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IAS 17
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Leasehold Buyer's Guide
Interested in buying Leasehold properties in Hawaii? You may want to read thi...
From Mathew Ngo
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A
TENEO
C
ENTRAL
B
AR
O
PERATIONS
2007
Civil Law
SUMMER REVIEWER
—Adviser:
Dean Cynthia Roxas-Del Castillo
; Heads:
Joy Marie Ponsaran, Eleanor Mateo
; Understudies:
Joy StephanieTajan, John Paul Lim
—
LEASECHARACTERISTICS: (lease of things)
1. Consensual2. Principal contract3. Nominate4. Subject matter must be within the commerce ofman5. 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 thecontract is considered essentially gratuitous2. must be capable of determination3. may be in the form of products, fruits,construction; as long as it has
value
LEASE DISTINGUISHED FROM USUFRUCTLEASE USUFRUCT
Ownership on the partof the lessor is notnecessary to constitutea contract of leaseOwnership of the thing onthe part of the grantor isnecessary to constitute ausufruct
It is generally apersonal right and is areal right only byexceptionIt is always a real rightIt is limited to the usespecified in thecontractIt includes all possibleuses and enjoyment ofthe thingLessor places andmaintains the lessee inthe peacefulenjoyment of the thingOwner allows theusufructuary to use andenjoy the propertyIts term is generally fora definite periodIts term may be for anindefinite periodIt may be created bycontract as a generalruleIt may be created by law,contract, last will orprescriptionLessee has not duty tomake repairsUsufructuary has duty tomake repairsLessee has not duty topay taxesUsufructuary has duty topay taxesLessee cannotconstitute a usufruct ofthe property leasedUsufructuary 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 REALRIGHT
Generally, 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 writing2. 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 terminatethe lease in case he buys the propertyfrom the owner-lessor;3. actual knowledge of existence andduration of lease, is equivalent toregistration;4. stranger knows of the existence of thelease, 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 whether immovable 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
A
TENEO
C
ENTRAL
B
AR
O
PERATIONS
2007
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 underlitigation
-
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 of
public 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 LESSEE IS AN ALIEN
(a) 99-year limit applies to aliens as long as it isa lease of
personal property
(b) aliens CANNOT lease
public lands,
andcannot 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 Investor’s 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 canterminate it
NOTE:
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 realproperty 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 for a 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 WHO FURNISHES WORK & MATERIAL:
(a) duty to deliver(b) duty to transfer ownership(c) duty to warrant eviction and hiddendefects
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 contractor’s 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 theother 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 withoutconsidering the laborthat produced itThe object of contract isthe service itself andnot the result which itgeneratesIf the result promisedis not accomplished,the lessor orpromissor is notentitled tocompensationEven if the resultintended is not attained,the services of thelessor must still be paid
of 00
Ateneo Central Bar Operations 2007 Civil Law Summer Reviewer
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thanks 4 ur reviewer..