G.R.No.189061.August6,2014.

*
MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION, represented by its
Chairman/President,Ph.D.inEducation,DR.SABINOM.MANGLICMOT,petitioner,vs.MARISSAE.
CASTRO,etal.,respondents.
CivilLaw;Contracts;Lease;Itissettledthatonceacontactofleaseisshowntoexistbetweenthe
parties,thelesseecannot byanyproof,howeverstrong,overturntheconclusivepresumptionthatthe
lessorhasavalidtitletoorabetterrightofpossessiontothesubjectpremisesthanthelessee. Itis
settledthat[o]nceacontactofleaseisshowntoexistbetweentheparties,thelesseecannotbyanyproof,
howeverstrong,overturntheconclusivepresumptionthatthelessorhasavalidtitletoorabetterrightof
possessiontothesubjectpremisesthanthelessee.Section2(b),Rule131oftheRulesofCourtprohibitsa
tenantfromdenyingthetitleofhislandlordatthetimeofthecommencementoftherelationoflandlord
and tenant between them. In Santos v. National Statistics Office, 647 SCRA 345 (2011), the Court
expoundedontheruleonestoppelagainstatenantandfurtherclarifiedthatwhatatenantisestoppedfrom
denyingisthetitleofhislandlordatthetimeofthecommencementofthelandlordtenantrelation.If
thetitleassertedisonethatisallegedtohavebeenacquiredsubsequenttothecommencementofthat
relation,thepresumptionwillnotapply.
Same;Sales;Onecansellonlywhatoneownsorisauthorizedtosell,andthebuyercanacquirenomore
rightthanwhatthesellercantransferlegally.Nemodatquodnonhabet.Onecansellonlywhatone
ownsorisauthorizedtosell,andthebuyercanacquirenomorerightthanwhatthesellercantransfer
legally.ItmustbepointedoutthatwhatTomasboughtfromUnionBankintheauctionsalewerethetwo
parcels of land originally owned and mortgaged by CCC to Bancom, and which mortgage was later
assignedbyBancomtoUnionBank.Contrarytothepetitionersassertion,thepropertysubjectofthe
mortgageandconsequentlytheauctionsalepertainsonlytothesetwoparcelsoflandanddidnotinclude
theresidential
_______________
*

FIRSTDIVISION.

193

VOL.732,AUGUST6,2014

193

MidwayMaritimeandTechnologicalFoundationvs.Castro
house.ThiswaspreciselythetenorofCastro,Jr.v.CourtofAppeals,250SCRA661(1995),wherethe
Courtnullifiedthewritofpossessionissuedbythetrialcourtinsofarasitaffectedtheresidentialhouse
constructedbytherespondentsonthemortgagedpropertyasitwasnotownedbyCCC,whichwasthe
mortgagor.
Remedial Law; Civil Procedure; Judgments; The rule is that when a decision becomes final and
executory,itbecomesvalidandbindinguponthepartiesandtheirsuccessorsininterest. Theruleis

*
*

thatwhenadecisionbecomesfinalandexecutory,itbecomesvalidandbindinguponthepartiesandtheir
successorsininterest. Such being the case, Castro, which already determined with finality the
respondentsownershipoftheresidentialhouseinquestion,isapplicableandbindinginthiscaseandthe
petitionercannotbeallowedtochallengethesame.Thus,ascorrectlyruledbytheCA,[t]oourmind,the
pronouncementresolvingthesaidissuenecessarilytouchesalsotheissueontheownershipofthebuilding.
xxxThefindingoftheCourt[inCastro],nowbeingfinalandexecutory,isnolongeropenforinquiryand
therefore,hasattaineditsimmutability.
Same;SpecialCivilActions;Ejectment;Inejectmentsuits,theonlyissueforresolutionisthephysicalor
materialpossessionofthepropertyinvolved,independentofanyclaimofownershipbyanyoftheparty
litigants. However, the issue of ownership may be provisionally ruled upon for the sole purpose of
determiningwhoisentitledtopossessiondefacto.AsregardstherulingoftheRTCofCabanatuanCity,
Branch 26, in Civil Case No. 2939 (AF) that the advertised sale of the property included all the
improvementsthereon,sufficeittosaythatsaidcaseinvolvedanactionforejectmentandanyresolution
bytheRTConthematteroftheownershipoftheimprovementsofthepropertyismerelyprovisionaland
cannotsurpasstheCourtspronouncementin Castro andinthepresentcase.Thepetitionershouldbe
remindedthatinejectmentsuits,theonlyissueforresolutionisthephysicalormaterialpossessionofthe
propertyinvolved,independentofanyclaimofownershipbyanyofthepartylitigants.However,theissue
ofownershipmaybeprovisionallyruleduponforthesolepurposeofdeterminingwhoisentitledto
possessiondefacto.TheMTCandRTCsadjudicationofownershipismerelyprovisionalandwouldnot
barorprejudiceanactionbetweenthesamepartiesinvolvingtitletotheproperty.194

