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2. Object certain which is the subject matter of the


contract; and
X. Lease
3. Cause of the obligation which is established.

A. Concepts and scope

Art. 1642. The contract of lease may be of things, or Art. 1643. In the lease of things, one of the parties binds
of work and service. himself to give to another the enjoyment or use of a thing
for a price certain, and for a period which may be definite
The contract of lease is an agreement whereby one or indefinite. However, no lease for more than ninety-
person (lessor) binds himself to grant temporarily the nine years shall be valid.
enjoyment or use of a thing or to render some work or
service to another (lessee) who undertakes to pay rent,
compensation or price therefore.
LEASE OF THINGS
General Rule: Lease is only a personal right.
Landlord lessor or owner
Exception: It is a real right only by exception as in case of
Tenant lessee
lease of real estate recorded in the Registry or Property
which makes it binding upon third persons, like a Essence: the transmission of the temporary enjoyment
purchaser. or use by the lessee of a thing for a certain period in
consideration of the undertaking to pay rent therefor.
A lease contract is not essentially personal in character
in the sense that the rights and obligations therein are The object of lease must be within the commerce of man;
transmissible to the heirs. otherwise it is void.
Kinds of Lease according to subject matter: The lease of a building includes the lease of the lot on
which it stands, and the rentals of a building include
1. Lease of things whether real or personal,
those of the land.
involving an obligation on the part of the lessor
to deliver the thing which is the object thereof Subject-matter of lease movable or immovable
and the correlative right of the lessee to the
peaceful and adequate enjoyment thereof for a In a lease of chattels, the lessor loses complete control
price certain (Art. 1654); or over the chattel leased although the lessee would be
2. Lease of work which refers to a contract for responsible to the lessor should he make bad use thereof.
a piece of work, involving an obligation on the
part of the contractor (lessor) to execute a The lessor need not be the owner of the thing leased as
piece of work for the employer (lessee) in long as he can transmit its enjoyment or use to the lessee
consideration of a certain price or since ownership is not being transferred.
compensation (Art. 1713); or Even the lessee himself may lease the property to
3. Lease of service involving an obligation on another; in such case, a sublease results.
the part of the housekeeper, laborer or
employee, or common carrier to do or perform Consideration of lease of things must be price certain
a service for the head of a family, or master, generally called rent or rental in money or its
employer, or passenger or shipper of goods, equivalent, such as products, fruits, or other useful
respectively, in consideration of compensation. things, or some other prestation or labor which the
lessee binds himself to undertake. The important thing is
Characteristics that what is given by the lessee has value.
1. Consensual Price certain means that the price of the
2. Bilateral lease or rent has been determined by the
3. Onerous parties or is at least capable of determination
4. Commutative under the contract. A price certain exists when
5. Nominate, and the same can be ascertained according to the
6. Principal usages or customs of the place.
3 Elements The amount must not be nominal or so
insignificant as to indicate an intention to enter
1. Consent of the contracting parties;
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into a contract of commodatum which is when he exercises his option and the lessor cannot
essentially gratuitous. thereafter be excused from performing his part of the
Since lease is essentially a consensual contract, agreement. The clause simply means that the lessees
in the absence of a law fixing a ceiling on exercise of the option resulted in the automatic extension
rentals, the lessor has the right to fix the of the contract of lease under the same terms and
amount of the rent, and upon the expiration of conditions.
the contract, to demand an increase thereof.
During the period fixed in the contract where Rule: In case of uncertainty as to the meaning of a
there is a stipulated rent, the lessor cannot provision granting extension to a contract of lease, the
increase the rental without the consent of the tenant is the one favored and not the landlord.
lessee. Neither can a court fix a different rental,
Reason: the landlord having the power of stipulating in
even where there is an increase in realty taxes.
his own favor, has neglected to do so; and also upon the
Period of lease may be definite or indefinite. In any principle that every mans grant is to be taken most
case, the period is temporary, not perpetual. strongly against himself.

When the period is definite or fixed, the longest Q: When the parties to a contract agreed that the
is 99 years. lease period shall subsist for an indefinite period
provided the lessee is up-to-date in the payment of
Reason: because it is an unsound economic policy his monthly rentals, is the contract void?
to allow ownership and enjoyment to be separated
for a very long time. A: No. The lease period between the parties is with a
period subject to a resolutory condition. Such a
In case the period fixed is more than 99 years, the stipulation
lease should be considered as having expired after the
end of said term. Where there is an implied new lease, Does not make either the validity or the fulfillment of the
the lease will be for an indefinite time. contract dependent upon the will of the party to whom it
is conceded the privilege of cancellation; for where the
If the term is fixed but it is indefinite but from the contracting parties have agreed that such option shall
circumstances it can be inferred that a period was exist, the exercise of the option is as much in the
intended, the court may fix the duration thereof. fulfillment of the contract as any other act which may
have been the subject of agreement.
If not term is fixed, Art. 1682 applies for leases of rural
lands, and Art. 1687, for leases of urban lands. Estoppel against lessee

A verbal contract of lease for as long as the lessee A lessee is estopped from asserting title to the thing
are doing business and as long as they can pay just leased as against the lessor, or to deny the lessors title,
rents has been held to be a lease from month to month or to assert a better title not only in himself, but also in
under Art. 1687 and not one of indefinite duration, some third person., including the State while he remains
terminable without necessity of a special notice upon in possession of the leased property and until he
expiration of any month. surrenders possession to the lessor.

