UST Golden Notes 2011

LEASE
LEASE
Q:Whatiscontractoflease?
A: A contract by which one of the partiesagrees

to give the other for a fixed time and price the
useorprofitofathingorofhisservicetoanother
whoundertakestopaysomerent,compensation
orprice.
Q: What are the characteristics of a contract of

lease?
A:
1. Consensual;
2. Bilateral;
3. Commutative;
4. Principalcontract;
5. Nominate;
6. Subject matter must be within the
commerceofman;
7. Purposeistoallowenjoymentoruseof
athing;
8. Purpose to which the thing will be
devotedshouldnotbeimmoral;
9. Onerous;
10. Periodistemporary;
11. Period may be definite or indefinite;
and
12. Lessorneednotbetheowner.
Q:Whatarethekindsoflease?
A:
1. Leaseofthings(immovable/movable)
Oneofthepartiesbindshimselftogive
to another the enjoyment or use of a
thingforapricecertain.
Period: definite or indefinite but not

morethan99years.(Art.1634)
Note: It may be made orally but if the

leaseofrealpropertyisformorethanone
year,it must beinthewriting (Statute of
Frauds).
Statute of Frauds requires certain

agreements to be in writing before they
can be proved and enforced in a judicial
action. However, noncompliance does
notmaketheoralcontractvoid.Theonly
effect is that no action for the
enforcement of the contract can be
proved.Moreover,therighttoinvokethe
StatuteofFraudsmaybewaivedbyfailure
to object to the presentation of oral
evidence, or by cross examining the
witnessontheissue.(Pineda,Obligations
andContracts,pgs.577,579,580)
2.
Lease of work (contract for a piece of

work)Oneofthepartiesbindshimself
to produce a result out of his work or
laborforacertainprice.
Note:Dutiesofacontractorwhofurnishes
workandmaterials:
1. todeliver;
2. totransferownership;and
3. to warrant eviction and hidden
defects.
Remedyofemployerincaseofdefects:
1. Ask contractor to remove the
defect or to execute another
work;
2. If contractor fails or refuses,
employer can ask another at
thecontractorsexpense.
3.
Lease of service One party binds

himself to render to the other some
serviceforapricecertain.
Q:Whenisleaseconsideredacontractofsale?
A: A lease of personal property with option to

buy, where title is transferred at the end of the
contractprovidedrentshavebeenfullypaid.
Q:Distinguishleasefromsale.
A:
LEASE
Onlytheuseor
enjoymentistransferred
Transferistemporary
Lessorneednottobethe
owner
Thepriceoftheobject
(distinguishedfromthe
rent)isusuallynot
mentioned
SALE
Ownershipistransferred
Transferispermanent
Sellermustbetheowner
atthetimeofdelivery
Usually,thesellingprice
ismentioned
Q:Distinguishleasefromusufruct.
A:
LEASE
Ownershiponthepartof
thelessorisnot
necessary
GR: Personalright
XPN:Realright
Limitedtotheuse
specifiedinthecontract
USUFRUCT
Ownershipofthething
onthepartofthegrantor
isnecessary
Realright
Includesallpossibleuses
andenjoymentofthe
thing
ACADEMICSCHAIR:LESTERJAYALANE.FLORESII
UNIVERSITYOFSANTOTOMAS
VICECHAIRSFORACADEMICS:KARENJOYG.SABUGO&JOHNHENRYC.MENDOZA
Facultad de Derecho Civil
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UST GOLDEN NOTES 2011
Lessorplacesand
maintainsthelesseein
thepeacefulenjoyment
ofthething
Definiteperiod
Createdbycontractasa
generalrule
Lesseehasnodutyto
makerepairs
Lesseehasnodutytopay
taxes
Lesseecannotconstitute
ausufructoftheproperty
leased
Ownerallowsthe
usufructuarytouseand
enjoytheproperty
Maybeforanindefinite
period
Createdbylaw,contract,
lastwillorprescription
Usufructuaryhasdutyto
makerepairs
Usufructuaryhasaduty
topaytaxes
Usufructuarymay
constituteasublease
I.LEASEOFTHINGS
Q:Isleaseofrealpropertyarealright?
A:
GR:Leaseofarealpropertyisapersonalright
XPNs:Itisarealright:
1. Ifitisformorethanoneyearandtobe
enforceablemustbewriting
2. If it is registered with Registry of
Propertyregardlessofitsperiod
Q: What are the effects if the lease of real

propertyisnotregistered?
A:
1. Itisnotbindingonthirdpersons;
2. Such third person is allowed to
terminatetheleaseincasehebuysthe
propertyfromtheownerlessor;
3. Actual knowledge of existence and
duration of lease is equivalent to
registration;or
4. A stranger who knows of the existence
ofthelease,butwasledtobelievethat
the lease would expire soon or before
the new lease in favor of him begins,
the stranger can still be considered
innocent.
Q:Whatcanbethesubjectmatterofalease?
A:Thingswithinthecommerceofman.
Note: Lease of properties belonging to the public

domainisvoid.
Q:Whatarethepropertiesthatmaybeleased?
A:
440
1.
2.
By Filipinos public domain with an

area of 500 hectares and may acquire
notmorethan12hectares
Bycorporations
a. Ifatleast60%Filipinosowned
public domain for a period
of 25 years, renewable for
another25years;theareanot
to exceed more than 1,000
hectares
Q: What are the rules on lease of things when

lesseeisanalien?
A:
Personalproperty99yearlimitapplies.
Alienscannotleasepubliclands,andcannot
acquire private lands except through
succession
If lease of real property (private lands),
maximum of 25 years renewable for
another25years(P.D.713)
UndertheInvestorsLeaseActof1995,the
25 year period was extended to 50
yearsprovidedthefollowingconditions
aremet:
Lesseemustmakeinvestments
LeaseisapprovedbyDTI
If terms are violated, DTI can
terminateit
Note:TheILAdidnotdoawaywithP.D.713,under
ILAtheconsentofDTIisrequired,whileinP.D.713
noconsentisrequired.
Q:Whatisrent?
A:Thecompensationeitherinmoney,provisions,
chattelsorlabor,receivedbythelessorfromthe
lessee.
Q:Whataretherequisitesofrent?
A:
1. Notfictitiousornominal,otherwisethe
contractbecomesgratuitous;
2. Capableofdetermination;and
3. May be in the form of products, fruits,
orconstruction,aslongasithasvalue.
Note:Ownerhastherighttofixtherentbecausethe
contractisconsensualandnotimposedbylaw.
Increasing the rent is not an absolute right of the