194

SUPREMECOURTREPORTSANNOTATED

MidwayMaritimeandTechnologicalFoundationvs.Castro

CivilLaw;Property;RealProperties;Abuildingbyitselfisarealorimmovablepropertydistinctfromthe
land on which it is constructed and therefore can be a separate subject of contracts.Adoracions
subsequentacquisitionofthetwoparcelsoflandfromherfatherdoesnotnecessarilyentailtheacquisition
oftheresidentialbuilding.Abuildingbyitselfisarealorimmovablepropertydistinctfromthelandon
whichitisconstructedandthereforecanbeaseparatesubjectofcontracts.WhateverAdoracionacquired
fromherfatherisstillsubjecttothelimitationpronouncedbytheCourtinCastro,andthesalebetween
AdoracionandTomasisconfinedonlytothetwoparcelsoflandandexcludedtheresidentialbuilding
ownedbytherespondents.ItisbeyondquestionthatTomas,andsubsequently,Adoracion,couldnothave
acquiredarightgreaterthanwhattheirpredecessorsininterestCCCandlater,UnionBankhad.
PETITIONforreviewoncertiorariofthedecisionandresolutionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
BalbinoV.DiegoandMartinez,Vergara,Gonzalez&Serranoforpetitioner.
RomuloB.Lumauigforrespondents.
REYES,J.:
ThepetitionerMidwayMaritimeandTechnologicalFoundation(petitioner)isthelesseeoftwoparcelsof
landinCabanatuanCity.Itspresident,Dr.SabinoManglicmot(Manglicmot),ismarriedtoAdoracion

Cloma(Adoracion),whoistheregisteredownerofthepropertyunderTransferCertificateofTitle(TCT)
Nos.T71321andT71322.Insidesaidpropertystandsaresidentialbuilding,whichisnowthesubject
matterofthedispute,ownedbytherespondents.
Thetwoparcelsofland,onaportionofwhichtheresidentialbuildingstand,wereoriginallyownedbythe
respondentsfatherLouisCastro,Sr.TheelderCastrowasalsothepresi
195

VOL.732,AUGUST6,2014

195

MidwayMaritimeandTechnologicalFoundationvs.Castro
dentofCabanatuanCityColleges(CCC).OnAugust15,1974,CastromortgagedthepropertytoBancom
DevelopmentCorporation(Bancom)tosecurealoan.Duringthesubsistenceofthemortgage,CCCsboard
ofdirectorsagreedtoa15yearleaseofaportionofthepropertytotheCastrochildren,hereinrespondents,
whosubsequentlybuilttheresidentialhousenowindispute.Theleasewastoexpirein1992.
WhenCCCfailedtopayitsobligation,Bancomforeclosedthemortgageandthepropertywassoldat
publicauctionin1979,withBancomasthehighestbidder.BancomthereafterassignedthecredittoUnion
Bankof thePhilippines(Union Bank),andlateron,UnionBankconsolidated itsownershipover the
propertiesin1984duetoCCCsfailuretoredeemtheproperty.WhenUnionBanksoughttheissuanceofa
writofpossessionovertheproperties,whichincludedtheresidentialbuilding,respondentsopposedthe
same.ThecasereachedtheCourtinG.R.No.97401entitled,Castro,Jr.v.CA,1[1]andinaDecisiondated
December6,1995,theCourtruledthattheresidentialhouseownedbytherespondentsshouldnothave
beenincludedinthewritofpossessionissuedbythetrialcourtasCCChasnotitleoverit.
Inthemeantime,Adoracionsfather,TomasCloma(Tomas),boughtthetwoparcelsoflandfromUnion
Bank in an auction sale conducted on July 13, 1993. Tomas subsequently leased the property to the
petitionerandthereafter,soldthesametoAdoracion.Severalsuitswerebroughtbytherespondentsagainst
thepetitioner,includingthecaseatbench,whichisanactionforOwnership,RecoveryofPossessionand
Damages,docketedasCivilCaseNo.3700(AF).
IntheirAmendedComplaint2[2]datedApril19,2000,therespondentsallegedthat:(1)theyaretheowners
oftheresidentialbuildingsubjectofthedispute,whichtheyusedfrom1977to1985whentheyleftforthe
UnitedStatesofAmerica
_______________
3

