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Title VIII. - LEASE CHAPTER 1 GENERAL PROVISIONS -----------------------------------------------------------------------------Art. 1642. The contract of lease may be of things, or of work and service. ------------------------------------------------------------------------------The contract of lease is an agreement whereby one person (lessor) binds himself to grant temporarily the enjoyment or use of a thing or to render some work or service to another (lessee) who undertakes to pay rent, compensation or price therefore. General Rule: Lease is only a personal right. Exception: It is a real right only by exception as in case of lease of real estate recorded in the Registry or Property which makes it binding upon third persons, like a purchaser. A lease contract is not essentially personal in character in the sense that the rights and obligations therein are transmissible to the heirs. Kinds of Lease according to subject matter: 1. Lease of things whether real or personal, involving an obligation on the part of the lessor to deliver the thing which is the object thereof and the correlative right of the lessee to the peaceful and adequate enjoyment thereof for a price certain (Art. 1654); or Lease of work which refers to a contract for a piece of work, involving an obligation on the part of the contractor (lessor) to execute a piece of work for the employer (lessee) in consideration of a certain price or compensation (Art. 1713); or Lease of service involving an obligation on the part of the housekeeper, laborer or employee, or common carrier to do or perform a service for the head of a family, or master, employer, or passenger or shipper of goods, respectively, in consideration of compensation.
------------------------------------------------------------------------------Art. 1643. In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than ninety-nine years shall be valid. ------------------------------------------------------------------------------LEASE OF THINGS Landlord lessor or owner Tenant lessee Essence: the transmission of the temporary enjoyment or use by the lessee of a thing for a certain period in consideration of the undertaking to pay rent therefor. The object of lease must be within the commerce of man; otherwise it is void. The lease of a building includes the lease of the lot on which it stands, and the rentals of a building include those of the land. Subject-matter of lease movable or immovable In a lease of chattels, the lessor loses complete control over the chattel leased although the lessee would be responsible to the lessor should he make bad use thereof. The lessor need not be the owner of the thing leased as long as he can transmit its enjoyment or use to the lessee since ownership is not being transferred. Even the lessee himself may lease the property to another; in such case, a sublease results. Consideration of lease of things must be price certain generally called rent or rental in money or its equivalent, such as products, fruits, or other useful things, or some other prestation or labor which the lessee binds himself to undertake. The important thing is that what is given by the lessee has value. Price certain means that the price of the lease or rent has been determined by the parties or is at least capable of determination under the contract. A price certain exists when the same can be ascertained according to the usages or customs of the place. The amount must not be nominal or so insignificant as to indicate an intention to enter into a contract of commodatum which is essentially gratuitous. Since lease is essentially a consensual contract, in the absence of a law fixing a ceiling on rentals, the lessor has the right to fix the amount of the rent, and upon the expiration of the contract, to demand an increase thereof. During the period fixed in the contract where there is a stipulated rent, the lessor cannot increase the rental without the consent of the lessee. Neither can a court
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Characteristics 1. Consensual 2. Bilateral 3. Onerous 4. Commutative 5. Nominate, and 6. Principal 3 Elements 1. Consent of the contracting parties; 2. Object certain which is the subject matter of the contract; and 3. Cause of the obligation which is established.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
2S 2011-2012 Reviewer
fix a different rental, even where there is an increase in realty taxes. Period of lease may be definite or indefinite. In any case, the period is temporary, not perpetual. When the period is definite or fixed, the longest is 99 years. Reason: because it is an unsound economic policy to allow ownership and enjoyment to be separated for a very long time. In case the period fixed is more than 99 years, the lease should be considered as having expired after the end of said term. Where there is an implied new lease, the lease will be for an indefinite time. If the term is fixed but it is indefinite but from the circumstances it can be inferred that a period was intended, the court may fix the duration thereof. If not term is fixed, Art. 1682 applies for leases of rural lands, and Art. 1687, for leases of urban lands. A verbal contract of lease for as long as the lessee are doing business and as long as they can pay just rents has been held to be a lease from month to month under Art. 1687 and not one of indefinite duration, terminable without necessity of a special notice upon expiration of any month. A lease of things during the lifetime of one of the parties is for an indefinite period. A lease for such time as the lessor or the lessee may please, is one for life, ending upon the death of either party. The continuance and fulfillment of a lease of a house cannot be made to depend solely upon the uncontrolled choice of the lessee on whether or not the lessee would pay rentals, thus depriving the lessor of any say on the matter. Q: Is a stipulation in the contract of lease to the effect that a contract may be renewed for a like term at the option of the lessee is void for being potestative? A: No. The lessor is bound by the option he has conceded to the lessee. The lessee likewise becomes bound only when he exercises his option and the lessor cannot thereafter be excused from performing his part of the agreement. The clause simply means that the lessees exercise of the option resulted in the automatic extension of the contract of lease under the same terms and conditions. Rule: In case of uncertainty as to the meaning of a provision granting extension to a contract of lease, the tenant is the one favored and not the landlord. Reason: the landlord having the power of stipulating in his own favor, has neglected to do so; and also upon the principle that every mans grant is to be taken most strongly against himself. Q: When the parties to a contract agreed that the lease period shall subsist for an indefinite period provided the lessee is up -