lessor. The new rate must be reasonable and in no
case shall the lessor be allowed to increase the
rentalwhenthetermhasnotyetexpired,unless,the
tenantconsents.(Paras,p.262)
CIVILLAWTEAM:
ADVISER:ATTY.ELMERT.RABUYA;SUBJECTHEAD:ALFREDOB.DIMAFELIXII;
ASST.SUBJECTHEADS:KARENFELIZG.SUPNAD,LAMBERTOL.SANTOSIII;MEMBERS:PAULELBERTE.AMON,ALSTONANARNA,OZANJ.
FULLEROS,CECILIOM.JIMENO,JR.,ISMAELSARANGAYA,JR.;CONTRIBUTORS:LOISERAEG.NAVAL,MONICAJUCOM
LEASE
If the rent is fixed for the first time, courts cannot
interfere,butifitisarenewal,thecourtscansettle
thedisagreements.
Q: What is the right of a purchaser of a leased

property?
A:
GR: Purchaser of thing leased can terminate
thelease.
XPNs:
1. Lease is recorded in Registry of
Property;
2. There is a stipulation in the contract of
salethatthepurchasershallrespectthe
lease;
3. Purchaser knows the existence of the
lease;
4. Saleisfictitious;or
5. Saleismadewitharightofrepurchase.
SUBLEASE
Q:Whatissublease?
A: It is an agreement between a sublessor and

sublesseewherebytheformergrantstemporarily
the enjoyment or use of the same thing, service
orworksubjectoftheoriginalcontractofleaseto
thelatterinexchangeforcompensationorprice,
respecting the terms and conditions of original
contractofleasebetweenthelessorandlessee.
Q:Whatisthenatureofsublease?
A: It is a separate and distinct contract of lease

wherein the original lessee becomes a sublessor
toasublessee.
Q:Whataretherequisitesofavalidsublease?
A: There must be no express prohibition for

subleaseinacontractoflease.Also,theduration
of sublease cannot be longer than that of the
leasetowhichitisdependent
Q:Whoarethepartiestoasublease?
A:
1. Lessor
2. Sublessor(originallesseeinthecontract
oflease)
3. Sublessee
Q:Doesthelesseehavetherighttosubleasethe
property?
A:Yes,unlessexpresslystipulated.
Note: If the prohibition to sublease is not express

but only implied, the sublease will still be allowed.
(Art.1650)
Q:Whatistheremedyofthelessorifthelessee
violatestheprohibitionastosublease?
A: Rescission and damages or only damages

allowing the contract to remain in force. The
sublessee is subsidiarily liable for any rent due.
The lessor has an accion directa against the
sublesseeforunpaidrentalsandimproperuseof
theobject.
Q: Can rights under a contract of lease be

assigned?
A:
GR: Lessee cannot assign the lease without
consentoflessor(Art.1649,NCC)
XPN:Stipulationtothecontrary
Q: When does an assignment of lease take

place?
A: It exists when the lessee made an absolute

transferofhisleaseholdrightsinacontract,and
he has disassociated himself from the original
contractoflease.(Pineda,p.451)
Note: The assignment has the effect of novation

consisting in the substitution. There being a
novation,theconsentoflessorisnecessarytoeffect
assignment unless the contract of lease allows the
lesseetoassign.(Pineda,p.452)
Q:Whatistheeffectofassignmentoflease?
A: The personality of the original lessee

disappears and there only remain in the juridical
relation of two persons: the lessor and the
assignee,whoisconvertedintoalessee.(Pineda,
p.451)
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Q: Distinguish sublease from assignment of

lease.
A:
SUBLEASE
ASSIGNMENTOFLEASE
Thereare2leasesand2
distinctjuridical
relationshipsalthough
immediatelyconnected
andrelatedtoeachother
Personalityofthelessee
doesnotdisappear
Lesseedoesnottransmit
absolutelyhisrightsand
obligationstothe
sublessee
Sublessee,generally,
doesnothaveanydirect
actionagainstthelessor
Thereisonlyonejuridical
relationship,thatofthe
lessorandtheassignee,
whoisconvertedintoa
lease
Personalityofthelessee
disappears
Lesseetransmits
absolutelyhisrightsto
theassignee
Assigneehasadirect
actionagainstthelessor
Q: May a lessee sublease a leased property

withouttheconsentofthelessor?
A: Yes, provided that there is no express

prohibition against subleasing. Under the law,
wheninthecontractofleaseofthings,thereisno
express prohibition, the lessee may sublet the
thing leased without prejudice to his
responsibilityfortheperformanceofthecontract
towardthelessor.(Art.1650,NCC)
Incasethereisasubleaseofthepremisesbeing
leased,thesublesseeisboundtothelessorforall
the acts which refer to the use and preservation
of the thing leased in the manner stipulated
between the lessor and the lessee. (Art. 1651,
NCC)
The sublessee is subsidiarily liable to the lessor

for any rent due from the lessee. However, the
sublessee shall not be responsible beyond the
amountoftherentdueformhim.
As to the lessee, the latter shall still be

responsible to the lessor for the rents; bring to
the knowledge of the lessor every usurpation or
untoward act which any third person may have
committed or may be openly preparing to carry
out upon the thing leased; advise the owner the
need for all repairs; to return the thing leased
upon the termination of the lease just as he
received it, save what has been lost or impaired
bythelapseoftimeorbyordinarywearandtear
or from an inevitable cause; responsible for the
deteriorationorlossofthethingleased,unlesshe
442
proves that it took place without his fault. (1999

