copy of lease

8/4/2019 Copy of Lease

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lease reviewer 2011

Sales and lease comments and cases by hector de leon, UP, Ateneo and San beda civil law

reviewer | jen_biltz_albano/2011

CONTRACT OF LEASE

a contract by which one person binds himself to grant

temporarily, the use of a thing or the rendering of someservice to another who undertakes to pay some rent,

compensation, or price.

CHARACTERISTICS: (lease of things)

1. Consensual

2. Principal contract

3. Nominate

4. Subject matter must be within the commerce of man

5. Purpose should not be minimal

6. Onerous

7. Period is temporary

8. Period may be definite or indefinite

9. Lessor need not be the owner

RENT

The compensation either in money, provisions, chattels or

labor, received by the lessor from the lessee.


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REQUISITES:

1. Must not be fictitious or nominal otherwise the contract

is considered essentially gratuitous2. Must be capable of determination

3. May be in the form of products, fruits, construction; as

long as it has value

WHEN LEASE OF REAL PROPERTY IS REAL RIGHT

Generally, a lease of real property is a personal right. Exceptions:

1. If it is for more than one year and to be enforceable it must be in

writing

2. If it is registered with Registry of Property, regardless of its period

EFFECTS IF LEASE OF REAL PROPERTY IS NOT REGISTERED:

1.The lease is not binding on third persons;2. Such third person is allowed to terminate the lease in case he

buys the property from the owner-lessor;

3. Actual knowledge of existence and duration of lease, isequivalent to registration;

4. Stranger knows of the existence of the lease, but was led tobelieve that the lease would expire soon or before the new lease infavor of him begins, the stranger can still be considered innocent.


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KINDS OF LEASE

1.Lease of things or properties whether immovable or movableproperty

one of the parties binds himself to give to another theenjoyment or use of a thing

for a price certain for a period which may be definite or indefinite But in no case will the period exceed 99 years.

WHAT CAN BE THE SUBJECT OF A LEASE- Only things which are within the commerce of man; lease ofproperties belonging to the public domain cannot be proper

subjects of lease; such contracts are void.

PERSONS DISQUALIFIED TO BECOME LESSEES:

(a) Husband and wife cannot lease to each other their separateproperties (exception: separation of property)(b) Those disqualified due to fiduciary relationship- Guardian: ward- Agent: principal

- Executor & administrators- Public officer: state property- Justices, judges: property under litigation- Others disqualified by law

LEASEBY FILIPINOS- may lease lands of public domain with an area of 500 has. andmay acquire not more than 12 has.

LEASE BY CORPORATIONS- at least 60% Filipino-owned, may lease lands ofpublic domainfora period of 25 years, renewable for not more than 25 years; the areanot to exceed more than 1,000 has. [One thousand Hectares]


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RULE ON LEASE OF THINGS WHEN LESSEE IS AN ALIEN

(a) 99-year limit applies to aliens as long as it is a lease ofpersonalproperty

(b) Aliens CANNOT lease public lands, and cannot acquire privatelands except through succession

(c) If lease of real property (private lands), maximum of 25 yearsrenewable for another 25 years (P.D.713)

(d) Under the Investors Lease Act of 1995, the 25-year period wasextended to 50 years renewable for another 25 years provided the

following conditions are met:

lessee must make investments lease is approved by DTI if terms are violated, DTI can terminate it

NOTE: the ILA did not do away with P.D. 713, under ILA the

consent of DTI is required while in P.D. 713 it is not.

FORM OF CONTRACT OF LEASE OF THINGS- may be made orally but if the lease of real property is for morethan one year, it must be in writing under the statue of frauds [stillvalid but unenforceable]NOTE: - Owner has the right t fix the rent because the contract isconsensual and not imposed by law- Increasing the rent is NOT an absolute right of the lessor

- If the rent is fixed for the first time, courts cannot interfere; but ifit is a renewal, the courts can settle the disagreements


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Lease of work which refers to contract for a piece of work- one of the parties binds himself to produce a result out of his workor labor and the other party binds himself to pay a remunerationtherefor.

DUTIES OF CONTRACTOR WHO FURNISHES WORK &MATERIAL:

(a) duty to deliver

(b) duty to transfer ownership

(c) duty to warrant eviction and hidden defects

REMEDY OF EMPLOYER IN CASE OF DEFECTS:- ask contractor to remove the defect or to execute another work; ifcontractor fails or refuses, employer can ask another at thecontractors expense

Lease of service-one party binds himself to render some service to the other partyconsisting his own free activity of labor, and not its result and the

other party binds himself to pay a remuneration therefor.