to-date in the payment of his monthly rentals, is the contract void? A: No. The lease period between the parties is with a period subject to a resolutory condition. Such a stipulation Does not make either the validity or the fulfillment of the contract dependent upon the will of the party to whom it is conceded the privilege of cancellation; for where the contracting parties have agreed that such option shall exist, the exercise of the option is as much in the fulfillment of the contract as any other act which may have been the subject of agreement. Estoppel against lessee A lessee is estopped from asserting title to the thing leased as against the lessor, or to deny the lessors title, or to assert a better title not only in himself, but also in some third person., including the State while he remains in possession of the leased property and until he surrenders possession to the lessor. Exception: Where the lessee would, in effect, be paying rental twice for the use of the same property for the same period of time to the real owner if he were to pay the lessor. Conclusive presumptions include: (b) The tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation of landlord and tenant between them. (Sec. 3-b, Rule 131, RC) Lease vs. Sale LEASE OF THINGS Only the enjoyment or use is transferred Transfer is temporary The lessor need not be the owner SALE Ownership is transferred Transfer is permanent, unless subject to a resolutory condition The owner must be the owner or at least authorized by the owner to transfer ownership, of the thing sold at the time it is delivered The price of the thing is usually fixed in the contract
The price of the subject matter, is usually not mentioned, being immaterial
In case of doubt, the intention of the parties is an important factor in determining the contract entered into. Note: A lease of personalty with option to buy is an installment sale and not a lease. Lease vs. Commodatum LEASE Onerous contract, although the rent may subsequently be condoned or remitted COMMODATUM Essentially gratuitous
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
2S 2011-2012 Reviewer
Not essentially personal in character and, therefore, the right may be transmitted to the heirs Purely personal in character, and consequently, the death of either the bailor or the bailee extinguishes the contract Consensual contract Real contract as it is perfected only upon delivery of the object thereof Both contracts consist in the transmission of the enjoyment or use of a thing to another By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time and return it, in which case the contract is called commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum. Lease vs. Mutuum LEASE The owner of the property does not lose his ownership MUTUUM The lender or creditor loses ownership of the thing loaned which becomes the property of the borrower or debtor It is that of creditor or oblige and debtor or obligor It is only money or any other fungible thing Not governed by the statute of frauds Governed by said law no taxes
annual charges and taxes on the fruits The usufructuary is obliged to make the ordinary repairs needed by the thing given in usufruct The usufructuary may lease the thing in usufruct to another May be created by law, contract, last will and testament or prescription As a rule covers all possible uses of the property
Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides. Lease vs. Deposit LEASE The enjoyment or use of the thing leased is the essential purpose The lessor cannot demand the thing leased before the expiration of the contract Both movable and immovable property may be the object Onerous Consensual DEPOSIT The safekeeping of the thing delivered is the principal purpose The depositor can demand the return of the subject matter at will If it is extrajudicial, only movable (corporeal) things may be the object May be gratuitous Real contract perfected only upon delivery of the object thereof
The relationship is one of lessor and lessee The subject matter may be real and/or personal property The first is governed by the statute of frauds where the thing leased is real property for more than one year Not governed by Usury Law
Note: Central Bank Circular No. 905 (Dec. 10, 1982) suspended the effectivity of the Usury Law. It removed the ceiling on interest rates. Simple loan may be gratuitous or with stipulation. Lease vs. Usufruct LEASE Real right only in the case of the lease of real property where the lease is registered The lessor may or may not be the owner The lessor has the active obligation to maintain the lessee in the enjoyment or use of the property The lessee generally pays USUFRUCT always a real right
A Deposit is constituted from the moment a person received a thing belonging to another, with the obligation of safe keeping it and of returning the same. Lease of Chattels vs. Employment LEASE OF CHATTELS EMPLOYMENT The relationship is that of It is one of employer and lessor and lessee employee The lessor loses control or The employer retains management over the control or management over chattel leased his chattel The lessor has no control or The employer exercises supervision over the lessee control and supervision over his employee The lessee pays rent to the The employer pays wage or lessor for the enjoyment or salary for the services of the use of the chattel employee Note: Under the boundary system, the relation between the driver and the jeepney owner is that of employer and employee, not of lessor and lessee.
