Short answer. Often yes. Where a contract creates a real right over property, a third person who comes into possession of that property is bound by it. The qualification matters, though: the effect on a buyer of registered land depends on the land registration laws and what appears on the title.
What the law says
In contracts creating real rights, third persons who come into possession of the object of the contract are bound thereby, subject to the provisions of the Mortgage Law and the Land Registration Laws.
Civil Code, Article 1312 — Real Rights Bind Third Persons. Read the full provision →
The rule, and the exception built into it
Contracts normally bind only the people who made them. Article 1312 of the Civil Code sets out an important departure: in contracts creating real rights, third persons who come into possession of the object of the contract are bound thereby, subject to the provisions of the Mortgage Law and the Land Registration Laws. A real right attaches to the property itself rather than to the person who granted it — a mortgage, an easement or right of way, a usufruct. It travels with the land into the hands of whoever takes possession. But the closing clause is not decoration. For registered land, whether that right actually binds a buyer turns on the registration system.
Why the title annotation decides most disputes
Under the Torrens system a buyer is generally entitled to rely on what the certificate of title shows. That is why a right of way, a mortgage or a long-term lease is annotated: the annotation is what puts every future purchaser on notice and makes the burden stick. A real right that was never annotated may still bind a buyer who knew about it or who was aware of facts that should have prompted inquiry, because knowledge takes the place of registration for a purchaser who is not in good faith. Visible occupation, a worn path across the lot, a pipe or a drainage line is exactly the sort of fact that defeats a claim of innocence.
Where a lease sits
Lease is treated differently from a classic real right, and this is where readers most often go wrong. A lease is fundamentally a personal contract between lessor and lessee, and a buyer is not automatically bound by every rental arrangement the previous owner made. What changes the position is registration or the buyer's actual knowledge of the tenancy, and special rules can apply depending on the length of the lease and the nature of the property. Agricultural tenancy and residential tenancies under special legislation have their own protections that do not depend on this article at all. If you are a tenant, an unregistered lease is a weak place to stand.
What to do on either side of the transaction
If you are buying, get a certified true copy of the title from the Registry of Deeds shortly before you pay and read every annotation on the back page. Then go to the property and look — visible occupants, access roads, posts and pipes tell you what the paper may not. Ask in writing about existing leases and keep the answer. If you hold a right over someone else's land, have it annotated now rather than after the property changes hands, and keep the signed document, the survey and proof of long use. When a dispute has already started, bring the title and your documents to a lawyer before you block access or stop accepting rent.
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.
- Jan-Dec Construction Corporation vs. Court of Appeals, et al, G.R. No. 146818, February 6, 2006 — read the decision on LawPhil →
- Fabio Cahayag and Conrado Rivera vs. Commercial Credit Corporation, et al./Dulos Realty & Development Corporation, et al. vs. Commercial Credit Corporation, et al, G.R. No. 168078 / G.R. No. 168357, January 13, 2016 — read the decision on LawPhil →