3 KINDS:a. householdb. contract of laborc. common carriers

Lease of things

(1) Concept

Art. 1643. In the lease of things, one of the parties binds

himself to give to another the enjoyment or use of a thing


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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.

(2) Consumable things cannot be the subject matter of

lease, Except

(a) Consumables only for display

or advertising. e. g. Wedding cakes for display in

Goldilocks, wine in a showcase of a store

(b) Goods are accessory to an industrial establishment

e.g., coal in a factory

(3) Special characteristics of lease of things;

(a) Essential purpose is to transmit the use and

enjoyment of a thing

(b) Consensual

(c) Onerous

(d) Price fixed in relation to period of use or enjoyment

(e) Temporary


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LEASE OF SERVICE DISTINGUISHED FROM PIECE OF WORK

LEASE OF SERVICE Contract for aPIECE OF WORK

The important object is thelabor performed by the lessor

The important object is thework done

The result is generally notimportant, hence the laboreris entitled to be paid even ifthere is destruction of the

work through fortuitous event

The result is generallyimportant; generally, the priceis not payable until the workis completed, and said pricecannot be lawfully demandedif the work is destroyed beforeit is finished and accepted

LEASE OF THINGS DISTINGUISHED FROM SERVICES:

LEASE OF THINGS LEASE OF SERVICES

Object of the contract is athing

Object is some work

Lessor has to deliver thething leased

Lessor has to perform somework or service

In case of breach, there canbe an action

In case of breach, no actioncan be taken


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LEASE OF SERVICES DISTINGUISHED FROM AGENCY

LEASE DISTINGUISHED FROM SALE:

LEASE SALE

Only the enjoyment or use istransferred

Ownership is transferred

Transfer is temporary Transfer is permanent

The lessor need not be theowner

Seller must be the owner orat least authorized by the

owner at the time it isdelivered

Price of the matter is notusually mentioned, beingimmaterial

Price of the thing is usuallyfixed in the contract

LEASE OF SERVICES AGENCY

It is based on employment The lessor of services doesnot represent his employernor does he execute juridicalacts

It is based on representationAgent represents his principaland enters into juridical acts

Principal contract Preparatory contract


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**In case of doubt, the intention of the parties is an

important factor in determining the contract entered into.

LEASE DISTINGUISHED FROM COMMODATUM:

LEASE COMMODATUM

Consist of cession of the useof a thing to another

Consist of cession of the useof a thing to another

It is onerous Essentially gratuitous

LEASE DISTINGUISHED FROM USUFRUCT

LEASE USUFRUCT

Ownership is not necessary Ownership is necessary

It is generally a personalright and is a real right onlyby exception

It is always a real right

It is limited to the usespecified in the contract

it includes all possible usesand enjoyment of the thing


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Lessor places and maintainsthe lessee in the peaceful

enjoyment of the thing

Owner allows theusufructuary to use and

enjoy the property

Its term is generally fora definite period

Its term may be for anindefinite period

It may be created bycontract as a generalrule

It may be created by law,contract, last will orprescription

Lessee has no duty tomake repairs

Usufructuary has duty tomake repairs

Lessee has no duty topay taxes

Usufructuary has duty topay taxes

Lessee cannotconstitute a usufruct ofthe property leased

Usufructuary mayconstitute a sublease


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LEASE DISTINGUISHED FROM MUTUUM

LEASE MUTUUM

Owner does not lose hisownership

Loses ownership of the thingloaned which becomes theproperty of the borrower ordebtor

Lessor lessee relationship Creditor/ debtor or obligee/obligor relationship

Real or personal property Only money or any otherfungible things

Governed by statute offrauds

Not governed

Not governed Governed by usury law

**Simple loan may be gratuitous or with a stipulation

(art.1933) **

PRICE IN LEASE:

ts, or in some other

useful things; some other prestation

- when the price consists of acertain percentage of the fruits obtained from the thing.

But is regarded as having the character more of a

partnership rather than a lease.


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Amount of Rent

the parties are not able to fix the price, or the basis for

its determination, the contract is ABSOLUTELY VOID. Ifthe lessee has entered upon the possession and enjoyment

of the thing, he will be liable for the damages for the

occupation of the thing.