[1]321Phil.262;250SCRA661(1995).

[2]Records,pp.3033.

1
2
3
4

196

196

SUPREMECOURTREPORTSANNOTATED

MidwayMaritimeandTechnologicalFoundationvs.Castro
andinstitutedtheiruncle,JosefinoC.Castro(Josefino),asthecaretaker;(2)Manglicmot,whowasthe
PresidentofthepetitionerMidwayMaritimeandTechnologicalFoundation,leasedthebuilding(exceptfor
theportionoccupiedbyJosefino)fromLourdesCastro,motheroftherespondents,inJune1993with
monthlyrentofP6,000.00,whichwaslatertobeincreasedtoP10,000.00inOctober1995afterJosefino
vacateshisoccupiedportion;(3)thepetitionerfailedtopayrentstartingAugust1995,thuspromptingthe
respondentstofiletheaction.Therespondentsprayedthattheybedeclaredastheownersoftheresidential
building,andthatthepetitionerbeorderedtovacatethesameandpayrentarrearagesanddamages.5[3]
The petitioner, however, denied respondents ownership of the residential building and claimed that
Adoracionownsthebuilding,havingboughtthesametogetherwiththelandonwhichitstands. 6[4]
InaDecision7[5] datedJuly2,2001,theRegionalTrialCourt(RTC)ofCabanatuanCity,Branch28,
renderedjudgmentinfavoroftherespondents,declaredthemastheabsoluteownersoftheresidential
buildingandorderedpetitionertopaytherespondentsunpaidrentalsfromAugust1995untilfullypaid.
ThedispositiveportionoftheRTCdecisionreads:
WHEREFORE,judgmentisherebyrendered:
1.Declaringthe[respondents]astheabsoluteownersofthebuildinginquestiondescribedasfollows:
xxxx
2. Orderingthe[petitioner]topaythe[respondents]thesumof[P]672,000.00bywayofunpaidrentals
fromAugust1995at[P]6,000.00andfromOctober1995at[P]10,000.00untilfullypaid.
_______________
8

[3]Id.,atp.33.

[4]Id.,atp.42.Seealsopp.1011.

10

[5]IssuedbyJudgeTomasB.Talavera;id.,atpp.218221.

197

5
6
7
8
9
10

VOL.732,AUGUST6,2014

197

MidwayMaritimeandTechnologicalFoundationvs.Castro

3.Theclaimformoraldamages,otherlitigationexpensesandattorneysfeesaredismissedforlackof
merit.
SOORDERED.11[6]
TheCourt ofAppeals(CA)dismissedthepetitionersappealandaffirmedtheRTCdecisioninthe
assailedDecision12[7]datedOctober29,2008andResolution13[8]datedAugust3,2009.
Hence,thispetition.
ThepetitionerconteststheawardofrentalsmadebytheRTC,whichwasaffirmedbytheCA,contending
that when Tomas bought the two parcels of land from Union Bank in 1993, the sale included the
improvementsthereon,oneofwhichwastheresidentialhouseindispute.Thepetitioneralsoarguesthat
theleasebetweenCCCandtherespondentsalreadyexpiredatthetimeofthesaleandtheyarenowthe
currentlesseesoftheproperty,albeittheresidentialhouseisstillstandinginsidetheschoolcompound. 14[9]
ThepetitionerreliesonadecisionrenderedbytheRTCofCabanatuanCity,Branch26,inCivilCaseNo.
2939(AF),whichwasanappeal from thetrial courtsdismissal ofthecomplaint forEjectment with
Damagesfiledbytherespondentsagainstthepetitioner.Insaiddecision,theRTCstatedthatinthe
advertisedsaleofthelotscoveredbyTCTNos.T45816and[T45817]ofthelandrecordsofCabanatuan
City,allimprovementswereincluded,hence,theinstantcasehasnofactualandlegalbasis.15[10]
_______________
[6]Id.,atp.221.
[7]PennedbyAssociateJusticeAmelitaG.Tolentino,withAssociateJusticesJaparB.Dimaampaoand

