If the new buyer already knew about my lease when he bought the land, can he still terminate it?

Why an unrecorded lease is vulnerable

The starting rule protects a buyer who purchases land without notice of an existing lease. Article 1676 says the purchaser of a piece of land which is under a lease that is not recorded in the Registry of Property may terminate the lease. The vulnerability comes from the lease being unrecorded: because it does not appear in the public property registry, a buyer relying on that registry may not know it exists and can end it after buying. Recording a lease in the Registry of Property is what normally makes it bind later buyers. Without that recording, the lease is exposed to termination by a new owner, but only up to a point.

Two exceptions, and knowledge is one

The right to terminate is not absolute. The same sentence carves out two situations: save when there is a stipulation to the contrary in the contract of sale, or when the purchaser knows of the existence of the lease. The second exception is the answer to this question. A buyer who actually knew about the lease when purchasing cannot then turn around and terminate it as though he were an innocent purchaser caught by surprise. His knowledge takes away the justification for the termination right. The first exception works similarly: if the sale contract itself says the buyer takes subject to the lease, he is bound.

Protections for the tenant

The article also softens the blow even where a buyer may terminate. If the buyer does exercise the right, the lessee may demand that he be allowed to gather the fruits of the harvest which corresponds to the current agricultural year and that the vendor indemnify him for damages suffered. So a terminated tenant is not simply cast off without recourse; there is a claim against the seller. The provision goes further against sham deals: if a sale is fictitious, for the purpose of extinguishing the lease, the supposed buyer cannot use the termination right at all, and the sale is presumed fictitious if, when he demands termination, it is still not recorded in the Registry of Property.

What this means for you

If your landlord sold the land to someone who already knew you were leasing it, this article is on your side: that knowledge blocks the buyer's special power to terminate an unrecorded lease. The practical battleground is proof of knowledge, meaning anything showing the buyer was told of the lease, saw you in possession, or dealt with the arrangement before buying. The cleaner protection, going forward, is to have leases recorded in the Registry of Property so a later buyer is bound regardless. If a new owner is trying to end your lease, have the facts of his knowledge and the sale reviewed.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Midway Maritime and Technological Foundation, represented by its Chairman/President PhD in Education, Dr. Sabino M. Manglicmot vs. Marissa E. Castro, et al, G.R. No. 189061, August 6, 2014 — read the decision on LawPhil →
• Felipe Uy vs. The Land Bank of the Philippines, G.R. No. 136100, July 24, 2000 — read the decision on LawPhil →
• Cebu Bionic Builders Supply, Inc. and Lydia Sia vs. Development Bank of the Philippines, et al, G.R. No. 154366, November 17, 2010 — read the decision on LawPhil →
• Hubert Nuñez vs. SLTEAS Phoenix Solutions, Inc, G.R. No. 180542, April 12, 2010 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1676 — Buyer's Right to Terminate an Unrecorded Lease