G.R. No. 201787; September 25, 2013
Analita P. Inocencio, substituting for Ramon Inocencio (Deceased), Petitioner, vs. Hospicio de San Jose, Respondent.

FACTS

On March 1, 1946, Hospicio de San Jose (HDSJ) leased a parcel of land in Pasay City to German Inocencio under a contract containing a clause stating it was “intransferable” unless the lessor’s prior written consent was obtained. German constructed buildings on the land and subleased them, with his son Ramon administering the property. German died in 1997, and Ramon continued collecting rentals from sublessees and paying HDSJ without formally notifying HDSJ of his father’s death. On March 1, 2001, HDSJ, through its administrator, notified Ramon that the lease was terminated effective March 31, 2001, stating that an implied month-to-month lease existed after German’s death but was being terminated due to unauthorized subleasing.
HDSJ subsequently filed an unlawful detainer case against Ramon and the sublessees. Ramon argued that HDSJ was estopped from denying the lease’s transfer, as it had accepted rentals from him after German’s death, thereby creating an implied new lease. He also contended the original contract did not prohibit subleasing. The Metropolitan Trial Court ruled for HDSJ, a decision affirmed by the Regional Trial Court and the Court of Appeals, leading to this petition.

ISSUE

Whether Ramon Inocencio validly acquired rights under the original lease contract upon his father’s death, making the ejectment action improper.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings. The core legal principle is that a contract of lease is not automatically transmitted to heirs if it contains an express stipulation of intransmisibilidad (non-transferability). The original contract between HDSJ and German Inocencio explicitly stated it was “intransferable” without HDSJ’s written consent. This stipulation is valid and binding, preventing the lease from passing to German’s heirs by mere succession upon his death. Consequently, Ramon did not step into the shoes of his father as a direct successor to the original leasehold rights.
The Court rejected the argument of an implied new lease between HDSJ and Ramon. While HDSJ accepted rental payments from Ramon after German’s death, this act alone did not constitute consent to a transfer of the original contract or to the creation of a new one with identical terms. Acceptance of rentals, under the circumstances, was merely a tolerance of Ramon’s occupancy. HDSJ’s eventual demand to vacate and refusal of further payments negated any presumption of a mutually agreed new contract. Furthermore, Ramon’s act of subleasing without HDSJ’s consent, a violation of the original contract’s spirit as acknowledged in communications, provided independent grounds for termination. Thus, no lawful lease existed to shield Ramon from the ejectment suit.