BarQuestion)
Q:Whatistheresponsibilityofthelesseetothe
lessorincasehesubleasestheproperty?
A: By express provision of Article 1650, NCC, the

lessee is still responsible for the performance of
hisobligationstowardthelessor.
Q:Whataretheresponsibilitiesofasublesseeto
thelessor?
A:
GR: No juridical relationship between lessor
andsublessee.
XPNs:
All acts which affect the use and
preservationofthethingleased
For any rent due to the lessor from the
lesseewhichthelatterfailedtopay
the lessor must collect first from
thelessee
if the lessee is insolvent, the
sublessee
becomes
liable
(subsidiaryliability)
Q:Whenisasublesseeliabletothelessor?
A:
1. All acts which refer to the use and
preservation of the thing leased in the
manner stipulated between the lessor
andthelessee
2. Thesublesseeissubsidiaryliabletothe
lessorforanyrentduefromthelessee
REMEDIESINSUBLEASE
Q:Whatisacciondirecta?
A: A direct action which the lessor may bring

against a sublessee who misuses the subleased
property.
Q:Whataretheremedieswheneitherthelessor
or the lessee did not comply with his
obligations?
A:RED
1. Rescissionanddamages;
2. Damagesonly(contractwillbeallowed
toremaininforce);or
3. Ejectment
CIVILLAWTEAM:
LEASE
IMPLIEDNEWLEASE
Q: What is tacita reconducion (implied new

lease)?
A:Aleasethatarisesifattheendofthecontract
the lessee should continue enjoying the thing
leased for 15 days with the acquiescence of the
lessor, unless a notice to the contrary had
previouslybeengivenbytheeitherparty.
Q: What are the requisites for tacita

reconducion?
A:
Thetermoftheoriginalcontracthasexpired
The lessor has not given the lessee a notice
tovacate
The lessee continued enjoying the thing
leased for at least 15 days with the
acquiescenceofthelessor
Q:Whenistherenoimpliednewlease?
A:
1. Before or after the expiration of the
term, there is a notice to vacate given
byeitherparty;
2. There is no definite fixed period in the
original lease contract as in thecase of
successiverenewals.
Q:Whataretheeffectsofanimpliednewlease?
A:
1. Theperiodofthenewleaseisnotthat
stated in the original contract; but for
thenlegalperiodsestablishedbylawin
Art. 1682, if the lease is rural lease, or
Art.1687,iftheleaseisurbanlease.
2. Accessory obligations contracted by a
third person are extinguished (Art.
1672,NCC)
3. Othertermsoftheoriginalcontractare
revived
Note:Thetermsthatarerevivedareonly
those which are germane to the
enjoyment of possession, but not those
with respect to special agreementswhich
are by nature foreign to the right of
occupancy or enjoyment inherent in a
contractoflease.
DURATIONOFSUBLEASE
Q:Whatisthedurationofthelease?
A:
1. WithdeterminateorfixedperiodLeasewill
beforthesaidperiodanditendsontheday
fixedwithoutneedofademand
2. Nofixedperiod
a. For rural lands (Art. 1682,
NCC) It shall be all time
necessaryforthegatheringof
fruits which the whole estate
mayyieldin1year,orwhichit
mayyieldonce
b. Forurbanlands
3. Ifrentispaiddaily, leaseisfromthedayto
day
4. If rent is paid weekly, lease is from week to
week
5. Ifrentpaidmonthly,leaseisfrommonthto
month
6. If rent is paid yearly, lease is from year to
year
Q:Whenisthelesseeentitledtoareductionof
rent?
A:
GR:Incaseofthelossofmorethanonehalf
of the fruits through extraordinary and
unforeseenfortuitousevents.
XPN:Stipulationtothecontrary.
Note:Itisapplicableonlytoleaseofrurallands.
Q: What are the rules on the extension of the

leaseperiod?
A:
1. If a lease contract for a definite terms
allowslesseetodulynotifylessorofhis
desiretosoextendtheterm,unlessthe
contraryisstipulated
2. May be extended as stipulation
lessee can extend without lessors
consentbutlesseemustnotifylessor
3. May be extended for 6 years agreed
upon by both parties as stipulation
thismustbeinterpretedinfavorofthe
lessee. Hence, oridinarily the lessee, at
the end of the original period, may
either:
a. leavethepremises;or
b. remaininpossession
4. In coownership, assent of coowner is
needed, otherwise, it is void or
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5.
6.
7.
8.
ineffective as against nonconsenting

coowners
Where according to the terms of the
contract, the lease can be extended
only by the written consent of the
parties thereto, no right of extension
canrisewithoutsuchwrittenconsent
If the option is given to the lessor, the
lessee cannot renew the lease against
theformersrefusal
The lessor may impose additional
conditions after the expiration of the
originalperiod
Par. 2, Art. 1687, NCC provides that in
the event that the lessee has occupied
the leased premises for over a year,
courtsmayfixalongertermoflease
Note:Thepowerofthecourtstoestablish
a grace period is potestative or
discretionary,dependingontheparticular
circumstancesofthecase.
Q:Whatisperpetuallease?
A: A lease contract providing that the lessee can

stay in the premises for as long as he wants and
for as long as he can pay the rentals and its
increase.
Note:Itisnotpermissible.Itisapurelypotestative
condition because it leaves the effectivity and
enjoyment of leasehold rights to the sole and
exclusivewillofthelessee.
TERMINATIONOFLEASE
Q: When does immediate termination of lease

apply?
A:
1. Only to dwelling places or any other
buildingintendedforhumanhabitation
2. Even if at the time the contract was
perfected, the lessee knew of the
dangerousconditionorwaivedtheright
to rescind the contract on account of
thiscondition
Q: What are the grounds for termination of

lease?
A:WiReLExRun
1. Expirationoftheperiod
2. Resolution of the right of lessor (i.e.:
when the lessor is a usufructuary and
theusufructisterminated)
3. By the will of the purchaser or
transfereeofthething
444
4.
5.
6.
Lossofthething
Rescission due to the performance of
the obligations of one of the parties
statedunderArt.1654and1657.
Thedwellingplaceoranyotherbuilding
is unfit for human habitation and is
dangeroustolifeorhealth.
Q: Will the death of the lessee extinguish the

leaseagreement?
A:No.Thedeathofthelesseewillnotextinguish
the lease agreement, since lease is not personal
in character and the right is transmissible to the
heirs. (Heirs of Dimaculangan v. IAC, G.R. No.
68021,Feb.20,1989)(1997BarQuestion)
Q:Whataretheremediesoftheaggrievedparty
in case of noncompliance of the other partys
obligations under Arts. 1654 (obligations of
lessor)and1657(obligationsoflessee)?
A:
1. Rescissionwithdamages
2. Damages only allowing the lease to
subsists
Q: What are the restrictions in exercising the

righttorescind?
A:JAS
1. Breach must be Substantial and
fundamental(deminimisnoncuratlex
thelawisnotconcernedwithtrifles).
2. ItrequiresJudicialaction.
3. It can be filed only by the Aggrieved
party.
Q: In case of action to rescind, may the other

