GR 66; (May, 1902) (Digest)
G.R. No. 66 : May 1, 1902
GEORGE M. SAUL, plaintiff-appellant, vs. ENRIQUE DALTON HAWKINS, defendant-appellee.
FACTS:
On August 8, 1900, Canuto Rivera sold a house and lot to George M. Saul, and the deed was recorded in the property register on September 13, 1900. Prior to the sale, Rivera had leased the same property to Enrique Dalton Hawkins under an unrecorded contract. After the sale, Saul, invoking his rights as the new owner, demanded that Dalton (who had subleased the property) deliver to him the full monthly rental from the sublessee. Dalton refused, contending he was only obligated to pay the rental amount stipulated in his lease contract with Rivera. Saul filed a complaint seeking a declaration of the “nullity of the gravamen” (the leasehold right) that Dalton claimed burdened the property, and an order for Dalton to deliver all rentals received since the purchase.
ISSUE:
Whether the unrecorded contract of lease executed by the former owner (Rivera) in favor of Dalton constitutes a real right or encumbrance that is enforceable against the subsequent purchaser (Saul) of the property.
RULING:
No. The Supreme Court reversed the lower court’s judgment. The Court held that an unrecorded lease does not create a real right enforceable against a subsequent purchaser. Upon the sale of the property, the vendor’s (Rivera’s) right is extinguished, and with it, the lessee’s (Dalton’s) right to possess and enjoy the property as against the new owner, unless the lease was recorded in the property register to constitute a binding encumbrance. The preventive annotation of a judgment related to a sublease did not constitute the recordation of the lease contract itself to create such a real right. Consequently, the lease in favor of Dalton was not enforceable against Saul. Saul, as the purchaser, was entitled to terminate the existing lease and recover possession and the fruits (rentals) of the property. The Court ordered Dalton to deliver to Saul all rents received from the property from the time of the act of conciliation (where demand was first made).