The creator of the right must be the owner or one duly authorized by him The owner has the passive duty to allow the usufructuary to enjoy or use the same The usufructuary pays the
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
2S 2011-2012 Reviewer
------------------------------------------------------------------------------Art. 1644. In the lease of work or service, one of the parties binds himself to execute a piece of work or to render to the other some service for a price certain, but the relation of principal and agent does not exist between them. ------------------------------------------------------------------------------LEASE OF WORK OR SERVICE Lease of work vs. lease of service LEASE OF WORK LEASE OF SERVICE The object is the execution It is the performance of of a piece of work for an some service or an employer by an employer by a househelper independent contractor or laborer or for a passenger or owner of goods by common carrier In both kinds of lease, the employer or passenger or owner of goods binds himself to pay some remuneration or compensation in favor of the independent contractor, employee, or common carrier and the relation of principal and agent does not exist between the parties Lease of work or service vs. Agency LEASE OF AGENCY WORK/SERVICE The basis is employment It is representation The lessor performs a The agent executes a material act for the benefit juridical act for and in behalf of his employer without of his principal representation of the latter The work or service must It is presumed for a be for a price or compensation compensation The will of both parties is The will of one is sufficient necessary for the extinguishment of the relationship Only two persons are Three persons: the involved: the lessor and principal, the agent and the lessee third person with whom the agent has contracted The risk of loss before The risk is borne by the delivery is borne by the principal since the agent independent contractor, acts merely as his esp. in the lease of work for representative a fixed price In the lease of work, the The agent is not, unless he independent contractor is expressly binds himself or personally liable for his exceeds the limits of his contracts with third persons authority In the lease of service, the The agent exercises lessor ordinarily performs discretionary powers only ministerial duties By contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.
Lease of work or service vs. Partnership LEASE OF PARTNERSHIP WORK/SERVICE There is no principle of every partner is an agent of representation the partnership for the purpose of its business The lessor performs a The partners enter into material act for the benefit commercial or business of the employer transactions for the realization of profits Only two persons are A juridical personality involved (partnership) separate and distinct from that of each partner is formed The work or service is The partners perform acts dependent upon the ends conducive to their own and purposes of the lessee business purposes The work or service must The partners share in the be for a price or profits or losses compensation The will of both parties is The will of any partner is necessary for the sufficient extinguishment of relationship In the lease of work, the A partner is generally not independent contractor is personally liable for his contracts with 3rd persons In the lease of service, the Every partner as an agent lessor (like servant) of the partnership, ordinarily performs only exercises discretionary ministerial duties powers Compensation in lease of work or service 1. Where there is agreement the lessee must be compelled to pay the agreed price unless it is found to be iniquitous or unreasonable in which case the courts may fix a reasonable and just remuneration. Where the compensation is renounced or waived after the service has been rendered, there is still a lease of service although it has become gratuitous. Where the agreement may be implied on principle one who performs work or service in favor of another who impliedly consents thereto and who benefits thereby, is entitled to compensation by virtue of an innominate contract of facio ut des (I give that you may do) or of the case of services tacitly contracted in which case the courts will fix the reasonable worth of the services rendered. Where no rate or amount is fixed in the contract the contract is nevertheless valid If the amount can be ascertained in the light of the customs and usages of the place, or by findings of fact on the basis of evidence submitted in case of disagreement.