party validly request for time within which to
complywithhisduties?
A:No.Theaggrievedpartyseekingrescissionwill
prevail.UnderArticle1659,NCC,thecourthasno
discretion to refuse rescission, unlike the
situation covered by Art. 1191, NCC, in the
generalrulesonobligations[Bacallav.Rodriguez,
et.al.,C.A.40O.G.(supp.),Aug.30,1941]
Q:Howistheamountofdamagesmeasured?
A:Differencebetweentherentsactuallyreceived
and that amount stipulated in the contract
representing the true rental value of the
premises. (A. Maluenda and Co. vs. Enriquez, 49
Phil.916)
CIVILLAWTEAM:
LEASE
Q: Under a written contract dated December 1,
1989, Victor leased his land to Joel for a period
offive(5)yearsatamonthlyrentalofP1,000.00,
to be increased to P1,200.00 and P1,500.00 on
thethirdandfifthyear,respectively.OnJanuary
1,1991,JoelsubleasedthelandtoConradfora
period of 2 years at a monthly rental of
P1,500.00.OnDecember31,1992,Joelassigned
the lease to his compadre, Ernie, who acted on
the belief that Joel was the rightful owner and
possessorofthesaidlot.Joelhasbeenfaithfully
paying the stipulated rentals to Victor. When
Victor learned on May 15, 1992 about the
sublease and assignment, he sued Joel, Conrad
and Ernie for rescission of the contract of lease
andfordamages.
1. Will the action prosper? If so,
againstwhom?Explain.
2. In case of rescission, discuss the
rights and obligations of the
parties.
A:
1. Yes, the action for rescission of the
lease will prosper because Joel cannot
assign the lease to Ernie without the
consent of Victor (Art. 1649, NCC). But
Joel may sublet to Conrad because
there is no express prohibition (Art.
1650, NCC; Alipio v. CA, G.R. No.
134100,Sept.29,2000).
Victorcanrescindthecontract oflease
with Joel, and the assignment of the
lease to Ernie, on the ground of
violation of law and of contract. The
sublease to Conrad remained valid for
2 years from January 1, 1991, and had
not yet lapsed when the action was
filedonMay15,1992.
2. In case of rescission, the rights and

obligations of the parties should be as
follows:AtthetimethatVictorfiledsuit
on May 15, 1992, the assignment had
not yet lapsed. It would lapse on
December 1, 1994, the very same date
that the 5year basic lease would
expire. Since the assignment is void,
Victor can get the property back
because of the violation of the lease.
Both Joel and Ernie have to surrender
possession and are liable for damages.
But Conrad has not yet incurred any
liability on the sublease which still
subsistedatthetimeofthefilingofthe
actiononMay15,1992.
Ernie can file a crossclaim against Joel

for damages on account of the
rescissionofthecontractofassignment.
Conrad can file a counterclaim against
Victorfordamagesforlackofcausesof
action at the time of the filing of the
suit.(2005BarQuestion)
Q: A is the owner of a lot on which he

constructed a building in the total cost of
P10,000,000. Of that amount B contributed
P5,000,000providedthatthebuildingasawhole
would be leased to him (B) for a period of ten
years from January 1, 1985 to December 31,
1995 at a rental of P100,000 a year. To such
condition,Aagreed.OnDecember20,1990,the
buildingwastotallyburned.Soonthereafter,As
workers cleared the debris and started
construction of a new building. B then served
noticeuponAthathewouldoccupythebuilding
being constructed upon completion, for the
unexpired portion of the lease term, explaining
that he had spent partly for the constructionof
the building that was burned. A rejected Bs
demand.DidAdorightinrejectingBsdemand?
A: Yes, A was correct in rejecting the demandof

B. As a result of the total destruction of the
building by fortuitous event, the lease was
extinguished. (Art. 1655, NCC) (1993 Bar
Question)
II.LEASEOFWORKORSERVICES
Q:Whatisacontractforapieceofwork?
A: A contract whereby one of the parties binds

himself to produce a result out of his work or
labor and the other party binds himself to pay
remunerationtherefor.
Q:Whatisacontractforleaseofservices?
A:Acontractwherebyonepartybindshimselfto
rendersomeservicetotheotherpartyconsisting
his own free activity of labor, and not its result
and the other party binds himself to pay a
remunerationtherefor.(PinedaSales,p.440441,
2002ed)
Q:Distinguishleaseofservicesfromagency.
A:
LEASEOFSERVICES
Basedonemployment
thelessorofservices
doesnotrepresenthis
employernordoeshe
executejuridicalacts
AGENCY
Basedonrepresentation
agentrepresenthis
principalandenterinto
juridicalacts
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Principalcontract
Preparatorycontract
Q: Distinguish contract of piece of work and

contractofleaseservices.
A:
PIECEOFWORK
Objectofcontractisthe
resultofthework
withoutconsideringthe
laborthatproducedit
Iftheresultpromisedis
notaccomplished,the
lessororpromissoryis
notentitledto
compensation
LEASEOFSERVICES
Objectofcontractisthe
serviceitselfandnotthe
resultwhichitgenerates
Eveniftheresult
intendedisnotattained,
theservicesofthe
lessormuststillbepaid
Q: What if the value has not been agreed upon

inacontractofleaseofservice?
A:Whennoratehasbeenfixed,thesameshallbe
determined by the courts according to the uses
and customs of the place and the evidence,
unless the services by agreement were to be
rendered gratuitously. (Pineda Sales, p. 444,
20002ed)
III.LEASEOFRURALANDURBANLANDS
Q: What is a rural land (ProductProducing

Lands)?
A:Regardlessofsite,iftheprincipalpurposeisto
obtainproductsfromthesoil,theleaseisofrural
lands.Hence,asusedhere,rurallandsarethose
where the lessee principally is interested in soil
products.
Q: What is an urban land (NonProduct

ProducingLands)?
A: Lands leased principally for purposes of

residencearecalledurbanlands.
Q: What is the form required of a contract of

leaseofthings?
A: Lease may be made orally, but if the lease of

realpropertyisformorethanayear,itmustbein
writingsunderthestatuteoffrauds.
Note:Wherethewrittencontractofleasecalledfor
the erection by the tenant, of a building of strong
wooden materials, but what he actually did
constructontheleasedpremiseswassemiconcrete
edifice at a much higher cost, in accordance with a
subsequent oral agreement with the lessor, oral
evidence is admissible to prove the verbal
modification of the original terms of the lease.
446
(Paterno v. Jao Yan, GR. No. L12218, February 28,