PERIOD OF LEASE:

When the lease is for such time as the lessor or lesseemay please, it is considered as on for life, ending upon

the death of the party who would have terminated the

contract.

CANNOT be perpetual- there must always be a period,which may be definite or indefinite

If the period is indefinite, and the thing leased is ruralland, art.1682 shall apply; if it is urban land art. 1687

governs.

If the thing is neither rural nor urban land, theprovisions of the two articles should be applied by

analogy.

RURAL LAND

Art. 1682. The lease of a piece of rural land, when its

duration has not been fixed, is understood to have been for

all the time necessary for the gathering of the fruits which

the whole estate leased may yield in one year, or which it


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may yield once, although two or more years have to elapse

for the purpose.

URBAN LANDArt. 1687. If the period for the lease has not been fixed, it is

understood to be from year to year, if the rent agreed upon

is annual; from month to month, if it is monthly; from week

to week, if the rent is weekly; and from day to day, if the

rent is to be paid daily.

Rent Courts can fix a longer term

Monthly lessee occupied premises formore than a year

Weekly lessee has been inpossession for over sixmonths

Daily lessee has stayed in the

place for over one month

CAPACITY OF LESSEE

Those who are disqualified to buy certain things cannot

lease such things. (ART.1646, 1490,1491)

Lease of Real Estate

Every lease of real estate may be recorded in the Registry of

Property to be binding upon 3rd persons.


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Purchase of Leased Land

here a purchaser of land at the time of the purchase

has FULL KNOWLEDGE of the fact that the land has beenleased to a third person, he is BOUND to respect said lease,

although it is not recorded upon the certificate of title.

ASSIGNMENT OF LEASE

Art. 1649. The lessee cannot assign the lease without the

consent of the lessor, unless there is a stipulation to the

contrary.

However, a mere transfer of rights of the lessee, andnot of the contract itself, would not require the lessors

consent, unless there is an express stipulation to the

contrary.

SUBLEASE

Art. 1650. When in the contract of lease of things there isno 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.


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ASSIGNMENT OF LEASE VS. SUBLEASE:

Assignment of lease Sublease

There is a transfer to a thirdperson of the rights andobligations arising from thelease contract

Merely another contract oflease, where the originallessee becomes in turn alessor

A sale of the lessees rights,

and when the lessor giveshis consent, the original

lessee is released

Even when the lessorconsents to the sub-lease,the original lease contract

subsists and is binding onthe lessee

Succession by particulartitle to one contract of lease

Juxtaposition of 2 leases

Lessee remains a party inthe contract

Lessee is disassociated fromthe original contract of lease

Sublessee does not have anydirect action against the

lessor

Assignee has a direct actionagainst the lessor, there

being novationSubleasing is allowed unlessthere is an expressprohibition

Assignment is not allowedunless the lessor gives hisconsent

(1) Remedy when property is subleased despite prohibition:

rescission and damages, or damages only.

(2) When in the contract of lease, there is no express

prohibition; the lessee may sublet the thing leased, in


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whole or in part, without prejudice to his responsibility for

the performance of the contract toward the lessor.

(a) House Rental Law (RA 877) there is a presumptionthat there would be no sublease unless the lessor allows it

(b) obligation of sublessee to lessor

SUBLEASE- a lessee may sublease the thing unless there is an expressprohibition to do so- if the prohibition to sublease is not express but only implied, thesublease will still be allowed- remedy of lessor if lessee violates prohibition: action for rescissionof the lease and may seek for damages- duration of sublease cannot be longer than that of the lease towhich it is dependent

RESPONSIBILITIES OF A SUBLESSEE TO THE LESSOR:1. for all acts which affect the use and preservation of the thingleased2. for any rent due to the lessor from the lessee which the latter

failed to pay- the lessor must collect first form the lessee- if the lessee is insolvent, the sublessee becomes liable (subsidiaryliability)

LEASE DISTINGUISHED FROM DEPOSIT:

LEASE DEPOSIT

Enjoyment or use of thingleased is the essentialpurpose

the safekeeping of the thingdelivered is the principalpurpose

The lessor cannot demandthe thing leased before theexpiration of the contract

The depositor can demandthe return of the subjectmatter at will


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Both movable andimmovable may be the object

Only movable may be theobject

Onerous Gratuitous

Consensual Real contract perfected uponthe delivery of the objectthereof

LEASE OF CHATTELS DISTINGUISHED FROM EMPLOYMENT:

LEASE OF CHATTELS EMPLOYMENT

Lessor and lessee relationship Employee employer relationship

Loses control or management of

the chattel

Retains control or management

over his chattelNo control or supervision overthe lessee

Exercises control andsupervision over his employee

Lessee pays rent to the lessor forthe enjoyment or use of thechattel

Employer pays wage or salary forthe services of the employee

LEASE OF WORK/SERVICE DISTINGUISHED FROM PARTNERSHIP:

LEASE OF WORK PARTNERSHIP

No principle of representation Every partner is an agent of thepartnership for the purpose of itsbusiness

Lessor performs a material actfor the benefit of the employer

Partners enter into commercialor business transactions for therealization of profits

Only 2 persons are involved Juridical personality separate

and distinct from that of each ofthe partner is formed

Work/service is dependent uponthe ends or purpose of the lessee

Partners perform acts conduciveto their own business purposes


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OBLIGATIONS OF THE LESSOR (Art. 1654)

1. to deliver the thing which is the object of the contract in suchcondition as to render it fit for the use intended;

2. to make on the same during the lease all the necessary repairs inorder to keep it suitable for the use to which it has been devoted,unless there is a stipulation to the contrary;

3. to maintain the lessee in the peaceful and adequate enjoyment ofthe lease for the entire duration of the contract.

4. Not to alter the form

o REPAIRS implies the putting back of something in thecondition in which it was originally

o IMPROVEMENT is the adding of something new thereto,hence, the filling of a vacant lot is not a repair nor theconstructions of a house.

- It is the duty of the lessee to give NOTICE of the need ofrepairs to the lessor, and he shall be liable for the

damages which by his neglect may be suffered by theowner.- lessor is NOT bound to make repairs caused by the lessee

himself.

Effect of Urgent Repairs

During the lease it should become necessary to make someurgent repairs upon the thing leased, which cannot bedeferred until the termination of the lease, the lessee isobliged to tolerate the work.

If the repair lasts for more than 40 days, the rent shall bereduced in proportion to the time-including the 40 days-


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and the part of the property of which the lessee has beendeprived.

When the work is of such a nature that the portion whichthe lessee and his family need for their dwelling becomes

uninhabitable, he may rescind the contract if the mainpurpose of the lease is to provide a dwelling for the lessee.

If after having been notified, the lessor fails to make urgentrepairs, the lessee, to avoid imminent danger, may order therepairs at the lessors expense.

Dangerous Conditions:

The lessee may terminate the lease at once by notifying thelessor, even if at the time the contract was perfected theformer knew of the dangerous condition or waived the right torescind the lease on account of the condition.

Alteration

Art. 1661. The lessor cannot alter the form of the thing leased insuch a way as to impair the use to which the thing is devoted underthe terms of the lease.

TRESPASS IN LEASE

o Trespass in fact (perturbacion de mere hecho)- Physical enjoyment is reduced- Lessor will not be held liable

o Trespass in law (perturbacion de derecho)- A third person claims legal right to enjoy the premises- Lessor will be held liable


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OBLIGATIONS OF THE LESSEE (Art. 1657)

1. pay the price of the lease according to the terms stipulated;

2. use the thing leased as a diligent father of a family devoting it tothe use stipulated, and in the absence of stipulation, to that whichmay be inferred from the nature of the thing leased, according tothe custom of the place;

3. pay the expenses for the deed of lease.

Pay Rent

ises only when the contract has been actually carried into effectby the delivery of the thing leased to the lessee for the purposestipulated in the contract.

Increase and Decrease of Rent

net of the assessed violation of the property

Failure to Pay for Rent

ction, recover the unpaid rent, plus accrued legal interestthereon at the rate of 6% per year.

Place and Time

ayment of rent shall be made at the domicile of the lessee; andwith respect to the time, the custom of the place shall be followed.


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Use the Thing Leased as a Diligent Father

o Standard: diligent father of a family, in the absence ofstipulation, to that which may be inferred from the nature of

the thing leased, according to the custom of the place.o The lessee is responsible for the deterioration of the thing

leased, unless he proves that it took place without his fault.oThe lessee is liable for any deterioration caused by members of

his household and by his guest and visitors.

