G.R. No. 154577; July 23, 2008
EL CID PAGURAYAN, ANTONIO SOLOMON, ANGELITO REÑOSA and VILMA RAMOS DATOON, for themselves and as representatives of the tenants, occupants and builders in good faith of the Don Domingo Neighborhood Association, Petitioners, vs. LEONARDO T. REYES, DOLORES SORIANO-CARANGUIAN, DOMITILA SORIANO-SANCHEZ, DOMINADOR SORIANO, DELFIN SORIANO, DANIEL SORIANO, DAMASO SORIANO, DIOSDADO SORIANO and the HEIRS OF DOMINGO SORIANO, Respondents.

FACTS

Respondent Leonardo T. Reyes acquired three parcels of land from the Soriano family through a public auction sale to satisfy a judgment. The validity of this sale was upheld by the courts and became final. Petitioners, who were occupants and lessees of the Sorianos on the subject lots, refused to vacate after Reyes sought execution of the judgment. The RTC granted Reyes’s motion for a writ of possession and later a writ of demolition, ruling that petitioners, as lessees of the judgment debtors (the Sorianos), were bound by the judgment and their rights terminated when their lessor’s title ceased.
Petitioners sought to intervene and quash the writ of demolition, claiming they had become lessees of respondent Reyes. They argued that since 1992, they had been paying rent directly to Reyes, and his acceptance, coupled with a 1994 letter from his counsel directing them to pay rent to him as the lawful owner, established a new lessor-lessee relationship. The Court of Appeals denied their petition for certiorari, prompting this appeal.

ISSUE

Did the acceptance of rental payments by respondent Reyes from the petitioners create a consensual contract of lease between them, thereby precluding their ejectment via a writ of execution and demolition?

RULING

No. The Supreme Court denied the petition, upholding the CA decision. The Court explained that a contract of lease is a consensual contract perfected by the meeting of minds of both parties. Mere acceptance of rental payments by a new property owner does not, by itself, establish a lease contract if there is no mutual consent to create such a relationship. In this case, respondent Reyes accepted the payments not as a lessor consenting to a lease, but in his capacity as the lawful owner of the property entitled to its fruits pursuant to Section 34, Rule 39 of the old Rules of Court.
The legal logic is clear: petitioners’ right of possession was derivative, originating solely from the Sorianos. When the Sorianos’ title was extinguished by the final execution sale in favor of Reyes, petitioners’ right to occupy the land likewise terminated. They could not unilaterally impose a lease on the new owner. Since Reyes never agreed to be their lessor, no contract of lease was perfected. Consequently, as occupants whose rights were not adverse to but derived from the judgment debtors, petitioners were bound by the judgment and were properly subject to ejectment through the writs of execution and demolition issued to enforce Reyes’s superior right of possession as the absolute owner.