1961)
Q:Whatisthepurposeinrecordingalease?
A: A lease does not have to be recorded in the

Registry of Property to be binding between the
parties;registrationisusefulonlyforthepurpose
of notifying strangers to the transaction. (Art
1648,NCC)
Q:Whatismeantbyproperauthority?
A:Properauthoritymeansapowerofattorneyto
constitutethelease.
Q:Whenisaproperauthorityrequired?
A:
1. Husband with respect to the
paraphernalrealestateofthewife;
2. FatherorGuardianwithrespecttothe
propertyoftheminorortheward;
3. Managerwithrespecttotheproperty
underadministration.
Q:Whoisamanager?
A:
1. administratorofaconjugalproperty
2. administratorofacoownership
3. administrator of state patrimonial
property
Q: Is the husband the administrator of the

paraphernalrealproperty?
A: No, unless such administrator has been

transferredtohimbyvirtueofapublicdocument.
(Art.110,FC)
Q: A husband was properly given his wife

authority to administer the paraphernal real
property. Does this necessarily mean that just
because the husband is now the administrator,
he can lease said property without any further
authority?
A:Itdepends.
1. Iftheleasewillbeforoneyearorless,
nootherauthorityisrequired.
2. Iftheleaseontherealpropertywillbe
for more than a year, then a special
power of attorney (aside from the
public
instrument
transferring
administration) is required. (Art.1878,
NCC)
3. Furthermore, whether it be a) or b), if
theleaseistoberecorded,theremust
CIVILLAWTEAM:
LEASE
be a special power of attorney. (Art
1647,NCC).
Note: If it is the wife who is administering her

paraphernal real estate, the husband has no
authority whatever, to lease, in any way, or
administertheproperty.
Q: If a father, who is administering the real

estate of his minor son, wants to record the
lease,shouldheaskforjudicialpermission?
A: Yes (Art. 1647, NCC). But even if no judicial

authorization is asked, such defect cannot be
invoked by a lessee who has dealt with him.
(Summers v. Mahinay, [CA] 40 O.G. [11th S] No.
18, p.40). Only the son or his own heirs may
questionthevalidityofthetransaction.
Q: How can leases of personal property be

bindingonthirdpersons?
A: By executing a public instrument (by analogy,

Art.1625,NCC).
A.QUALIFIEDPERSONS
Q: Who are persons disqualified to become

lessees?
A: Persons disqualified to buy referred to in

article 1490 and 1491, are also disqualified to
becomelesseesofthethingsmentionedtherein.
(Article1646)
Q: Are foreigners disqualified to lease lands in

thePhilippines?
A:
GR:Yes
XPN: lease of lands for residential

purposes (Smith, Bell and Co. vs.
RegisterofDeeds,96Phil53)
B.REGISTRATION
Q:What istheeffectofrecordingofcontractof
lease?
A: Even if not recorded with the Registry of

Property, the lease is binding between the
parties. However, if third persons have to be
bound,thecontractmustberecorded.
Note: However, if a purchaser has actual

knowledge of the existence of the lease, which
knowledge is equivalent to registration, he is
boundbythelease.(Quimsonvs.Suarez,45Phil.
901)
Q: When is proper authority required for the

recordingofcontractoflease?
A:
1. Spouse with respect to the separate or
exclusivepropertiesoftheother,unless
the administration of such properties
has been transferred to said spouse
done in a public instrument duly
recorded.(Art.110,FamilyCode)
Note:Conjugalpropertycannotbeleased
withoutthejointconsentofthespouses
2.
3.
Father or guardian with respect to the

realpropertyofaminorchildorward
Administrator or manager of a realty
with respect to the property under his
administration
a. (Art.1647)
Note: the proper authority is a special power of

attorneydulyexecutediftheleaseisformorethan
oneyear(Art.1878(8))
Q:Whenisleaseofrealpropertyarealright?
A:Generally,aleaseofrealpropertyisapersonal
right. However, it is considered real under the
followingconditions:
1. Ifitisformorethanoneyearandtobe
enforceable,itmustbeinwriting
2. If it is registered with the Registry of
Property, regardless of its period.
(PinedaSales,p.449,2002ed)
C.PROHIBITIONS
Q:Whatistheruleregardingsubleaseofruralor
urbanlands?
A:Thelesseemaysubletthepropertyinabsence
ofanexpressprohibition.
Note:thesubleasemaybeofthewholeorpart
onlyofthethingleased.
This right to sublease is without prejudice to the

sublessors responsibility in the performance of
thecontracttowardsthelessor.(Art.1650,NCC)
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IV.RIGHTSANDOBLIGATIONS
OFLESSORSANDLESSEES
Q: Who are the persons disqualified to become

lessees?
A:
GR: Husband and wife with respect to their
separateproperties.
XPN: Separation of property agreed

uponorjudicialseparationofproperty.
Those disqualified due to fiduciary

relationship.
Q:Whataretheobligationsofthelessor?
A:ReDCaP
1. To Deliver the things in such condition
as to render it fit for the use intended
(cannotbewaived)
2. GR: To make, during the lease all the
necessary Repairs in order to keep it
suitablefortheusetowhichithasbeen
devoted
XPN:Stipulationtothecontrary.
3. To maintain the lessee in the Peaceful

and adequate enjoyment of the lease
fortheentiredurationofthecontract
4. Cannot alter the form of the thing

leased
Q: What are the rules on changing the form of

thingleased?
A:
1. Lessor can alter the thing leased
providedthereisnoimpairmentofthe
use to which the things are devoted
underthetermsofthelease
2. Alteration can be made by lessee
provided the value of property is not
substantiallyimpaired
Q: What are the rules if urgent repairs are

necessary?
A:
1. Lesseeisobligatedtotoleratethework,
althoughitmaybeannoyingtohimand
although during the same time he may
bedeprivedofapartofthepremises,if
repairslastfornotmorethan40days
448
2.
If repairs last for 40 days or more,

lesseecanaskforreductionoftherent
inproportiontothetimeincludingthe
st
1 40 days and the part of the
propertyofwhichheisdeprived
Note: In either case, rescission may be availed of if

