Winkleman v. Veluz
REITERATIONFacts
The Antecedents: Segunda Abuel owned two parcels of land in Tayabas. On February 20, 1913, she leased these lands to Filemon Veluz for nine years, with a stipulation that the lease would stand if the lands were sold. In January 1919, Victoria T. de Winkleman, intending to buy one parcel, investigated and discovered the existing lease, having personally read the contract. On January 11, 1919, she purchased one parcel from Segunda Abuel. The deed of sale did not mention the lease. The lands were unregistered, thus neither the lease nor the sale was recorded. Procedural History: Victoria T. de Winkleman attempted to take possession of the purchased land but Filemon Veluz refused to deliver it. Winkleman filed an action to compel Veluz to deliver the property and its fruits, or their value. Veluz prayed for dismissal and, in the alternative, for his right to remain on the land during the agricultural year and indemnification from the lessor. The trial court rendered a judgment partly in favor of the plaintiff. The Petition: Both parties appealed. The plaintiff assailed the award of fruits to the defendant. The defendant argued for the termination of the lease and questioned the jurisdiction of the Court of First Instance, claiming it was a forcible entry and detainer case.
Issue(s)
Whether the Court of First Instance has jurisdiction over the case. Whether the plaintiff, as a purchaser of the leased property, can invoke Article 1571 of the Civil Code to terminate the lease. Whether the plaintiff's actual knowledge of the lease contract and its stipulations is equivalent to registration for the purposes of Article 1571 of the Civil Code.
Ruling
The Supreme Court reversed the judgment of the lower court, absolving the defendant from the complaint. The plaintiff is not entitled to terminate the lease.
Ratio Decidendi
On the jurisdiction of the Court of First Instance: The Court held that the contention of lack of jurisdiction is untenable. The issue joined was not merely ejectment but whether, under the circumstances, the plaintiff had the right to terminate the lease. Therefore, the Court of First Instance had jurisdiction to try and adjudicate the case. On the plaintiff's right to terminate the lease under Article 1571 of the Civil Code: The Court found that Article 1571 grants the purchaser of a leased estate the right to terminate any lease in force, unless there is a stipulation to the contrary or the purchaser is not considered a third person under the Mortgage Law. In this case, the lease contained a stipulation that it should stand if the lands were sold. The plaintiff, before purchasing the property, had personal knowledge of this stipulation, having read the lease contract. This knowledge effectively incorporated the stipulation into the contract of sale, preventing her from invoking Article 1571. On the effect of actual notice versus registration: The Court emphasized that the purpose of registration under the Mortgage Law is to provide publicity of encumbrances. However, a purchaser with actual knowledge of an encumbrance, such as the lease in this case, is not considered a third person and cannot take advantage of the failure to register. The plaintiff's actual knowledge of the lease and its stipulation to remain in force upon sale was equivalent to registration under the Mortgage Law. Therefore, the lease could not be terminated by the plaintiff, as her rights were prejudiced by her knowledge of the existing lease.
Main Doctrine
A purchaser of a leased estate cannot terminate the lease under Article 1571 of the Civil Code if the purchaser had actual notice of the lease contract and its stipulations, particularly a stipulation that the lease should stand in case of sale, as such actual notice is equivalent to registration and binds the purchaser.