SixtoC.Marella,Jr.,concurring;CARollo,pp.156172.
[8]Id.,atpp.187188.

[9]Rollo,pp.911.
[10]Records,p.119.

11
12
13
14
15

198

198

SUPREMECOURTREPORTSANNOTATED

MidwayMaritimeandTechnologicalFoundationvs.Castro

RulingoftheCourt
The first issue to be resolved is whether there was a lease agreement between the petitioner and the
respondentsasregardstheresidentialbuilding.Suchissue,itmustbeemphasized,isaquestionoffact[11]
thathasbeenresolvedbytheRTCintheaffirmative,towit:fromJune1993toJuly25,1995orfora
periodof26months,the[petitioner]hasbeenpayingrentalsforthebuildinginquestionandpaidarental
of[P]156,000.00whichrentalwasincreasedtoP10,000.00beginningOctober1995whenthecaretakerof
the[respondents]Mr.JosefinoCastrowasejectedtherefromandtheentirebuildingwasleasedtothe
[petitioner],representedbyDr.SabinoManglicmot.[12]Suchfindingisbornebytherecordsofthiscase.
ExhibitJ[13]fortherespondentsisacashdisbursementvoucherissuedbythepetitionertoMrs.Lourdes
Castro.ThevouchercontainedthestatementpaymentofbuildingrentalsxxxfromJune01toDecember
01,1993inthetotalamountofP36,000.00.Thepetitionerspaymentoftheforegoingrentalsconfirmsthe
existenceofitsagreementtoleasetheresidentialbuildingfromtherespondents.
Given the existence of the lease, the petitioners claim denying the respondents ownership of the
residentialhousemustberejected.Accordingtothepetitioner,itisAdoracionwhoactuallyownsthe
residentialbuildinghavingboughtthesame,togetherwiththetwoparcelsofland,fromherfatherTomas,
who,inturn,boughtitinanauctionsale.
Itissettledthat[o]nceacontactofleaseisshowntoexistbetweentheparties,thelesseecannotbyany
proof,howeverstrong,overturntheconclusivepresumptionthatthelessor
_______________
[11]R&MGeneralMerchandise,Inc.v.CourtofAppeals,419Phil.131,143;366SCRA679,690(2001).
[12]Records,p.221.
[13]Id.,atp.135.

199

VOL.732,AUGUST6,2014

199

MidwayMaritimeandTechnologicalFoundationvs.Castro
hasavalidtitletoorabetterrightofpossessiontothesubjectpremisesthanthelessee.[14]Section2(b),
Rule131oftheRulesofCourtprohibitsatenantfromdenyingthetitleofhislandlordatthetimeofthe
commencementoftherelationoflandlordandtenantbetweenthem.[15]InSantosv.NationalStatistics