the main purpose of the lease is to provide a
dwelling place and the property becomes
uninhabitable.
Q:Whataretheeffectsifthelessorfailstomake
urgentrepairs?
A:Thelesseemay:
1. orderrepairsatthelessorscost;
2. suefordamages;
3. suspendthepaymentoftherent;or
4. ask for rescission, in the case of
substantialdamagetohim.
Q:Whatarethekindsoftrespassinlease?
A:
1. Trespass in the fact (perturbation de
mere hecho) physical enjoyment is
reduced.Lessorwillnotbeliable.
2. Trespass in the law (perturbation de
derecho) a 3rd person claims legal
right to enjoy the premises. Lessor will
beheldliable.
Q:Whataretheobligationsofthelessee?
A:TRUEPRU
1. Pay the price of the lease according to
thetermsstipulated
2. Usethethingleasedasadiligentfather
of a family devoting it to the use
stipulated, and in the absence of
stipulation, to that which may be
inferred from nature of thing leased,
accordingtothecustomoftheplace
3. PaytheExpensesofthedeedoflease
4. Notify the lessor of Usurpation or
untowardacts
5. TonotifythelessorofneedforRepairs
6. To Return the property leased upon
termination of the lease in the same
condition as he receive it except when
whathasbeenlostorimpairedbylapse
of time, ordinary wear and tear or
inevitablecause/fortuitousevent
7. Tolerance of urgent repairs which
cannot be deferred until the end of
lease(par.1,Art.1662,NCC)
CIVILLAWTEAM:
LEASE
Q: What is the effect of the destruction of the
thingleased?
A:
1. Total destruction by fortuitous event
Leaseisextinguished.
2. Partialdestruction
a. Proportional reduction of
rent;or
b. Rescissionofthelease.
Q:Whenmaylesseesuspendpaymentofrent?
A:Whenthelessorfailsto:
1. undertakeurgentrepairs;or
2. maintain the lessee in peaceful and
adequate enjoyment of the property
leased.
Note:Fortheinterveningperiod,thelesseedoesnot
havetopaytherent.
Q:Whendoesthesuspensionbecomeeffective?
A:Therightbegins:
1. Inthecaseofrepairsfromthetimeof
thedemandanditwentunheeded
2. In case of eviction from the time the
final judgment for eviction becomes
effective
Q: What are the alternative remedies of the

aggrieved party in case of nonfulfillment of
duties?
A:
1. Rescissionanddamages
2. Damages only, allowing the contract to
remaininforce(specificperformance)
V.SPECIALRULESFORLEASEOFRURALAND
URBANLANDS
RURALLANDS
Q:Whatistheeffectofsterilityoflandincaseof
rurallease?
A:Thereisnoreduction.Thefertilityorsterilityof
thelandhasalreadybeenconsideredinthefixing
oftherent.
Q: What is the effect of damage caused by a

fortuitouseventontherurallease?
A:
1.
2.
Ordinary fortuitous event no

reduction. The lessee being the owner
of crops must bear the loss. Res perit
domino
Extraordinaryfortuitousevent
a. More than onehalf of the
fruits were lost, there is a
reduction (XPN: specific
stipulationtothecontrary)
b. Less than onehalf, or if the
loss is exactly onehalf, there
isnoreduction
Note:Therentmustbereducedproportionately.
Q: X leased his land to Y for the purpose of

growingcropsthereon.Duetoanextraordinary
fortuitous event, more than onehalf of the
crops were. In the lease contract, the rent was
fixed at an aliquot (proportional) part of the
crops.IsYentitledtoareductioninrents?
A:No,becauseheretherentisalreadyfixedatan
aliquot part of the crops. Thus, every time the
crops decrease in number, the rent is reduced
automatically. If therefore, the tenant here
refusestogivethestipulatedpercentage,hecan
beevicted.(HijosdeI.delaRamav.Benedicto,1
Phil.495)
Q:Whatistheruleforreductionofrent?
A:Thereductiononrentcanbeavailedofonlyif
the loss occurs before the crops are separated
from their stalk, root, or trunk. If the loss is
afterwards,thereisnoreductionofrent.
Q: What is the duration of rural lease with an

unspecifiedduration?
A: 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 may
yield once, although two or more years have to
elapseforthepurpose. (Art.1682,NCC)
Q: A rural lease was agreed upon to last for a

certain definite period. But the tenant planted
fruittreeswhichwouldrequirealongperiodof
time to bear fruit, as well as introduce certain
more or less valuable improvements. Has this
act of the tenant changed the duration of the
contract?
A: No, the duration of the lease has not been

changed. There was a fixed period for the lease
and therefore the nature of the fruit trees or
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valuableimprovementsisimmaterial.(Iturraldev.
Garduno,9Phil.605)
Q: If at the end of the lease, there are still

pendingcrops,whowillownthem?
A:Thelessee.However,acontrarystipulationwill
prevail.
Q:Whatistheruleforlandtenancyonshares?
A: This refers to the contracts of aparceria. Land

tenancy on shares are primarily governed by
special laws (ex: Agricultural Tenancy Act, RA
1199),andsuppletorily,bythestipulationsofthe
parties, the provisions on partnership, and the
customsoftheplace.
Q:Whoisatenant?
A: A tenant is a person, who, himself, and with

the aid of available from within his immediate
farmhousehold,cultivatesthelandbelongingto,
orpossessedbyanother,withthelattersconsent
for the purpose of production, sharing the
produce with the landholder under the share
tenancysystem,orpayingtothelandlordaprice
certain or ascertainable in produce, or in money
or both, under the leasehold tenancy system.
(Pangilinan v. Alvendia, GR no. 10690, June 28,
1957)
Q: What is included in an immediate farm

household?
A:Thisincludesthemembersofthefamilyofthe
tenant,andsuchotherperson/s,whetherrelated
to the tenant or not, who are dependent upon
him for support, and who usually help him
operatethefarmenterprise.
Q:Canatenantworkfordifferentlandowners?
A:Itisprohibitedforatenant,whoseholdingis5
hectares or more, to contract work at the same
timeontwoormoreseparateholdingsbelonging
to different landholders without the knowledge
andconsentofthelandholderwithwhomhehad
first entered into the tenancy relationship. (Sec.
24,RA1199)
Q: What are the grounds for ejectment of the

