Samelo vs. Manotok Services, Inc.

A lessee is estopped from denying the lessor’s title or asserting an adverse claim of ownership while remaining in possession under the lease; in unlawful detainer, only physical possession is at issue, and an implied new lease under Article 1670 arises when the original lease expires, no notice to vacate is given, and the lessee continues enjoying the premises for at least fifteen days with the lessor’s acquiescence.

Manotok Services, Inc. claimed to be the administrator of Lot 9-A, Block 2913, situated at 2882 Dagupan Extension, Tondo, Manila. Viegely Samelo occupied a portion of that land, described as Lot 4, Block 15, under a lease contract with Manotok. The dispute concerns the right to physical possession of the leased premises and the legal effect of Samelo’s continued occupation after the lease term. The case is governed by the summary remedy of unlawful detainer and the Civil Code provisions on lease, including implied new lease and estoppel of a tenant.

Manotok Services, Inc. alleged that it was the administrator of Lot 9-A, Block 2913, located at 2882 Dagupan Extension, Tondo, Manila. On January 31, 1997, it entered into a contract with Viegely Samelo for the lease of a portion of that land described as Lot 4, Block 15. The lease was for a period of one year, with a monthly rental of ₱3,960.00, and the lease period commenced on January 1, 1997 and expired on December 31, 1997.

After the lease expired on December 31, 1997, Samelo continued occupying the subject premises without paying rent. On August 5, 1998, Manotok, through its President Rosa Manotok, sent Samelo a letter demanding that she vacate the premises and pay compensation for its use and occupancy. Samelo refused to heed the demand.

On November 18, 1998, Manotok filed a complaint for unlawful detainer against Samelo before the MeTC, Branch 3, Manila. In her answer, Samelo alleged that Manotok had no right to collect rentals because the subject premises were located inside the property of the Philippine National Railways, and that Manotok had no certificate of title over the premises. She also claimed that her signature in the contract of lease was obtained through Manotok’s misrepresentation, and that she had become the owner of the premises because she had been in possession since 1944. She did not deny signing the lease contract.

The MeTC found that Manotok had established its right of possession over the subject premises and that Samelo’s rights under the lease contract ceased upon expiration. The RTC, on appeal, found that Manotok failed to show authority to administer the premises and to enter into the lease, and that the premises formerly owned by the Philippine National Railways were now owned by Samelo by virtue of her possession and stay since 1944. The CA found that Samelo was estopped from questioning Manotok’s right over the property and that she had not performed any unequivocal act of repudiation of the lease contract.

• Estoppel of Tenant: Petitioner argued that the CA erred in ruling that a tenant is not permitted to deny the title of his landlord.
• Respondent’s Lack of Title or Authority: Petitioner maintained that respondent is not the owner or administrator of the subject premises and had no certificate of title; she also alleged that the premises are located inside the property of the Philippine National Railways and that respondent had no right to collect rentals.
• Ownership by Possession: Petitioner insisted that she had been in possession of the land since 1944 and had acquired possessory rights leading to ownership.
• Repudiation of Lease: Petitioner claimed that she repudiated the lease contract by filing a case for fraudulent misrepresentation, intimidation, annulment of lease contract, and quieting of title with injunction before another court.
• Misrepresentation: Petitioner claimed that her signature in the contract of lease was obtained through respondent’s misrepresentation.

• Estoppel of Tenant: Whether a tenant may deny the title of the lessor or assert an adverse claim of ownership while remaining in possession under the lease.
• Unlawful Detainer — Physical Possession: Whether the only issue in an unlawful detainer case is physical or material possession, independent of any claim of ownership.
• Implied New Lease (Tacita Reconduccion): Whether an implied new lease under Article 1670 of the Civil Code arose after the expiration of the original lease and the lessee’s continued enjoyment of the premises with the lessor’s acquiescence, and whether the notice to vacate aborted it.
• Ownership: Whether the issue of ownership must be resolved in the unlawful detainer case, or whether petitioner’s claim of ownership by possession since 1944 defeats respondent’s right of possession.
• Interest on Rentals: Whether petitioner is liable for interest on unpaid rentals and at what rates.

