Lease

A contract of lease is an agreement whereby one not important, hence important; generally,
person (lessor) binds himself to grant temporarily the the laborer is entitled price is not payable ‘til
enjoyment or use of a thing or to render some work or to be paid even if work is completed, and
service to another (lessee) who undertakes to pay rent, there is destruction of can’t be lawfully
compensation or price therefor. (De Leon) the work through demanded if the work is
fortuitous event destroyed before it is
LEASE SALES finished & accepted

GENERAL RULE (GR): Consumable goods cannot

1. only use or enjoyment 1. ownership is transferred be the subject matter of a contract of lease of things.
is transferred EXCEPTIONS (EXC):
2. transfer is temporary 2. transfer is permanent a. If they are merely exhibited; OR
3. lessor need not be 3. seller must be the b. If they are accessory to an industrial
the owner owner upon delivery establishment. (1645)
4. Price, distinguished 4. usually, the selling
from rent, is usually price is mentioned PERSONS DISQUALIFIED TO BECOME LESSEE
not mentioned 1. Husband and wife (1490); AND
LEASE USUFRUCT 2. Those with fiduciary relationship (1491)

1. Ownership (lessor’s
part) is not necessary
2. Generally, a personal
right.
3. It may be created by
contract as a general rule
4. It is limited to the use
specified in the contract.
5. Its term is generally for
a definite period
6. Lessee has no duty to
make repairs or pay taxes
7. Lessee can’t constitute
a usufruct of thing leased
Lease
of Things
1. object of contract is a
thing
2. lessor has to deliver
the thing leased
3. in case of breach, there
can be an action for
specific performance
1. Lease
of Service
2. important object:
labor (performed by
lessor)
3. the result is generally
1. Ownership (grantor’s
part) is necessary.
2. Always a real right
3. created by law, contract,
last will or prescription
4. Includes all possible use
and enjoyment of the thing
5. its term may be for an
indefinite period.
6. Usufructuary has duty to
make repairs and pay tax.
7. Usufructuary may
constitute a sublease
Lease of Work / Service
1. object is some work
or service
2. lessor has to perform
some work or service
3. in case of breach, no
action for specific
performance
Contract (piece of work)
1. the important object is
the work done
2. the result is generally
RECORDING OF LEASE
GR: Lease of real property is personal right.
EXC: Lease partakes the nature of real right if:
a. Lease of real property is more than 1 year
b. Lease of real property is registered regardless
of duration
SUBLEASE
- a separate and distinct contract of lease wherein the
original lessee becomes a sublessor to a sublessee.
 Sublease is allowed unless expressly prohibited.
ASSIGNMENT OF LEASE
SU
BL
EA
SE
1. there are two leases 1. there is only one
and two distinct juridical juridical relationship, that
relationships although of the lessor and the
immediately connected assignee, who is
and related to each other converted into a lessee
2. the personality of the 2. the personality of the
lessee does not lessee disappears
disappear
3.the lessee does not 3. the lessee transmits
transmit absolutely his absolutely his rights to the
rights and obligations assignee
4. the sublessee does not 4. the assignee has a
have any direct action direct action against the
against the lessor lessor
WHEN SUBLESSEE IS LIABLE TO THE LESSOR:

GROUP 6 Baldado, Hazel Lynn C. Diana, Eulla Magdalene T. Malilay, Marygrace P.