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Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
2S 2011-2012 Reviewer
Note: A price certain exists when the same can be ascertained according to the customs and usages of the place. ------------------------------------------------------------------------------Art. 1645. Consumable goods cannot be the subject matter of a contract of lease, except when they are merely to be exhibited or when they are accessory to an industrial establishment. ------------------------------------------------------------------------------LEASE OF CONSUMABLE GOODS Under the old Civil Code, fungible things which are consumed by use cannot be the subject of lease. The rule is the same under Art. 1645 with the qualification now that consumable goods may be the object of lease when they are merely to be exhibited or when they are accessory to an industrial establishment. The essence of a lease of things is the enjoyment or use of the property with the obligation on the part of the lessee to return the same upon the expiration of the lease. Ownership is not transferred to the lessee. Hence, things which by their nature cannot be used without being consumed, cannot be the subject matter of lease. CHAPTER 2 LEASE OF RURAL AND URBAN LANDS SECTION 1. - General Provisions --------------------------------------------------------------------------Art. 1646. The persons disqualified to buy referred to in Articles 1490 and 1491, are also disqualified to become lessees of the things mentioned therein. ---------------------------------------------------------------------------Rural lands - relating to, or associated with, or typical of, the country, the word being derived from the Latin word ruralis meaning country. Legal definition -relating to or constituting tenement in land adopted and used for agricultural or pastoral purposes. -one which, regardless of site, is principally used for the purpose of obtaining products from the soil as opposed to urban lands, which are principally for the purpose of residence. Persons disqualified to buy in accordance with Articles 1490 and 1491 are likewise disqualified to lease the thing therein mentioned. Art. 1490 relative incapacity of husband and wife to sell property to each other Art. 1491 incapacity of persons enumerated therein who, by the special relations they have with the property under their charge or peculiar control, are prohibited from purchasing said property.
The prohibition is adopted in Art. 1646 because of the similarity between the contract of lease and that of sale. ___________________________________________________ Art. 1490. The husband and the wife cannot sell property to each other, except: (1) When a separation of property was agreed upon in the marriage settlements; or (2) When there has been a judicial separation or property under Article 191. Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: (1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; (3) Executors and administrators, the property of the estate under administration; (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. (6) Any others specially disqualified by law. ___________________________________________________ _____________ Foreigners are prohibited by the Constitution, except only in cases of hereditary succession, to acquire lands in the Philippines. (Secs. 7,2, par. 1, Art. XII, Constitution.) Nevertheless, they can lease real or immovable property in the Philippines. Since the residence of aliens in the Philippines is temporary, they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. The maximum period allowable for the duration of leases of private lands to aliens or alien-owned entities not qualified to
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
2S 2011-2012 Reviewer
acquire private lands under the Constitution is 25 years, renewable for another period of 25 years upon mutual agreement of both lessor and lessee. (PD 471) -------------------------------------------------------------------------------Art. 1647. If a lease is to be recorded in the Registry of Property, the following persons cannot constitute the same without proper authority: the husband with respect to the wife's paraphernal real estate, the father or guardian as to the property of the minor or ward, and the manager without special power. -----------------------------------------------------------------------------Proper authority required if leased to be recorded in Registry of Property The registration of the lease is an act of strict ownership; hence a special power of attorney is necessary. But if the lease is not to be recorded, the lease entered into by said persons is valid even without a special power. Art. 1878(8) a special power of attorney is necessary to lease any real property to another person for more than one year. This requirement is imposed whether or not the lease will be recorded. In the absence of a special power, a lease for more than 1 year executed by the persons mentioned Art. 1647 is valid only for 1 year but void as to the excess. -----------------------------------------------------------------------------Art. 1648. Every lease of real estate may be recorded in the Registry of Property. Unless a lease is recorded, it shall not be binding upon third persons. --------------------------------------------------------------------------------Effect of registration of lease of real estate As against 3rd persons A lease contract is valid and binding between the parties, their privies, and their heirs. (Art. 1311) Exception: An oral lease for a longer period than 1 year in which case it cannot be enforced by action for non-compliance with the statute of frauds. [1403 (2,e)] To affect or bind third persons, a lease of real property should be registered in the Registry of Property. Unless so recorded, an innocent purchaser for value is not bound to respect the existing lease and he may terminate the same. (Art. 1676) A contract of lease of land must be in public instrument so that it may be recorded. Purpose: Art. 1648 is intended to protect the lessee, who cannot be ousted by the buyer if the lease is recorded. The right of the buyer to terminate the lease should be curbed as much as possible because it is unjust to the lessee, and practically sanctions a violation of the contract of lease by the lessor. As between parties Lease is merely a personal right.