• Estoppel of Tenant: No. A tenant is estopped under Section 2(b), Rule 131 of the Rules of Court and Article 1436 of the Civil Code from denying the lessor’s title or asserting a better title while remaining in possession and until surrender of the premises.
• Unlawful Detainer — Physical Possession: Yes. The only issue in unlawful detainer is physical or material possession; the fact of the lease and the expiration of its term are the only elements, and ownership is not required to determine possession.
• Implied New Lease (Tacita Reconduccion): Yes. An implied new lease arose under Article 1670 because the lease expired, no notice to vacate was given, and petitioner continued enjoying the premises for more than fifteen days with respondent’s acquiescence; the August 5, 1998 notice aborted it and made petitioner’s possession one of detainer.
• Ownership: No. The issue of ownership need not be resolved; petitioner’s claim of possession since 1944 was self-serving and unsupported, and the lease contract belied her claim of ownership.
• Interest on Rentals: Yes. Petitioner is liable for interest by way of damages on unpaid rentals at 6% per annum from August 5, 1998 until finality, and 12% per annum after finality until full payment.

• Estoppel of Tenant: The Court found no merit in petitioner’s allegation that respondent had no authority to lease the subject premises because it failed to prove ownership or administration. Section 2(b), Rule 131 of the Rules of Court provides that a tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation of landlord and tenant. Article 1436 of the Civil Code likewise provides that a lessee or bailee is estopped from asserting title to the thing leased or received as against the lessor or bailor. These provisions bar petitioner from contesting respondent’s title. The juridical relationship between lessor and lessee carries with it a recognition of the lessor’s title; as lessee, petitioner is estopped from denying the landlord’s title or asserting a better title, whether in herself or in a third person, while she remains in possession and until she surrenders possession. The estoppel applies even though the lessor had no title at the time the relation was created and may be asserted not only by the original lessor but also by those who succeed to his title. Once a contract of lease is shown to exist, the lessee cannot by any proof, however strong, overturn the conclusive presumption that the lessor has a valid title to or a better right of possession than the lessee. Tamio vs. Ticson explained that the relation of lessor and lessee does not depend on the former’s title but on the agreement between the parties, followed by possession of the premises by the lessee under such agreement; as long as the lessee remains in undisturbed possession, it is immaterial whether the lessor has a valid title or any title at all at the time the relationship was entered into.
• Unlawful Detainer — Physical Possession: An action for unlawful detainer exists when a person unlawfully withholds possession of any land or building against or from a lessor, vendor, vendee, or other person, after the expiration or termination of the right to hold possession by virtue of any contract, express or implied. The only issue to be resolved in an unlawful detainer case is physical or material possession of the property involved, independent of any claim of ownership by any of the parties. When the relationship of lessor and lessee is established, any attempt of the parties to inject the question of ownership into the case is futile, except insofar as it might throw light on the right of possession. In this case, it was undisputed that petitioner and respondent entered into a contract of lease. Petitioner did not deny that she signed the lease contract, although she maintained that her signature was obtained through respondent’s misrepresentations. Under the lease contract, petitioner obligated herself to pay a monthly rental of ₱3,960.00 to respondent for a one-year period commencing January 1, 1997 and expiring December 31, 1997. The fact of the lease and the expiration of its term are the only elements in an action for unlawful detainer. The defense of ownership does not change the summary nature of the action; although a wrongful possessor may at times be upheld by the courts, this is merely temporary and solely for the maintenance of public order, and the question of ownership is to be settled in the proper court and in a proper action.
• Implied New Lease (Tacita Reconduccion): Article 1670 of the Civil Code provides that if at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in Articles 1682 and 1687, and the other terms of the original contract shall be revived. The requisites of an implied new lease or tacita reconduccion are: (a) the term of the original contract of lease has expired; (b) the lessor has not given the lessee a notice to vacate; and (c) the lessee continued enjoying the thing leased for fifteen days with the acquiescence of the lessor. All these requisites were fulfilled. Respondent did not give petitioner a notice to vacate upon the expiration of the lease contract in December 1997; the notice to vacate was sent only on August 5, 1998, and petitioner continued enjoying the subject premises for more than fifteen days without objection from respondent. By the inaction of respondent as lessor, there could be no inference that it intended to discontinue the lease contract. Under Article 1687 of the Civil Code, since the rent was paid on a monthly basis, the period of the lease was considered to be from month to month. A lease from month to month is considered to be one with a definite period which expires at the end of each month upon a demand to vacate by the lessor. When respondent sent the notice to vacate on August 5, 1998, the tacita reconduccion was aborted, and the contract was deemed to have expired at the end of that month. A notice to vacate constitutes an express act on the part of the lessor that it no longer consents to the continued occupation by the lessee of its property. After such notice, the lessee’s right to continue in possession ceased and her possession became one of detainer.
• Ownership: The Court was unpersuaded by petitioner’s claim that she had acquired possessory rights leading to ownership over the subject premises because she had been in possession since 1944. Aside from her self-serving allegation, petitioner did not present any documentary evidence to substantiate her claim that she stayed on the subject premises since 1944. The certificates of title of the Manila Railroad Company over certain properties in Tondo, Manila, which allegedly covered the subject premises, were of no moment. One cannot recognize the right of another and at the same time claim adverse possession which can ripen to ownership through acquisitive prescription. For prescription to set in, the possession must be adverse, continuous, public, and to the exclusion of others. The RTC decision failed to state its basis for concluding that petitioner stayed in the subject premises since 1944. At any rate, no need existed to resolve the issue of ownership because it was not required to determine the issue of possession; the execution of the lease contract between petitioner, as lessee, and respondent, as lessor, belied petitioner’s claim of ownership.
• Interest on Rentals: Petitioner is liable to pay interest by way of damages for her failure to pay the rentals due for the use of the subject premises. Respondent’s extrajudicial demand on petitioner was made on August 5, 1998. From that date, the rentals due from petitioner earn interest at 6% per annum until the judgment in the case becomes final and executory. After the finality of judgment, and until full payment of the rentals and interests due, the legal rate of interest to be imposed is 12%.