Office,[16]theCourtexpoundedontheruleonestoppelagainstatenantandfurtherclarifiedthatwhata
tenantisestoppedfromdenyingisthetitleofhislandlordatthetimeofthecommencementofthe
landlordtenantrelation.Ifthetitleassertedisonethatisallegedtohavebeenacquiredsubsequenttothe
commencementofthatrelation,thepresumptionwillnotapply.[17]
Inthiscase,thepetitionersbasisforinsistingonAdoracionsownershipdatesbacktothelatterspurchase
ofthetwoparcelsoflandfromherfather,Tomas.ItwasTomaswhoboughtthepropertyinanauctionsale
byUnionBankin1993andleasedthesametothepetitionerinthesameyear.Notemustbemadethatthe
petitioners president, Manglicmot, is the husband of Adoracion and soninlaw of Tomas. It is not
improbablethatatthetimethepetitionerleasedtheresidentialbuildingfromtherespondentsmotherin
1993,itwasawareofthecircumstancessurroundingthesaleofthetwoparcelsoflandandthenatureof
the respondents claim over theresidential house.Yet, the petitionerstill chosetoleasethebuilding.
Consequently, the petitioner is now estopped from denying the respondents title over the residential
building.
Moreimportantly,therespondentsownershipoftheresidentialbuildingisalreadyanestablishedfact.
_______________
[14]Samelov.ManotokServices,Inc.,G.R.No.170509,June27,2012,675SCRA132,142.
[15]Id.,atp.141.
[16]G.R.No.171129,April6,2011,647SCRA345.
[17]Id.,atp.357.

200

200

SUPREMECOURTREPORTSANNOTATED

MidwayMaritimeandTechnologicalFoundationvs.Castro

Nemodatquodnonhabet.Onecansellonlywhatoneownsorisauthorizedtosell,andthebuyercan
acquirenomorerightthanwhatthesellercantransferlegally.[18]ItmustbepointedoutthatwhatTomas
boughtfromUnionBankintheauctionsalewerethetwoparcelsoflandoriginallyownedandmortgaged
byCCCtoBancom,andwhichmortgagewaslaterassignedbyBancomtoUnionBank.Contrarytothe
petitionersassertion,thepropertysubjectofthemortgageandconsequentlytheauctionsalepertainsonly
tothesetwoparcelsoflandanddidnotincludetheresidentialhouse.Thiswaspreciselythetenorof
Castro,Jr.v.CA[19]wheretheCourtnullifiedthewritofpossessionissuedbythetrialcourtinsofarasit
affectedtheresidential houseconstructedbytherespondentsonthemortgagedpropertyasitwasnot
ownedbyCCC,whichwasthemortgagor.TheCourtruled:
[Article 2127 of the Civil Code] extends the effects of the real estate mortgage to accessions and
accessoriesfoundonthehypothecatedpropertywhenthesecuredobligationbecomesdue.Thelawis
predicatedonanassumptionthattheownershipofsuchaccessionsandaccessoriesalsobelongstothe
mortgagorastheowneroftheprincipal.TheprovisionhasthusbeenseenbytheCourt,xxx,tomeanthat

allimprovementssubsequentlyintroducedorownedbythemortgagorontheencumberedproperty
aredeemedtoformpartofthemortgage.Thattheimprovementsaretobeconsideredsoincorporated
onlyifsoownedbythemortgagorisarulethatcanhardlybedebatedsinceacontractofsecurity,whether
realorpersonal,needsasanindispensableelementthereoftheownershipbythepledgorormortgagorof
thepropertypledgedormortgaged.Therationaleshouldbeclearenoughintheeventofdefaultonthe
securedobligation,theforeclosuresaleofthepropertywouldnaturallybethenextstepthatcanex
_______________
[18]Rufloe,etal.v.Burgos,etal.,597Phil.261,270;577SCRA264,272(2009).
[19]Supranote1.