tenantonshares?
A:
1. voluntarysurrenderoftheland
2. bona fide intention of the landholders
to cultivate the land himself personally
450
3.
4.
5.
6.
7.
8.
or thru the employment of farm

machineries
tenant violates or fails to comply with
the terms and conditions of the
contractortheRA1199
failure to pay the agreed rental or
deliverthelandholdersshare
tenant uses the land for different
purpose
sharetenant fails to follow farm
practices which will contribute towards
the proper care and increased
production
negligence permits serious injury to
land which will impair its productive
capacity
conviction by a competent court of a
tenantoranymemberofhisimmediate
family or farm household of a crime
against the landholder or a member of
hisimmediatefamily.
Q:Willthesaleofthelandextinguishthefarm
tenancyrelationship?
A: No. The purchaser or the transferee shall

assume the rights and obligations of the former
landholderinrelationtothetenant.
Q: Does death extinguish the tenancy

relationship?
A:Itdepends.
1. Death of tenant extinguishes
relationship but heirs and members of
his immediate farm household may
continue to work on the land until the
closeoftheagriculturalyear.
2. Death of landholder does not
extinguish the relationship because his
heirs shall assume his rights and
obligation.
Q: Does the expiration of the period of the

contract of tenancy fixed by the parties
extinguishtherelationship?
A: No. The landlord is required by law, if the

tenant does not voluntarily abandon the land or
turnitovertohim,toaskthecourtforanorder
ofdispossessionofthetenant.(Sec.49,RA1199,
asamendedbyRA2263)
CIVILLAWTEAM:
LEASE
URBANLANDS
Q:Whataretherulesapplicabletorepairswhich
anurbanlessorisliable?
A:
1. Specialstipulation
2. Ifnone,customoftheplace.
Q:Whataretheruleswhenthedurationoflease
isnotfixed?
A:
1. If there is a fixed period the lease
wouldbeforthesaidperiod.
2. Iftherearenofixedperiodapplythe
following:
a. rentpaiddailyleaseisfrom
daytoday
b. rentpaidweeklyleaseis
fromweektoweek
c. rentpaidmonthlylease
frommonthtomonth
d. rentpaidyearlyleasefrom
yeartoyear
VI.HOUSEHOLDSERVICE
Q:Whatisthescopeofhouseholdservice?
A: It includes the work of family servants and

driverbutnotthatoflaborersinacommercialor
industrialenterprise.
Q:Isworkingtoreduceindebtednessallowed?
A:Yes.Whatisprohibitedistoworkasaservant
forfree.
Q:Whenismedicalattendancegivenfree?
A: Medical attendance shall be given free only if

theinjuryorillnessaroseoutofandinthecourse
ofemployment.
Q: What is the duration of the contract for

householdservice?
A: 2 years. Any period agreed upon in excess of

twoyearsisvoid.
Note: Upon expiration, however, it is subject to a

renewalforsuchperiodsasmaybeagreeduponby
the parties. (Pineda Sales, p. 551, 2002 ed, Article
142,LaborCode)
Q: What is the effect if the contract for

householdserviceismorethan2years?
A: The contract is void insofar as the excess is

concerned.
Q: Is there a form of contract required for

householdservice?
A:Noformalitiesarerequiredforthecontractof
household service, and even if the term of
employmentshouldexceedoneyear,theStatute
of Frauds will not apply because in the contract,
performance is supposed to commence right
away.
Q:Canhousehelpersworkmorethantenhours
aday?
A: Yes because the law says shall not be

required. Hence, if the helper agrees to work
overtime, this is clearly permissible. (Baloloy v.
Uy,[CA]62O.G.5661)
Q: When can additional compensation be

demanded?
A:
1. ifthevoluntaryovertimeworkisagreed
upon;
2. if the nature of the work so demands
suchovertimeservice.
Q: What are included in the computation of

periodforhoursofwork?
A: The hours of work include not only those of

actual work but also the time during which the
services of the helper are available to the
employer,eveniftheservicesarenotavailedof.
Q:Whatistheruleforyayas?
A: A yaya or nursemaid for small children, by

thenatureofherwork,mayrendermorethan10
hours work, but she is evidently entitled to a
higherrateofcompensation.
Q:Whatistheruleonvacationforhelpers?
A:Thelawsaysfourdaysvacationeachmonth,
with pay. If the helper insists on this, the
employermustgrantthevacation,andhecannot
insistonmerelygivingthemonetaryvalue.
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VII.CONTRACTOFLABOR
Q:Whatisacontractoflabor?
A: It is a consensual, nominate, principal, and

commutative contract whereby one person,
calledtheemployer,compensatesanother,called
thelaborer,worker,oremployee,forthelatters
service. It is relationship impressed with public
interest in keeping with our constitutional policy
ofsocialjustice.
Q: What are the essential characteristics of a

contractoflabor?
A:
1. Employer(Er) freely enters into a
contractwiththeemployee(Ee);
2. EmployercanselectwhohisEewillbe
3. Employer can dismiss the Ee; the
workerinturncanquithisjob;
4. Employermustgiveremuneration;and
5. Employercancontrolandsupervisethe
conductoftheEe.
A.OBLIGATIONINCASEOF
DEATHORINJURYOFLABORERS
Q: What are the rules regarding Ers liability in

caseofdeathorinjury?
A:
1. If the cause of the death or personal
injuryaroseoutofandinthecourseof
employment,theErisliable.
2. If the cause was due to the Ees own
notorious negligence, or voluntary act
ordrunkenness,theemployershallnot
beliable.
3. If the cause was partly due to the Ees
lackofsuecare,thecompensationshall
beinequitablyreduced.
4. If the cause was due to the negligence
of a fellow Ee, the Er and the guilty Ee
shallbeliablesolidarily.
5. If the cause was due to the intentional
ormaliciousactoffellowEe,thefelloe
Ee is liable; also the Er unless he
exercisedduediligenceinselectingand
supervisingsaidEe.
452
VIII.CONTRACTFORPIECEOFWORK
Q: Distinguish contract for piece of work from

leaseofservices.
CONTRACTFORPIECE
OFWORK
LEASEOFSERVICES
The object is the

resultantworkorobject.
Theobjectisservices.
The risk is borne by the

workerbeforedelivery.
The risk is generally

borne by the Er, not by
the worker unless the
latterisguiltyoffaultor
negligence.
Q: What are the elements of the contract of

