ESTATE OF LLENADO V LLENADO
G.R. No. 145736, March 4, 2009
Cornelio leased the subject lot to his nephew, Romeo Llenado (Romeo), for a period of five years, renewable for another five years at the option of Cornelio. On March 31, 1978, Cornelio, Romeo and the latter’s cousin Orlando Llenado (Orlando) executed an Agreement whereby Romeo assigned all his rights to Orlando over the unexpired portion of the aforesaid lease contract. The parties further agreed that Orlando shall have the option to renew the lease contract for another three years commencing from December 3, 1980, up to December 2, 1983, renewable for another four years or up to December 2, 1987, and that “during the period that [this agreement] is enforced, the x x x property cannot be sold, transferred, alienated or conveyed in whatever manner to any third party.”
Shortly thereafter or on June 24, 1978, Cornelio and Orlando entered into a Supplementary Agreement amending the March 31, 1978 Agreement. Under the Supplementary Agreement, Orlando was given an additional option to renew the lease contract for an aggregate period of 10 years at five-year intervals, that is, from December 3, 1987 to December 2, 1992 and from December 3, 1992 to December 2, 1997. The said provision was inserted in order to comply with the requirements of Mobil Philippines, Inc. for the operation of a gasoline station which was subsequently built on the subject lot.
Upon the death of Orlando on November 7, 1983, his wife, Wenifreda Llenado (Wenifreda), took over the operation of the gasoline station. Meanwhile, onJanuary 29, 1987, Cornelio sold the to his children, namely, Eduardo, Jorge, Virginia and Cornelio, Jr., through a deed of sale. Several months thereafter or on September 7, 1987, Cornelio passed away. Sometime in 1993, Eduardo informed Wenifreda of his desire to take over the subject lot. However, the latter refused to vacate the premises despite repeated demands. Thus, on September 24, 1993, Eduardo filed a complaint for unlawful detainer
ISSUE: Are rights arising from lease contract transmissible?
Yes. Under Article 1311 of the Civil Code, the heirs are bound by the contracts entered into by their predecessors-in-interest except when the rights and obligations therein are not transmissible by their nature, by stipulation or by provision of law. A contract of lease is, therefore, generally transmissible to the heirs of the lessor or lessee. It involves a property right and, as such, the death of a party does not excuse non-performance of the contract. The rights and obligations pass to the heirs of the deceased and the heir of the deceased lessor is bound to respect the period of the lease. The same principle applies to the option to renew the lease. As a general rule, covenants to renew a lease are not personal but will run with the land.[ Consequently, the successors-in-interest of the lessee are entitled to the benefits, while that of the lessor are burdened with the duties and obligations, which said covenants conferred and imposed on the original parties.