201

VOL.732,AUGUST6,2014

201

MidwayMaritimeandTechnologicalFoundationvs.Castro

pectedlyfollow.Asalewouldresultinthetransmissionoftitletothebuyerwhichisfeasibleonlyifthe
sellercanbeinapositiontoconveyownershipofthethingsold(Article1458,CivilCode).Itistosay,in
theinstantcase,thataforeclosurewouldbeineffectiveunlessthemortgagorhastitletotheproperty
tobeforeclosed.[20](Citationsomittedandemphasisours)
Theruleisthatwhenadecisionbecomesfinalandexecutory,itbecomesvalidandbindinguponthe
partiesandtheirsuccessorsininterest.[21]Suchbeingthecase,Castro,whichalreadydeterminedwith
finalitytherespondentsownershipoftheresidentialhouseinquestion,isapplicableandbindinginthis
caseandthepetitionercannotbeallowedtochallengethesame.Thus,ascorrectlyruledbytheCA,[t]o
ourmind,thepronouncementresolvingthesaidissuenecessarilytouchesalsotheissueontheownership
ofthebuilding.xxxThefindingoftheCourt[inCastro],nowbeingfinalandexecutory,isnolongeropen
forinquiryandtherefore,hasattaineditsimmutability.[22]
AsregardstherulingoftheRTCofCabanatuanCity,Branch26,inCivilCaseNo.2939(AF)thatthe
advertisedsaleofthepropertyincludedalltheimprovementsthereon,[23]sufficeittosaythatsaidcase
involvedanactionforejectmentandanyresolutionbytheRTConthematteroftheownershipofthe
improvementsofthepropertyismerelyprovisionalandcannot surpasstheCourtspronouncement in
Castroandinthepresentcase.Thepetitionershouldberemindedthatinejectmentsuits,theonlyissuefor
resolutionisthephysicalormaterialpossessionofthepropertyinvolved,independentofanyclaimof
ownershipbyanyofthepartylitigants.However,
_______________
[20]Id.,atp.268.
[21] GovernmentServiceInsuranceSystem(GSIS)v.GroupManagementCorporation(GMC),G.R.No.

167000,June8,2011,651SCRA279,309.

[22]CARollo,pp.213214.
[23]Records,p.119.

202

202

SUPREMECOURTREPORTSANNOTATED

MidwayMaritimeandTechnologicalFoundationvs.Castro
theissueofownershipmaybeprovisionallyruleduponforthesolepurposeofdeterminingwhoisentitled
topossessiondefacto.[24]TheMTCandRTCsadjudicationofownershipismerelyprovisionaland
wouldnotbarorprejudiceanactionbetweenthesamepartiesinvolvingtitletotheproperty.[25]
Also,Adoracionssubsequentacquisitionofthetwoparcelsoflandfromherfatherdoesnotnecessarily
entailtheacquisitionoftheresidentialbuilding.Abuildingbyitselfisarealorimmovableproperty
distinctfromthelandonwhichitisconstructedandthereforecanbeaseparatesubjectofcontracts. [26]
WhateverAdoracionacquiredfromherfatherisstillsubjecttothelimitationpronouncedbytheCourtin
Castro, and the sale between Adoracion and Tomas is confined only to the two parcels of land and
excluded the residential building owned by the respondents. It is beyond question that Tomas, and
subsequently,Adoracion,couldnothaveacquiredarightgreaterthanwhattheirpredecessorsininterest
CCCandlater,UnionBankhad.[27]
ThepetitioneralsoinsiststhattheleasebetweenCCCandtherespondentsalreadyexpiredwhenAdoracion
boughtthepropertyfromTomas.Theforegoingissue,however,cannotbeconsideredinthepresentaction.
Asestablishedfromthefactsofthiscase,theresidentialhouseislocatedonaportionofthepropertythat
wasleasedbyCCCtotherespondents.DisputingtheleasebetweenCCCandtherespondents,ineffect,
goesintotherightoftherespondentstomaintaintheresidentialhouseinquestionandeventually,their
righttohavethe
_______________
[24]Malabananv.RuralBankofCabuyao,Inc.,605Phil.523,531;587SCRA442,447(2009).
[25]HeirsofAlbinaG.Ampilv.Manahan,G.R.No.175990,October11,2012,684SCRA130,139,citing

Pascualv.Coronel,G.R.No.159292,July12,2007,527SCRA474,482.
[26]Sps.Alcarazv.Tanggaan,449Phil.62,70;401SCRA84,90(2003),citingArticle415oftheCIVIL

CODE.