• Estoppel of Tenant — Under Section 2(b), Rule 131 of the Rules of Court, a tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation of landlord and tenant. Article 1436 of the Civil Code similarly estops a lessee or bailee from asserting title to the thing leased or received as against the lessor or bailor. The estoppel applies even if the lessor had no title at the time the relation was created and may be asserted by successors. In this case, petitioner was barred from contesting respondent’s title or authority to lease because a lease contract existed between them and petitioner remained in possession.
• Unlawful Detainer — Physical Possession — An action for unlawful detainer exists when a person unlawfully withholds possession of any land or building against or from a lessor, vendor, vendee, or other person, after the expiration or termination of the right to hold possession by virtue of any contract, express or implied. The only issue is physical or material possession, independent of any claim of ownership. When the lessor-lessee relationship is established, attempts to inject ownership are futile except insofar as they may throw light on the right of possession. The Court applied this doctrine to hold that ownership need not be resolved and that the lease and its expiration were the only elements.
• Implied New Lease (Tacita Reconduccion) — Article 1670 of the Civil Code provides that if at the end of the contract the lessee continues enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary has previously been given, an implied new lease arises, not for the original period but for the time established in Articles 1682 and 1687, with the other terms revived. The requisites are: (a) the term of the original lease has expired; (b) the lessor has not given the lessee a notice to vacate; and (c) the lessee continued enjoying the thing leased for fifteen days with the acquiescence of the lessor. Under Article 1687, if the rent is monthly, the implied lease is from month to month. A notice to vacate aborts the tacita reconduccion and converts the lessee’s possession into one of detainer. The Court found all requisites present and held that the August 5, 1998 notice aborted the implied lease.
• Adverse Possession and Acquisitive Prescription — For prescription to set in, possession must be adverse, continuous, public, and to the exclusion of others. One cannot recognize the right of another and at the same time claim adverse possession that can ripen to ownership through acquisitive prescription. The Court applied this doctrine to reject petitioner’s claim of ownership since 1944, which was unsupported and contradicted by the lease contract.
• Interest as Damages on Unpaid Rentals — Unpaid rentals may earn interest by way of damages from the date of extrajudicial demand. In this case, the Court imposed 6% per annum from August 5, 1998 until finality of judgment and 12% per annum after finality until full satisfaction.

• "The only issue to be resolved in an unlawful detainer case is physical or material possession of the property involved, independent of any claim of ownership by any of the parties involved." — This passage states the scope of an unlawful detainer action and supports the Court’s refusal to resolve the ownership claim in this case.
• "An implied new lease or tacita reconduccion will set in when the following requisites are found to exist: a) the term of the original contract of lease has expired; b) the lessor has not given the lessee a notice to vacate; and c) the lessee continued enjoying the thing leased for fifteen days with the acquiescence of the lessor." — This passage enumerates the requisites of tacita reconduccion, which the Court found satisfied before the August 5, 1998 notice to vacate.
• "Once a contact of lease is shown to exist between the parties, the lessee cannot by any proof, however strong, overturn the conclusive presumption that the lessor has a valid title to or a better right of possession to the subject premises than the lessee." — This passage articulates the conclusive presumption arising from the lessor-lessee relationship and the estoppel bar against the lessee’s challenge to the lessor’s title.
• "When the respondent sent a notice to vacate to the petitioner on August 5, 1998, the tacita reconduccion was aborted, and the contract is deemed to have expired at the end of that month." — This passage states the effect of the notice to vacate on the implied new lease and explains why petitioner’s continued possession became unlawful detainer.