Reporters Chan, Ellen Joy D. Jaramillo, Gamaliel T. Paracuelles, Jose Rodel G.
 Lease
1. All acts which refer to the use and preservation of
the thing leased in the manner stipulated between the
lessor and the lessee (1651);
2. The sublessee is subsidiarily liable for any rent due.
However, the sublessee shall not be responsible
beyond the amount of rent due from him (1652).
Note: the lessor has an accion directa against the
sublessee for unpaid rentals and improper use of the
subleased property.
Accion Directa – direct action which the lessor may
bring against the sublessee
OBLIGATIONS OF THE LESSOR (1654)
1. to deliver the thing which is the object of the
contract in such condition as to render it fit for the use
intended;
2. to make all the necessary repairs on the thing; and
3. to maintain the lessee in the peaceful and adequate
enjoyment of the lease for the entire contract duration.
OBLIGATIONS OF THE LESSEE (1657)
1. To pay the price of the lease (terms stipulated);
2. To use thing leased as a diligent father of a family;
3. Pay the expenses for the deed of lease;
4. Notify the lessor of: (1663)
a. Usurpation or untoward acts; AND/OR
b. need for repairs.
5. Return the thing leased upon termination of the
lease. (1665)
Note: Upon return of the thing, the lessee shall not be
liable for loss or impairment due to:
a. Lapse of time; OR
b. Ordinary wear and tear; OR
c. Inevitable cause.
SUSPENSION OF PAYMENT OF RENT (1658)
1. Lessor fails to make the necessary repairs; OR
2. Lessor fails to maintain the lessee in the peaceful
and adequate enjoyment of the property leased.
TRESPASS IN LEASE (1664)
1. Mere act of trespass (disturbance in fact);
2. Trespass in law: Here, lessor will be held liable.
TERMINATION OF THE LEASE
✓ If the lease was made for a determinate time, it
ceases upon the day fixed without the need of a
demand. (1669)
IMPLIED NEW LEASE (Tacita Reconducion)
✓ Requisites:
a.The term of the original contract has expired;
GROUP 6 Baldado, Hazel Lynn C.
Reporters Chan, Ellen Joy D.
b.The lessor has not given the lessee a notice to
vacate; AND
c. The lessee continued enjoying the thing leased for
fifteen (15) days with the acquiescence of the
lessor.
✓ when there is no implied new lease:
a. Stipulation against implied renewal of lease;
b. Invalidity of original lease;
c. Acceptance of rentals beyond original term;
d. Acceptance of rentals less than amount stipulated;
AND
e. Nonpayment of rentals.
GROUNDS FOR EJECTMENT (1673)
1. Expiration of the period;
2. Lack of payment of the price stipulated;
3. Violation of any condition/s agreed upon;
4. Unauthorized use or service of the thing.
STATUTES REGULATING RENTALS OF CERTAIN
RESIDENTIAL UNITS
- PD 20 (Oct. 12, 1972) - RA 8437 (Dec. 22, 1997)
- BP 25 (April 10, 1979) - RA 9161 (Dec. 22, 2001)
- BP 877 (June 6, 1985) - RA 9345 (Dec. 21, 2005)
- RA 6643 (Dec. 28, 1987) - RA 9653 (July 14, 2009)
- RA 7644 (Dec. 28, 1992)
 The common feature of these laws is the suspension
of the application of Article 1673 (1) of the Civil Code
(except when the lease is for a definite period) during
the period of their effectivity, to lease of a dwelling unit
or of land on which another’s dwelling is located.
PURCHASE OF THE LEASED PROPERTY
GR: Purchaser can terminate the lease (1676)
EXC: 1. Lease is recorded in Registry of Property;
2. There is stipulation in the contract of sale that
purchaser shall respect the lease;
3. Purchaser knows the existence of lease;
4. Sale is fictitious; OR
5. Sale is made with right of redemption (1677)
SPECIAL PROVISIONS FOR RURAL LANDS
✓ Effect of Loss due to fortuitous event: (1680)
1. Ordinary fortuitous event - no reduction
2. Extraordinary fortuitous event
a. If more than ½ of the fruits were lost, there shall
be a reduction, unless otherwise stipulated.
b. if ½ or less, there shall be no reduction.
✓ Lease Duration: If not fixed
“all the time necessary for the gathering of fruits which
the whole estate leased may yield in 1 year, or which
it may yield once. (1682)
Diana, Eulla Magdalene T. Malilay, Marygrace P.
Jaramillo, Gamaliel T. Paracuelles, Jose Rodel G.
 Lease

SPECIAL PROVISIONS FOR URBAN LANDS

✓ Repairs for which urban lessor is liable: (1680)
1. Special stipulation
2. If none, custom of the place
3. in case of doubt, repairs chargeable to lessor
✓ Lease Duration: If not fixed, apply the following:
a. If rent is paid daily: day to day
b. If rent is paid weekly: week to week
c. If rent is paid monthly: month to month
d. If rent is paid yearly: year to year (1687)

GROUP 6 Baldado, Hazel Lynn C. Diana, Eulla Magdalene T. Malilay, Marygrace P.

Reporters Chan, Ellen Joy D. Jaramillo, Gamaliel T. Paracuelles, Jose Rodel G.