[27]SeeDevelopmentBankofthePhilippinesv.PrudentialBank,512Phil.267,279;475SCRA623,633

(2005).
203

VOL.732,AUGUST6,2014

203

MidwayMaritimeandTechnologicalFoundationvs.Castro
sameleasedtothepetitioner.Suchargument,obviously,isadisguisedefforttocontestthetitleofthe
respondentsovertheresidentialhouseleasedtothepetitioner,which,astheCourtpreviouslydiscussed,
cannotbeallowedsincetheyareestoppedfromdenyingthesame.
ThereisalsonothingonrecordthatwillprovethepetitionersclaimthattheleasebetweenCCCandthe
respondentsalreadyexpired.ThefactthatAdoracionsubsequentlyboughtthepropertydidnotipsofacto
terminatethelease.WhiletheleasebetweenCCCandtherespondentscontaineda15yearperiod,toendin
1992,thepetitionerfailedtoshowthatthesubsequenttransferors/purchasersofthetwoparcelsofland
optedtoterminatetheleaseorinstitutedanyactionforitstermination.Bancomboughtthepropertyatan
auctionsalein1979;UnionBank,in1984;Tomas,andlater,Adoracion,acquiredthepropertyin1993.
Article1676oftheCivilCodeprovides:
ThepurchaserofapieceoflandwhichisunderaleasethatisnotrecordedintheRegistryofpropertymay
terminatethelease,savewhenthereisastipulationtothecontraryinthecontractofsale,orwhenthe
purchaserknowsoftheexistenceofthelease.
xxxx.
Itcannotbedeniedthatthetransferors/purchasersofthepropertyallhadknowledgeoftheleasebetween
CCC and therespondents; yet,not anyofthe transferors/purchasersmovedtoterminatethelease.In
Bernabev.JudgeLuna,[28]theCourtstated:
[P]etitionersareinerrorwhentheysaythatbecausetheyarethebuyersofthelotinvolvedherein,they
ipsofactohavetherighttoterminateanexistinglease.Theycandosobutonlyiftheleaseitselfisnot
recorded,and
_______________
[28]232Phil.122;148SCRA113(1987).

204

204

SUPREMECOURTREPORTSANNOTATED

MidwayMaritimeandTechnologicalFoundationvs.Castro

they,asbuyers,arenotawareoftheleasesexistenceandduration,thusArt.1676oftheCivilCodesays:
xxxx
Inthepresentcase,theleaseisnotrecorded,andalthoughpetitionerknewofitsexistence,therewasno
fixed period for its duration hence the lease was generally terminable at the will of the buyers

petitioners.Butofcoursetheyhadtomakeademandforitstermination.xxx.[29](Citationomitted
andemphasisours)
Thiswas,infact,thesignificanceoftheCourtsstatementinCastro,that
[I]nrespectoftheleaseontheforeclosedproperty,thebuyerattheforeclosuresalemerelysucceedstothe
rightsandobligationsofthepledgormortgagorsubject,however,totheprovisionsofArticle1676ofthe
CivilCodeonitspossibletermination.[30](Citationomitted,emphasisandunderscoringours)
Given,however,thelackofsubstantiation,thepetitionersinsistenceontheexpiryoftheleasebetween
CCCandtherespondents,atthispoint,mustfail.
WHEREFORE,thepetitionisDENIEDforlackofmerit.
SOORDERED.
Sereno(CJ.,Chairperson),Bersamin,**Villarama,Jr.,andMendoza,***JJ.,concur.
[29]Id.,atpp.126127.
[30]Supranote1atp.268;p.666.
**ActingWorkingChairpersonperSpecial OrderNo.1741datedJuly31,2014 vice AssociateJustice

TeresitaJ.LeonardoDeCastro.
*** ActingmemberperSpecialOrderNo.1738datedJuly31,2014 vice AssociateJusticeTeresitaJ.

LeonardoDeCastro.
205

VOL.732,AUGUST6,2014

205

MidwayMaritimeandTechnologicalFoundationvs.Castro
Petitiondenied.
Notes.TheSupremeCourthadsustainedthevalidityofaleaseagreementempoweringthesublessorto
takepossessionoftheleasedpremises,incasethesublesseefailstocomplywithanyofthetermsand
conditionsofthecontractwithoutnecessityofresortingtocourtaction.(Iraovs.BytheBay,Inc.,558
SCRA315[2008])
Onecansellonlywhatoneownsorisauthorizedtosell,andthebuyercanacquirenomorethanwhatthe
sellercantransferlegally.(Daclagvs.Macahilig,560SCRA137[2008])
o0o