Lease partakes of the nature of a real right when it is recorded on the title of the lessor (regardless of duration) only in the sense that it is binding even against 3rd persons without actual notice of the transaction. Leases of personal property Art. 1648 applies only to lease of real estate; hence, leases of personal or movable property cannot be registered. An assignment of a credit, right, or action shall affect 3 rd persons if the assignment appear in a public instrument. (Art. 1625). By analogy with said rule, leases of personal property shall be binding on 3rd persons if they appear in a public instrument. Effect of actual notice of unregistered lease by purchaser Where a purchaser of land at the time of the purchase has full knowledge of the fact that the land has been leased to a third person and is informed of the terms of such lease, he is bound to respect said lease, although it is not entered upon the certificate of title. The lease, in effect, became a part of the contract of sale. (Gustillo vs. Maravilla) -----------------------------------------------------------------------------Art. 1649. The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary. -------------------------------------------------------------------------------Assignment of lease by lessee In an assignment of lease, the personality of the lessee (assignor/debtor) disappears. The lessee makes an absolute transfer of his lease, involving not only and his rights but also obligations as such lessee and thus, dissociates himself from the original contract of lease. There arises the new juridical relation between the lessor and the assignee who is converted into a new lessee. There is in effect, a novation by substituting the person of the debtor (Art. 1291 [2]) and novation cannot take place without the consent of the creditor. (Art. 1293). Hence, the lessee cannot assign the lease without the consent of the lessor (creditor), unless there is a stipulation granting him that right. Objective: to protect the lessor or owner of the leased property. An assignment of lease without the consent of the lessor is a ground for rescission of the lease. -------------------------------------------------------------------------------Art. 1650. When in the contract of lease of things there is no express prohibition, the lessee may sublet the thing leased, in whole or in part, without prejudice to his responsibility for the performance of the contract toward the lessor. --------------------------------------------------------------------------------Sublease by lessee of thing leased Unlike inn assignment of a lease, a lessee may sublease the property in the absence of express prohibition. In sublease, the lessee remains a party to the contract. There are two leases and two distinct juridical relations: 1) Between the lessor and the lessee, and
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
2S 2011-2012 Reviewer
2) Between the sublessor (lessee) and the sublessee The lessee is still responsible for the performance of his obligations toward the lessor A judgment of eviction against the lessee affects the sublessee even if the latter is not sued in the ejectment case. Reason: the sublesee can invoke no right superior to that of the sublessor from which his own right is derived, and the moment the sublessor is duly ousted from the premises, the sublessee has no leg to stand on. Q: The lessee, without the written consent of the lessor, accepted boarders in their apartment. Is the lease agreement violated? A: No. Accepting boarders not equivalent to subleasing. The lessee does not relinquish or surrender his lease to them. He did not cease to become actual occupant and possessor of the demised premises. He did not surrender the possession and control of the leased premises or a part thereof. (Malasarte vs. CA) -----------------------------------------------------------------------------Art. 1651. Without prejudice to his obligation toward the sublessor, the sublessee is bound to the lessor for all acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor and the lessee. ------------------------------------------------------------------------------------The lessor may bring an action directly against the sublessee if he does not use and preserve the thing leased in accordance with the agreement between the lessor and the lessee or with the nature of the property. It is not necessary that the sublessor be joined as a defendant. ------------------------------------------------------------------------------Art. 1652. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the sublessee shall not be responsible beyond the amount of rent due from him, in accordance with the terms of the sublease, at the time of the extrajudicial demand by the lessor. Payments of rent in advance by the sublessee shall be deemed not to have been made, so far as the lessor's claim is concerned, unless said payments were effected in virtue of the custom of the place. -----------------------------------------------------------------------------Subsidiary liability of sublessee to lessor 1) Remedy to collect rents from the sublessee
p[ay the sublessor the rents which said sublessee failed to pay the lessor. Purpose: To prevent a situation where the lessee collects rents from the sublessee but does not pay his rents to the lessor. 2) Amount of rent recoverable
The liability of the sublessee is limited to the amount of rent due from him to the sublessor under the terms of the sublease at the time of the extrajudicial demand by the lessor. Future rents cannot be recovered. He is liable to the lessor only for rents the lessee falied to pay the lessor. Note: The liability of the sublessee is subsidiary. 3) Liability for rents paid in advance
The sublessee continues to be subsidiarily liable to the lessor for any rent unpaid by the lessee. The rule is to avoid collusion between the lessee and the sublessee. ------------------------------------------------------------------------------------Art. 1653. The provisions governing warranty, contained in the Title on Sales, shall be applicable to the contract of lease. In the cases where the return of the price is required, reduction shall be made in proportion to the time during which the lessee enjoyed the thing. -----------------------------------------------------------------------------------Warranty of the lessor Art. 1653 applies to leases the warranties in sales. (Arts. 1547, 1548, 1561, 1566) The lessor likewise warrants: 1) That he has a right to lease the thing 2) That the lessee shall enjoy the legal and peaceful possession of the thing, and 3) That the thing is fit for the use for which it is intended and free from any hidden fault or defect. (1654) In case of eviction of the lessee, and the return of the rents paid is required, a reduction shall be made taking into account the period during, which the lessee enjoyed the thing. The lessee has also the right of proportionate reduction of the rents agreed upon where the area or number of the object of the lease is less than that stated in the contract. (Art. 1542) Liability for the warranty is not equivalent to liability in damages, as the latter is an obligation distinct from the former.
