G.R. No. 32047, November 1, 1930
MANUEL MELENCIO, ET AL. vs. DY TIAO LAY

FACTS

The plaintiffs, heirs of Ramon Melencio, sought to recover possession of a parcel of land in Cabanatuan, Nueva Ecija, from the defendant Dy Tiao Lay, claiming the lease contract covering the land was void. The land was originally owned by Julian Melencio, whose heirs included his widow Ruperta Garcia and children Juliana, Ramon, Ruperta, Pedro R., and Emilio (represented by his minor son Jose P. Melencio). On July 24, 1905, Ruperta Garcia, Pedro R., Juliana, and Ruperta executed a 20-year lease, extendible for another 20 years at the lessee’s option, in favor of Yap Kui Chin for a rice mill. Neither Ramon nor Jose P. Melencio signed the lease. The lessee and successors (ultimately Dy Tiao Lay) occupied the land, built improvements, and paid monthly rent. Ramon Melencio lived in the same town, received his share of rent until his death in 1914, and never objected to the lease. His widow, Liberata Macapagal, as administratrix of his estate, continued collecting rent until May 1926, when she demanded a rent increase. The plaintiffs then sued, arguing the lease was void for lack of consent from co-owners Ramon and Jose P. Melencio.

ISSUE

Whether the lease contract executed in 1905 is valid and binding upon the plaintiffs, despite the lack of their formal consent, due to the doctrine of estoppel.

RULING

Yes, the lease is valid and binding. The Supreme Court affirmed the lower court’s decision, holding that Ramon Melencio was estopped from denying the lease’s validity. By living in the same town, observing the valuable improvements on the land, and accepting his share of rent for years without objection, Ramon acquiesced to the lease. His silence and acceptance of benefits estopped him from challenging the contract. This estoppel extends to his heirs (the plaintiffs), as their rights are derivative. The Court emphasized that estoppel applies even if the terms were unknown to the plaintiffs, as Ramon had means of knowledge through his brother Pedro, who managed the property and kept the lease. The non-registration of the lease did not affect its validity between the parties. Thus, the defendant is entitled to remain under the lease terms, and the plaintiffs’ action for recovery of possession and increased rent fails.