A.C. No. 6538 - Asturias vs. Serrano

Segunda Abuel owned two parcels of land situated in Tayabas Province.
On February 20, 1918, she leased these properties to Filemon Veluz for nine years.
The contract of lease contained an express stipulation that if the lands were sold, the lease shall continue in force.

Early in January 1919, Victoria T. de Winkleman, desirous of buying one of the parcels, discovered that the lands were already leased.
She personally investigated and verified the existence and content of the lease by reading the contract.
On January 11, 1919, she purchased the parcel of land located in the municipality of Unisan from Segunda Abuel.
Notably, the deed of sale did not mention the pre-existing contract of lease, although she was fully aware of its provisions.

Neither the contract of lease nor the deed of sale was recorded in the registry of deeds.
The absence of registration is significant as registration under the law affects the rights of third parties and the effectiveness of certain legal provisions, such as those in the Mortgage Law.

After the purchase, Victoria T. de Winkleman attempted to take possession of the land she bought.
Filemon Veluz, who was bound by the lease, refused to deliver the property to her.
Victoria T. de Winkleman initiated legal action to compel Filemon Veluz to deliver possession or pay the value of the fruits (P1,500), along with costs.

The plaintiff asserted her right to terminate the lease, invoking Article 1571 of the Civil Code.
The defendant countered with several defenses:

He sought absolution from the complaint by arguing his right to remain on the land during the agricultural year if the lease was terminated.
He requested that the lessor, Segunda Abuel, be joined as a party to secure indemnification for damages and a refund of the rents paid in advance.

The defendant also raised an issue of jurisdiction, contending that since the case involved forcible entry and detainer, it should fall under the original jurisdiction of a justice of the peace court rather than the Court of First Instance.

The trial court decided the case, rendering a judgment partly in favor of the plaintiff.
The lower court’s decision included awarding the fruits of the property to the defendant and declaring the lease terminated.
Both parties later assailed the judgment, with Victoria T. de Winkleman appealing the decision regarding the fruits, and Filemon Veluz contesting the termination of the lease as well as the lower court’s jurisdiction.

Whether the lower court had proper jurisdiction to try the case, given the defendant’s contention that the action was one of forcible entry and detainer appropriate for a justice of the peace.

Whether Victoria T. de Winkleman, as purchaser of the property, was entitled to terminate the lease under Article 1571 of the Civil Code.
Whether the stipulation in the lease—that the lease shall stand in the event of a sale—was binding on the purchaser, having been known and accepted by her before the purchase.

Whether the failure to register both the contract of lease and the deed of sale affected the rights of the parties.
Whether the plaintiff’s actual knowledge of the lease is legally equivalent to its registration under the provisions of the Mortgage Law.

Whether the general rule in Article 1571 is applicable in this case, considering its exceptions:

The existence of a contrary stipulation between the lessor and the purchaser.
The purchaser not being regarded as a third person due to his or her knowledge or participation as provided under mortgage law.

Whether the lease, being for a term exceeding six years and qualifying as a real right, should prevent the termination right of the purchaser.