The law grants the lessor the right to demand payment from the sublessee the rents which the sublessor failed to pay the lessor. The demand to pay rents made by the lessor on the sublessee does not exempt the latter from his obligation to
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
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Repair implies the putting of something back into his its original serviceable condition. It is intended to preserve the thing in a condition suitable for which it is destined as agreed upon. When repairs were made, lessee cannot unilaterally cancel contract of lease -after the plaintiff has made the necessary repairs upon the compliant of the defendant and the former made the repairs within reasonable time, the defendant cannot unilaterally cancel the contract of lease. (gregorio araneta vs. Lyric film exchange Inc) Sublessor liable for necessary repairs in relation to the sublessee -it is the duty of the sublessor to make the necessary repairs on the leased premises and to maintain the sublessee in the peaceful and adequate enjoyment of the lease -the lessor (or sublessor) cannot be compelled to fulfill the following acts the same not being considered reapairs: Filling and Improvement of a lot- it is not for preservation of the lot. Improvement is adding something new to the thing leased. Construction of a house is not a repair Rebuilding or reconstruction which presupposes the total loss of the thing leased. Repairs and its ordinary acceptation, must be understood to apply to the restoration of the things after the injury or partial destruction, without complete loss of identity in the thing repaired Parties may agree that lessee shall rebuikd, reconstruct or replace the building within a specific period, in case it is destroyed. Potestative Promise to Build- if the lessee agreed to reconstruct the building destroyed because of the war but the stipulation is potestative in nature, he cannot be compelled to reconstruct the destroyed building (shotwell vs Manila Motor Co.) Duty of the Lessee To Notify the Lessor About the Need for Necessary Repairs- he may be liable for damages if through his negligence, the owner suffers damages. -if the lessor is not informed about the needed repairs, he could not be held liable for damages for failure to perform his obligation imposed by Art. 1654. c. To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract This duty of the lessor also constitutes warranty against eviction or warranty against hidden defects
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
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Total destruction the lease is extinguished if the thing is totally destroyed the lessee cannot compel the lessor to reconstruct the destroyed property the lessee of the lot and building which has been totally destroyed by fortuitous event cannot be considered as lessee of the land after the building had been totally destroyed by the fortuitous event (roces vs. Richard) while the land has not been affected, consideration should be taken of the fact that generally the land was leased only as an incident to the lease of the building (shotwell vs. manila motors co) However what was leased is the lot and the lessee constructed a building thereon with the consent of the lessor the destruction of the building will not extinguish the lease, the reason being that the building is just an incident of the lease of the land, on which the owner of the land has no direct interest Partial Destruction Lease is not extinguished Lessee has two options: a. Seek proportional reduction of the rent b. To rescind the lease The choice is on the lessee and not to the lessor If the reduction of the rent is opted by the lessee, it shall be reckoned from the time of partial destruction The lessee can rescind the lease only if the destruction is substantial ------------------------------------------------------------------------------------Art. 1656. The lessor of a business or industrial establishment may continue engaging in the same business or industry to which the lessee devotes the thing leased, unless there is a stipulation to the contrary. ------------------------------------------------------------------------------------General rule: the lessor may engage in business similar to that the lessee, whether the lessor runs his business in the same building which he powns and part thereof is leased to th lessee. Exception: stipulation by the parties The lessor only warrants the peaceful and adequate enjoyment of the thing leased but not the success of the business of the lessee
d.