work?
A:
1. Consent
2. Objectexecutionofpieceofwork
3. Causecertainpriceorcompensation
Q:Whoisacontractor?
A: The worker is also called a contractor. He in

turn may obtain the services of others, who will
workunderhim.
Q:WhatisthetesttodetermineifoneisanEe
oranindependentcontractor?
A:Therightofcontroltestisused.Iftheperson
for whom services are to be performed controls
only the end to be achieved, the worker is a
contractor; if the former controls not only the
end but also the manner and means to be used,
thelatterisanemployee.
Q:Whatcanthecontractorfurnish?
A:Thecontractormayfurnish:
1. Bothmaterialandthelabor,
2. Oronlythelabor.
Q: What are the duties of a contractor who

furnishesbothworkandthematerial?
A:Thisisequivalenttosale;therefore,theseare
theduties:
1. Todeliver
2. Totransferownership
3. To warrant against eviction and hidden
defects
CIVILLAWTEAM:
LEASE
Q: What are the remedies of the Er in case of
defects?
A:
1. Askthecontractortoremovethedefect
ortoexecuteanotherwork.
2. If the contractor fails or refuses, the Er
can ask another at the contractors
expense. If a building is involved,
expensesforcorrectionandcompletion
mayberecovered.
Q: What is the rule on agreements waiving or

limitingthecontractorsliability?
A:
1. Intheabsenceoffraud,theagreement
wouldordinarilybevalid.
2. In the absence of prohibitory statute,
the validity of a limitation is generally
upheld, with a view of obtaining
compensation commensurate to the
riskassumed.
Q: A asked B to make a radio cabinet. B bound

himselftofurnishthematerial.Beforetheradio
cabinetcouldbedelivered,itwasdestroyedbya
fortuitous event. A) Who suffers the loss? B) Is
thecontractextinguished?
A:
B suffers the loss of both the materials and
the work, unless there was mora
accipiendi.Iftherewasmoraaccipiendi,
itisevidentthatAsufferstheloss.
No, and therefore B may be required to do
the work all over again, unless there
had been a prior stipulation to the
contrary or unless a remaking is
possible.(Art.1717,NCC)
Note: The law merely refers to the burden of the

loss,andnottotheextinguishmentofthecontract.
Q: Who suffers the loss in case of a fortuitous

eventoranunavoidableaccident?
A: As a general principle, in the absence of an

express agreement to the contrary, the
contractor must bear the loss from the
destructionofworkunderway,evenincaseofan
unavoidableaccident.
Q: What is the effect when the Er accepts the

work?
A:
1. The contractor is generally relieved of
liability.
2.
If the acceptance is made without

objection, the Er may still sue for
hiddendefects.
Q:Whereistheplaceofpayment?
A:
1. Wherestipulated
2. Ifnostipulation,thenattimeandplace
ofdelivery.
Q:Whataretherulesonliabilityforcollapseofa
building?
A:
1. The collapse of the building must be
within15yearsfromthecompletionof
thestructure.
2. The prescriptive period is 10 years
followingthecollapse.
3. If the engineer or architect supervises
the construction, he shall be solidarily
liablewiththecontractor.
4. The liability does applies to collapse or
ruin,nottominordefects.
5. Even if payment has been made, an
actionisstillpossible.(Art.1723,NCC)
Q:Whoisliablewhenabuildingcollapsesduring
anearthquake?
A:Itdepends.
1. Iftheproximatecauseofthecollapseof
the building is an earthquake, no one
can be held liable in view of the
fortuitousevent.
2. If the proximate cause is, however,
defective designing or construction, or
directly attributable to the use of
inferior or unsafe material, it is clear
thatliabilityexists.
Q:Canthecontractorwithdrawordemandfora
higher price when the work is already
stipulated?
A:
GR: the contractor cannot withdraw or
demandahigherpriceeveniftherebe
ahighercostoflaborormaterials.
XPNs:
1. if there was a written authorized
changeofplansandspecifications;
2. if the additional price is also in
writing, agreed upon by both
parties.
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LEASE

A: A contract by which one of the partiesagrees

Q: What are the characteristics of a contract of

Period: definite or indefinite but not

Note: It may be made orally but if the

Statute of Frauds requires certain

Lease of work (contract for a piece of

Lease of service One party binds

A: A lease of personal property with option to

Q: What are the effects if the lease of real

Note: Lease of properties belonging to the public

By Filipinos public domain with an

Q: What are the rules on lease of things when

Increasing the rent is not an absolute right of the

Q: What is the right of a purchaser of a leased

A: It is an agreement between a sublessor and

A: It is a separate and distinct contract of lease

A: There must be no express prohibition for

Note: If the prohibition to sublease is not express

A: Rescission and damages or only damages

Q: Can rights under a contract of lease be

Q: When does an assignment of lease take

A: It exists when the lessee made an absolute

Note: The assignment has the effect of novation

A: The personality of the original lessee

UST GOLDEN NOTES 2011

Q: Distinguish sublease from assignment of

Q: May a lessee sublease a leased property

A: Yes, provided that there is no express

The sublessee is subsidiarily liable to the lessor

As to the lessee, the latter shall still be

proves that it took place without his fault. (1999

A: By express provision of Article 1650, NCC, the

A: A direct action which the lessor may bring

Q: What is tacita reconducion (implied new

Q: What are the requisites for tacita

Q: What are the rules on the extension of the

UST GOLDEN NOTES 2011

ineffective as against nonconsenting

A: A lease contract providing that the lessee can

Q: When does immediate termination of lease

Q: What are the grounds for termination of

Q: Will the death of the lessee extinguish the

Q: What are the restrictions in exercising the

Q: In case of action to rescind, may the other

2. In case of rescission, the rights and

Ernie can file a crossclaim against Joel

Q: A is the owner of a lot on which he

A: Yes, A was correct in rejecting the demandof

A: A contract whereby one of the parties binds

UST GOLDEN NOTES 2011

Q: Distinguish contract of piece of work and

Q: What if the value has not been agreed upon

Q: What is a rural land (ProductProducing

Q: What is an urban land (NonProduct

A: Lands leased principally for purposes of

Q: What is the form required of a contract of

A: Lease may be made orally, but if the lease of

(Paterno v. Jao Yan, GR. No. L12218, February 28,

A: A lease does not have to be recorded in the

Q: Is the husband the administrator of the

A: No, unless such administrator has been