Ignacio v. Soriano

Summary

This case involves a dispute over whether a property purchaser is bound by a pre-existing lease. Gelano Sanchez had a registered 30-year lease on a lot owned by the Pabicos. When the Pabicos later sold the land to Ignacio Soriano, who then leased it to Filoil at a much higher rent, Sanchez sued for damages claiming his lease was still valid. The Supreme Court ruled that registered leases bind third persons under Article 1648 of the Civil Code, and since Soriano had actual knowledge of the existing lease before purchasing the property, he was bound to respect it. The Court rejected Soriano's arguments that the lease was terminated and awarded damages to Sanchez equivalent to the rental income he should have received. This case establishes the principle that actual knowledge of a lease is equivalent to registration and binds subsequent purchasers.