Pay Expenses for the Deed of Lease (Art. 1662-1667)o Right of lessee to suspend payment of rentals

Art. 1658. The lessee may suspend the payment of the rent in casethe lessor fails to make the necessary repairs or to maintain thelessee in peaceful and adequate enjoyment of the property leased.

o Right to ask for rescissionLiability for Breach of Duties

o If the lessor or lessee should not comply with the obligation setforth in ART 1654 and 1657, the aggrieved party may ask for:

(1) rescission of the contract;

(2) indemnification for damages;

(3) only damages, allowing the contract to remain in force

o The lessor cannot be held responsible for damages fromdefects unknown to both parties.


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Alternative Remedies

o Performance of the contract and rescissiono In either case, the aggrieved party is entitled to such damages

but may not upon rescission of the contract recover thedamages that are appropriate only where the performance isdemanded.

Rescission of the Contract

Where the plaintiff alleges and submits proof that the defendantis in possession of a parcel of land as lessee, and the latter has notpaid the proper rents, he may be compelled, by reason of his

inability to pay to:

(1) return the leased property;

(2) the lessor has a right to rescind the contract;

(3) recover the unpaid rents

(4) eject the tenant from the land

oThe execution of the deed shall be equivalent to delivery butthis is a rebuttable presumption.

o If the thing leased has never been placed in possession of thelessee, he has the remedy of rescission.

Enforcement of Lease

o Where the lessor resumes possession of his leased property forits protection after the lessee has abandoned the same, thelessor has still the right to hold the lessee responsible until thetermination of the lease.


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Termination of Lease

(1) by the expiration of the period;

(2) by the total loss of the thing;

(3) by the resolution of the right of the lessor, such as when thelessor is usufruct is terminated;

(4) by the will of the purchaser or transferee of the things;

(5) by rescission due to non-performance of the obligation of one ofthe parties.

Period

o If at the end of the contract the lessee should continueenjoying the thing leased for fifteen days with the acquiescenceof the lessor, and unless a notice to the contrary by eitherparty has previously given, it is understood that there is animplied new lease, not for the period of the original contractbut for the time established in art. 1682(rural) and

1687(urban)

o When the parties have made no agreement and the tenantremains in possession with the acquiescence of the lessor for15 days after the expiration of the term, the duration of thetenancy is governed by article 1682 and 1687.

GROUNDS FOR EJECTMENT

1. when the period agreed upon or that which is fixed for theduration of leases (see 1682, 1687) has expired;

2. lack of payment of the price stipulated;


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3. violation of any of the conditions agreed upon in the contract;

4. when the lessee devotes the thing leased to any use or service notstipulated which causes the deterioration thereof.

5. (1657, par. 2)-to use the thing leased as a diligent father of afamily, devoting it to the use stipulated; and in the absence ofstipulation, to that which may be inferred from the nature of thething leased, according to the custom of the place;

Warranty of Lessor:

IN the cases where the return of the price is required,REDUCTION shall be made in proportion to the time duringwhich the lessee enjoyed the thing.

Art. 1547, 1555, 1561, 1566, 1567, 1568, 1569 Liability for the warranty is not equivalent to liability in

damages.

The lessor is liable for the warranty of the thing leased againstany hidden defects it may have, even when UNKNOWN to saidlessor.

But this liability for warranty of the thing leased does notamount to an obligation to indemnify the tenant for damages,which is only to be allowed, when lessor acted with fraud andin bad faith by concealing the defect and not revealing it to thelessee.

Tacit Renewal

o The fifteen-day period which brings about a tacit renewal ofthe lease, is not applicable to successive renewals.


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Judicial Ejectment

o The lessor may judicially eject the lessee for any of thefollowing causes:

(1) When the period agreed upon, or that which is fixed for theduration of leases under Art 1682 (rural) and 1687(urban), hasexpired;

(2) Lack of payment of the price stipulated;

(3) Violation of any of the conditions agreed upon in the contract;

(4) When the lessee devotes the thing leased to any use or servicenot stipulated which causes the deterioration thereof, or if he doesnot observe due diligence in its use.

o When the lease contract does not have a definite period, but isterminable upon 30 days notice, the lease will terminate uponthe expiration of 30 days from the receipt of notice, whetherthe termination coincides with the rent day or not.

o The landlord has the right to increase the rent after theexpiration of the stipulated period. And if no period isstipulated, in a lease of urban property, notice by the lessor ofan increase in rent is equivalent to notice of termination of theoriginal agreement.

PROPERTY

copy of lease

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