Since the lessee is in the possession of the thing it is his duty to notify the lessor of every usurpation or untoward act or acts of a third person against the property the duty to maintain the lessee in the peaceful and adequate enjoyment of the lease for the duration of the contract, is merely a warranty that the lessee shall not be disturbed in his legal, not physical possession. Trespass in fact- when it is merely trespass in fact, the lessor cannot be faulted for any breach. The lessee can file a direct action against the trespasser such as forcible entry or illegal detainer. Force Majeure- when the lessee suffered damages due to force majeure, the lessor is not liable for any breach of duty Eviction of Lessee due to Lessors Failure to Pay Taxes- Ormachea vs Cua Chee Gan and Co.- the property was forfeited because of the plaintiffs failure to pay the taxes. The plaintiff is guilty of breach of his duty to maintain the lessee in peaceful enjoyment of the property. It is not just and fair compel the a lessee to pay rental for the leased property when he vacates it, not of his own free will, but in obedience to the orders of constituted authorities and through the fault of the lessor himself Ejectment through condemnation proceedings- if the tenant was ejected by reason of condemnation proceedings the landlord cannot be held liable for damages. Expropriation is an act of the state and is involuntary on the part of the owner. The lessee can recover damages from the agency or entity which expropriated the property. Measure of Damages When Lessee failed to Take Possession of the Thing Leased- the true test for the breach is what the injured party has lost by reason of such breach. Liability of the Lessee- even if the lessee suffers losses in his business venture carried on in the place leased, he is still bound to pay the rentals. A lease is no warranty that the lessee will realize the profits in the venture. Duty not Alter Form
-the lessor has also the duty not to alter the form of the thing leased as to impair the use of the said thing to which it is devoted under the terms of the lease (art. 1661) ------------------------------------------------------------------------------------Art. 1655. If the thing leased is totally destroyed by a fortuitous event, the lease is extinguished. If the destruction is partial, the lessee may choose between a proportional reduction of the rent and a rescission of the lease. -------------------------------------------------------------------------------------
------------------------------------------------------------------------------------Art. 1657. The lessee is obliged: (1) To pay the price of the lease according to the terms stipulated; (2) To use the thing leased as a diligent father of a family, devoting it to the use stipulated; and in the absence of stipulation, to that which may be inferred from the nature of the thing leased, according to the custom of the place; (3) To pay expenses for the deed of lease. -------------------------------------------------------------------------------------
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
-it is a settled that rental stipulated in the contract of lease that has expired or terminated may no longer be the reasonable value for the use and occupation of the premises as a result or by reason of the charges or rise in values.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
-the grounds for suspension is limitative, in the absence of any of the two grounds, it is grave abuse of discretion for a judge to allow suspension of payment -a lessee cannot stop payment on the pretext there was trespass on the premises when the trespass is only in fact and not in law -if the lessor refuses to make urgent repairs despite notice the remedy of the lessee is to make the urgent repairs themselves and to charge the cost to the lessor and not suspend payment of rentals. ------------------------------------------------------------------------------------Art. 1659. If the lessor or the lessee should not comply with the obligations set forth in Articles 1654 and 1657, the aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force. ------------------------------------------------------------------------------------The aggrieved party has two options in case of his obligations a. Rescission of the contract with damages -failure of lessor to place the lessee in possession of the premises leased is a case of lessors non-compliance with his obligation b. action for damages only allowing the lease to remain subsisting On the part of the lessor, instead of rescinding the contract, he may directly file an action for ejectment against the lessee If the aggrieved party has chosen the option of rescission under article 1659, the court has no discretion to grant the non-fulfillment in an ordinary obligation under article 1191 Lessor is under obligation to respect lessees right of first refusal is a contract of lease Lucrative Realty and Dev. Corp vs. bernabe Jr.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
