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ATENEOCENTRALBAROPERATIONS 2007

Civil LawSUMMER REVIEWER

Adviser:Dean Cynthia Roxas-Del Castillo; Heads:Joy Marie Ponsaran, Eleanor Mateo; Understudies:Joy StephanieTajan, John Paul Lim

LEASE

CHARACTERISTICS: (lease of things)1. Consensual2. Principal contract3. Nominate4. Subject matter must be within the commerce of

man

5. Purpose should not be minimal6. Onerous7. Period is temporary8. Period may be definite or indefinite9. Lessor need not be the owner

Requisites:1. must not be fictitious or nominal otherwise the

contract is considered essentially gratuitous

2. must be capable of determination3. may be in the form of products, fruits,

construction; as long as it has value

LEASE DISTINGUISHED FROM USUFRUCT

L E A S E USUFRUCT

Ownership on the partof the lessor is notnecessary to constitutea contract of lease

Ownership of the thing onthe part of the grantor isnecessary to constitute ausufruct

It is generally apersonal right and is areal right only by

exception

It is always a real right

It is limited to the usespecified in thecontract

It includes all possibleuses and enjoyment ofthe thing

Lessor places andmaintains the lessee inthe peacefulenjoyment of the thing

Owner allows theusufructuary to use andenjoy 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 not duty tomake repairs

Usufructuary has duty tomake repairs

Lessee has not duty topay taxes

Usufructuary has duty topay taxes

Lessee cannotconstitute a usufruct ofthe property leased

Usufructuary mayconstitute a sublease

CONTRACT OF LEASE a contract by whichone person binds himself to grant temporarily,the use of a thing or the rendering of someservice to another who undertakes to paysome rent, compensation, or price.

WHEN LEASE OF REAL PROPERTY IS REALRIGHTGenerally, a lease of real property is a personalright.Exceptions:

1. if it is for more that one year and to beenforceable it must be in writing

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

EFFECTS IF LEASE OF REAL PROPERTY ISNOT REGISTERED:RENT the compensation either in money,

provisions, chattels or labor, received by thelessor from the lessee

1. the lease is not binding on third persons;2. such third person is allowed to terminate

the lease in case he buys the propertyfrom the owner-lessor;

3. actual knowledge of existence andduration of lease, is equivalent to

registration;4. stranger knows of the existence of the

lease, but was led to believe that thelease would expire soon or before the newlease in favor of him begins, the strangercan still be considered innocent.

KINDS OF LEASE

1. Lease of things or properties whetherimmovable or movable property

one of the parties binds himself to give toanother the enjoyment 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 ofman; lease of properties belonging to thepublic domain cannot be proper subjects oflease; such contracts are void.


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Civil Law Summer Reviewer

ATENEOCENTRALBAROPERATIONS2007

Page 155 of 297

PERSONS DISQUALIFIED TO BECOMELESSEES:

(a) husband and wife cannot lease to each othertheir separate properties (exception:separation of property)

(b) those disqualified due to fiduciaryrelationship- guardian: ward- agent: principal- executor & administrators- public officer: state property- justices, judges: property under

litigation- others disqualified by law

LEASE BY FILIPINOS- may lease lands of public domain with an areaof 500 has. and may acquire not more than 12has.

LEASE BY CORPORATIONS- at least 60% Filipino-owned, may lease lands ofpublic domain for a period of 25 years, renewablefor not more than 25 years; the area not toexceed more than 1,000 has. [one thousandhectares]

RULE ON LEASE OF THINGS WHEN LESSEEIS AN ALIEN

(a) 99-year limit applies to aliens as long as it isa lease of personal property

(b) aliens CANNOT lease public lands, and

cannot acquire private landsexcept through succession

(c) if lease of real property (private lands),maximum of 25 years renewable for another25 years (P.D. 713)

(d) under the Investors Lease Act of 1995, the25-year period wasextended to 50 years renewable for another25 years provided the following conditionsare met:

i. lessee must make investmentsii. lease is approved by DTIiii. if terms are violated, DTI can

terminate itNOTE: the ILA did not do away with P.D. 713, underILA the consent of DTI is required while in P.D. 713 itis not.

FORM OF CONTRACT OF LEASE OF THINGS- may be made orally but if the lease of real

property is for more than one year, it mustbe in writing under the statue of frauds [stillvalid but unenforceable]

NOTE: - Owner has the right t fix the rentbecause the contract is consensual andnot imposed by law

- Increasing the rent is NOT an absoluteright of the lessor

- If the rent is fixed for the first time, courtscannot interfere; but if it is a renewal, thecourts can settle the disagreements

2. Lease of work which refers to contract fora piece of work- one of the parties binds himself to produce aresult out of his work or labor and the otherparty binds himself to pay a remunerationtherefor.

DUTIES OF CONTRACTOR WHOFURNISHES WORK & MATERIAL:(a) duty to deliver(b) duty to transfer ownership(c) duty to warrant eviction and hidden

defects

REMEDY OF EMPLOYER IN CASE OFDEFECTS:

- ask contractor to remove the defect orto execute another work; if contractorfails or refuses, employer can askanother at the contractors expense

3. Lease of service-one party binds himself to render someservice to the other party consisting his ownfree activity of labor, and not its result and the

other party binds himself to pay aremuneration therefor.3 KINDS:a. householdb. contract of laborc. common carriers

CONTRACT OFPIECE OF WORK(Locatio Operis)

CONTRACT OFLEASE OF SERVICE(Locatio Operarum)

The object of contractis the result of thework without

considering the laborthat produced it

The object of contract isthe service itself andnot the result which it

generates

If the result promisedis not accomplished,the lessor orpromissor is notentitled tocompensation

Even if the resultintended is not attained,the services of thelessor must still be paid


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OBLIGATIONS OF THE LESSOR (Art. 1654)1. to deliver the thing which is the object of the

contract in such condition as to render it fit for theuse intended;

2. to make on the same during the lease all the

necessary repairs in order to keep it suitable forthe use to which it has been devoted, unlessthere is a stipulation to the contrary;

3. to maintain the lessee in the peaceful andadequate enjoyment of the lease for the entireduration of the contract.

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 to the use stipulated, and in theabsence of stipulation, to that which may beinferred from the nature of the thing leased,according to the custom of the place;

3. pay the expenses for the deed of lease.

GROUNDS FOR EJECTMENT1. when the period agreed upon or that which is

fixed for the duration of leases (see 1682, 1687)has expired;

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 service not stipulated which causes thedeterioration thereof.

5. (1657, par. 2)

SUBLEASE- a lessee may sublease the thing unless there is

an express prohibition to do so- if the prohibition to sublease is not express but

only implied, the sublease will still be allowed- remedy of lessor if lessee violates prohibition:

action for rescission of the lease and may seekfor damages

- duration of sublease cannot be longer than thatof the lease to which it is dependent

DISTINGUISH A SUBLEASE FROM ANASSIGNMENT OF A LEASE

SUBLEASE ASSIGNMENT

Lessee remains aparty in the contract

Lessee is disassociatedfrom the originalcontract of lease

Sublessee does nothave any directaction against thelessor

Assignee has a directaction against thelessor, there beingnovation

Subleasing isallowed unless thereis an expressprohibition

Assignment is notallowed unless thelessor gives his consent

RESPONSIBILITIES OF A SUBLESSEE TOTHE LESSOR:1. for all acts which affect the use and

preservation of the thing leased2. 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 (subsidiary liability)

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