• Racaza vs. Gozum, 523 Phil. 694, 707 (2006) — Cited for the definition of an action for unlawful detainer as existing when a person unlawfully withholds possession after the expiration or termination of the right to hold possession by virtue of a contract.
• Mendoza vs. Court of Appeals, 492 Phil. 261, 265 (2005) — Cited for the rule that the only issue in an unlawful detainer case is physical or material possession, independent of any claim of ownership.
• Eastern Shipping Lines, Inc. vs. Court of Appeals, 424 Phil. 544, 554 (2002) — Cited for the rule that when the lessor-lessee relationship is established in an unlawful detainer case, attempts to inject ownership are futile except insofar as they may throw light on the right of possession.
• Paterno vs. Court of Appeals, 339 Phil. 154, 160-161 (1997) — Cited for the requisites of an implied new lease or tacita reconduccion under Article 1670.
• Arquelada vs. Philippine Veterans Bank, 385 Phil. 1200, 1219 (2000) — Cited for the rule that a lease from month to month is one with a definite period that expires at the end of each month upon a demand to vacate by the lessor.
• Tagbilaran Integrated Settlers Assoc. (TISA) Inc. vs. Court of Appeals, 486 Phil. 386, 394 (2004) — Cited for the rule that a notice to vacate constitutes an express act on the part of the lessor that it no longer consents to the lessee’s continued occupation.
• Century Savings Bank vs. Samonte, G.R. No. 176212, October 20, 2010, 634 SCRA 261, 277 — Cited for the rule that the estoppel of a lessee applies even though the lessor had no title at the time the relation was created and may be asserted by successors to the lessor’s title.
• Tamio vs. Ticson, 485 Phil. 434, 444 (2004) — Cited for the rule that the relation of lessor and lessee does not depend on the lessor’s title but on the agreement between the parties and the lessee’s possession under that agreement.
• Corpuz vs. Padilla, Nos. L-18099 and L-18136, July 31, 1962, 5 SCRA 814, 820 — Cited for the requisites of acquisitive prescription: possession must be adverse, continuous, public, and to the exclusion of others.
• Ocampo vs. Tirona, 495 Phil. 55, 66-67 (2005) — Cited for the rule that the defense of ownership does not change the summary nature of an unlawful detainer action and that ownership is to be settled in a proper action.
• Eastern Shipping Lines, Inc. vs. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78 — Cited for the imposition of interest by way of damages on unpaid rentals.

• Article 1670, Civil Code — Provides that if at the end of the lease the lessee continues enjoying the thing leased for fifteen days with the lessor’s acquiescence, and no notice to the contrary has previously been given, an implied new lease arises, not for the original period but for the time established in Articles 1682 and 1687, with the other terms revived. The Court applied this provision because the lease expired, no notice to vacate was given, and petitioner continued enjoying the premises for more than fifteen days with respondent’s acquiescence.
• Article 1687, Civil Code — Provides that if the period for the lease has not been fixed, it is understood to be from year to year if the rent is annual; from month to month if the rent is monthly; from week to week if the rent is weekly; and from day to day if the rent is daily. The Court applied this provision because the rent was paid monthly, making the implied new lease from month to month.
• Article 1436, Civil Code — Provides that a lessee or bailee is estopped from asserting title to the thing leased or received as against the lessor or bailor. The Court applied this provision to bar petitioner from contesting respondent’s title over the subject premises.
• Section 2(b), Rule 131, Rules of Court — Provides that a tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation of landlord and tenant. The Court applied this provision to hold that petitioner, as lessee, could not question respondent’s title or authority to lease.
• Rule 45, Revised Rules of Court — The petitioner filed the petition for review on certiorari under Rule 45. The Court denied the petition and affirmed the CA decision and resolution with modification.

• Antonio T. Carpio (Senior Associate Justice, Chairperson)
• Jose Portugal Perez
• Maria Lourdes P. A. Sereno
• Bienvenido L. Reyes