------------------------------------------------------------------------------------Art. 1662. If during the lease it should become necessary to make some urgent repairs upon the thing leased, which cannot be deferred until the termination of the lease, the lessee is obliged to tolerate the work, although it may be very annoying to him, and although during the same, he may be deprived of a part of the premises. If the repairs last more than forty days the rent shall be reduced in proportion to the time - including the first forty days - and the part of the property of which the lessee has been deprived. When the work is of such a nature that the portion which the lessee and his family need for their dwelling becomes uninhabitable, he may rescind the contract if the main purpose of the lease is to provide a dwelling place for the lessee. ------------------------------------------------------------------------------------Tolerance of Urgent Repairs -in case urgent repairs are needed upon the thing leased, which cannot be deferred until the end of the lease, the lessee has to tolerate the works although the same may annoy him and even if he be deprived of the part of the premises during the repairs -if the place becomes uninhabitable for the lessee and his family and the main purpose of the place is for dwelling, the lessee may rescind the contract -if the lessee does not choose to rescind, he may seek the reduction of the rentals if the repairs will last for more than 40 days in proportion to the time of deprivation. -if the period is less than 40 days, he cannot ask for reduction ------------------------------------------------------------------------------------Art. 1663. The lessee is obliged to bring to the knowledge of the proprietor, within the shortest possible time, every usurpation or untoward act which any third person may have committed or may be openly preparing to carry out upon the thing leased.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
The notice required under Art 1670 is the one given after the expiration of the lease period for the purpose of aborting an implied renewal of lease. The notice to vacate constitutes an express act on the part of the lessor that he no longer consents to the continue occupation by the lessee of the leased property. Revival of Original Conditions; Restrictions CASE: Dizon vs. Magsaysay The conditions in the original lease contract are revived like the amount of rentals, manner and time of payment. Said terms must be germane or connected with the lessees enjoyment of the leased property but will not include things like preferential right to buy or right of first refusal. Effect of Express Notice to Vacate Before the Lapse of the 15-day Period CASE: Arevalo vs. Lao Where the lessor is unwilling to renew the lease, it will be necessary for him to serve on the lessee a formal notice to vacate. As no talks have been held between the lessor and the lessee concerning the renewal of the lease, there can be no inference that the former, by his inaction, intends to discontinue it. In such a case, no less than an express notice to vacate must be made within the statutory 15-day period. A conditional notice to vacate where the condition was not accepted has the effect of absence of tacit renewal. If there is a letter sent to the lessee telling him to vacate, there is no implied renewal of the lease. (Llano vs. Mamaril) Instances when implied renewal not applicable: (1) Stipulation against implied renewal (2) Invalidity of original lease (3) Acceptance of rentals beyond original term (4) Acceptance of rentals less than amounts stipulated (5) Non-payment of rentals The Principle of Implied Renewal Does Not Apply to Cases of Successive Renewals Under Article 1687. If by the terms of the lease the period of its duration was five years, and a monthly, quarterly or yearly rental was reserved, and upon its expiration the tenant, with the acquiescence of the landlord, holds over for fifteen days, this does not bring about a tacit renewal of the lease for another term of five years, but creates a tenancy from month to month, from quarter to quarter or from year to year, as the case may be. (Ottofy vs. Dunn) ------------------------------------------------------------------------------------Art 1671. If the lessee continues enjoying the thing after the expiration of the contract, over the lessors objection, the former shall be subject to the responsibilities of a possessor in bad faith.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
SEC. 5. Rent and Requirement of Bank Deposit. Rent shall be paid in advance within the first 5 days of every current month or the beginning of the lease agreement unless the contract of lease provides for a later date of payment. The lessor cannot demand more than 1 month advance rent. Neither can he demand more than 2 months deposit which shall be kept in a bank under the lessor's account name during the entire duration of the lease agreement. Any and all interest that shall accrue therein shall be returned to the lessee at the expiration of the lease contract. In the event however, that the lessee fails to settle rent, electric, telephone, water or such other utility bills or destroys any house components and accessories, the deposits and interests therein shall be forfeited in favor of the latter in the amount commensurate to the pecuniary damage done by the former. SEC. 6. Assignment of Lease or Subleasing Assignment of lease or subleasing of the whole or any portion of the residential unit, including the acceptance of boarders or bedspacers, without the written consent of the owner/lessor is prohibited. SEC. 7. Grounds for Judicial Ejectment Ejectment shall be allowed on the following grounds: (a) Assignment of lease or subleasing of residential units in whole or in part, including the acceptance of boarders or bedspacers, without the written consent of the owner/lessor; (b) Arrears in payment of rent for a total of 3 months: Provided, That in the case of refusal by the lessor to accept payment of the rent agreed upon, the lessee may either deposit, by way of consignation, the amount in court, or with the city or municipal treasurer, as the case may be, or in a bank in the name of and with notice to the lessor, within one month after the refusal of the lessor to accept payment. The lessee shall thereafter deposit the rent within 10 days of every current month. Failure to deposit the
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.
Prepared by: ALCOBILLA, Irene Mae. OCFEMIA, Rea Nina. SOLA, Camille. 2-S 2011-2012. REFERENCES: De Leon, H. Pineda, E.