio, his wife.
- MTC
o Ordered defendants to pay
- RTC
o Ramon had no right to sublease the property
- CA
o Affirmed RTC. Merely modified the award for damages
- Hence, this Petition.
Issues:
- Whether the sublease is valid
Ruling:
- Despite the non-transferability of the contract without the consent of the lessor, HDSJ
nonetheless acknowledged that Ramon is its month-to-month lessee. Thus, German’s
death did not terminate the lease. (Validity of the lease to Ramon)
- Ramon likewise had the right to sublease the property since the lease contract did not
contain any prohibitions on sublease, pursuant to Article 1650. Thus, the sublease
contracts entered into by Ramon were valid. (Validity of sublease)
- Inocencios claim ownership over the property since they claim that these are separate
and distinct from the land on which they were built. Thus, they argue that they have a
right to lease the buildings to 3rd-parties, even after the termination of the lease. Further,
the Inocencios argue 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
- The Court DISAGREES with the Inocencios by stating the ruling in the case of Duellome v.
Gotico:
o The lease of a building includes the lease of the lot and consequently, the rentals
of the building include the rentals of the lot.
o Accordingly, they pointed out that the ARGUMENT of HDSJ is CORRECT when they
stated the following:
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.
Ratio:
The general rule is lease contracts survive the death of the parties and continue to bind the heirs
except if the contract states otherwise.—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. In Sui Man Hui
Chan v. Court of Appeals, 424 SCRA 127 (2004) 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-
ininterest 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.