A lease of things during the lifetime of one of the Exception: Where the lessee would, in effect, be paying
parties is for an indefinite period. A lease for such time rental twice for the use of the same property for the same
as the lessor or the lessee may please, is one for life, period of time to the real owner if he were to pay the
ending upon the death of either party. lessor.

The continuance and fulfillment of a lease of a house Conclusive presumptions include: (b) The tenant is not
cannot be made to depend solely upon the uncontrolled permitted to deny the title of his landlord at the time of
choice of the lessee on whether or not the lessee would the commencement of the relation of landlord and tenant
pay rentals, thus depriving the lessor of any say on the between them. (Sec. 3-b, Rule 131, RC)
matter.
Lease vs. Sale
Q: Is a stipulation in the contract of lease to the effect
that a contract may be renewed for a like term at the LEASE OF THINGS SALE
option of the lessee is void for being potestative? Only the enjoyment or Ownership is transferred
use is transferred
A: No. The lessor is bound by the option he has conceded Transfer is temporary Transfer is permanent,
to the lessee. The lessee likewise becomes bound only unless

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The lessor need not be The owner must be the The lessee cannot The usufructuary may
the owner owner or at least constitute a usufruct on lease the thing in
authorized by the owner the property usufruct to another
to ransfer ownership, of As a rule may be created May be created by law,
the thing sold at the time only by contract contract, last will and
it is delivered testament or
The price of the subject The price of the thing is prescription
matter, is usually not usually fixed in the Generally covers As a rule covers all
mentioned, being contract particular uses limited by possible uses of the
immaterial the contract property

Lease Commodatum Lease of things Lease of services


Onerous contract, Essentially gratuitous Object of a contract is a Object is some work or
although the rent may thing service
subsequently be Lessor has to deliver the Lessor has to perform
condoned or remitted thing leased some work or service
Not essentially personal Purely personal in In case of breach, there In case of breach, no
in character and, character, and can be an action for action for specific
therefore, the right may consequently, the death specific performance performance
be transmitted to the of either the bailor or the
heirs bailee extinguishes the
contract Lease of services Agency
Consensual contract Real contract It is based on It is based on
Both contract consist in the transmission of the employment representation agent
enjoyment or use of a thing to another represents his prinicipal
Lessor does not enter and enters into juridical
into juridical acts in acts.
By the contract of loan, one of the parties delivers to behalf of the lessee.
another, either something not consumable so that the Principal contract Preparatory contract; the
latter may use the same for a certain time and return it, purpose is for the agent
in which case the contract is called commodatum; or to enter into other
money or other consumable thing, upon the condition contracts which he is
that the same amount of the same kind and quality shall authorized to enter.
be paid, in which case the contract is simply called a loan The lessor performs a The agent executes a
or mutuum. material act for the juridical act for and in
benefit of his employer behalf of the principal.
without representation
of the latter
Lease Usufruct Work or service must be Presumed to be for a
Real right only in the case Always a real right for consideration. price or consideration
of lease of real property For its extinguishment, For its extinguishment,
where the lease is will of both parties will of one is sufficient.
registered necessary.
The lessor may or may The creator of the right Risk of loss before Risk of loss before
not be the owner must be the owner or one delivery - Borne by the delivery - Borne by the
duly authorized by him independent contractor principal since agent
The lessor has the active The owner has the merely acts as
obligation to maintain passive duty to allow the representative.
the lessee in the usufructuary to enjoy or Independent contractor GR: agent is not liable for
enjoyment or use of the use the same personally liable for his third eprsons.
property contract with third
The lessee generally pays The usufructuary pays persons. XCP: When the agenet
the taxes annual charges and taxes expressly binds himself
on the fruits or exceed the limit of his
The lessee generally has The usufructuary is authority.
no obligation to pay for obliged to make the Lessor is only limited to Agent exercises
repairs ordinary repairs ministerial duties. discretionary power.

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Lease of property to Aliens

Lease of consumable goods Foreigners are prohibited under the


Constitution, except only in cases of hereditary
Art. 1645. Consumable goods cannot be the subject succession, to acquire lands in the Philippines.
matter of a contract of lease, except when they are Nevertheless, the can lease real or
merely to be exhibited or when they are accessory to an immovable property in the Philippines.
industrial establishment. In lease, the lessee does not exercise any
proprietary right.

Where lease contract amounts to visual transfer of


Under the old Civil Code, fungible things which
ownership
are consumed by use cannot be the subject of
lease. A contract whereby an alien is given ot only a
The rule is the same under Art. 1645 with the lease but also an option to buy a parcel of land
qualification now that consumable goods may by virtue of which Filipino owner cannot sell or
be the object of lease when they are merely to otherwise dispose of her property; this is to last
be exhibited or when they are accessory to an 50 years, is a virtual transfer of ownership and
industrial establishment. circumvents the constitutional ban against
The essence of a lease of things is the alien landholding.
enjoyment or use of the property with the
obligation on the part of the lessee to return the Maximum period of lease to aliens
same upon the expiration of the lease.
Ownership is not transferred to the lessee. 25 years, renewable for another period of 25
Hence, things which by their nature cannot be years
used without being consumed, cannot be the
subject matter of lease. 2. Recording of Lease

Art. 1647. If a lease is to be recorded in the Registry of


B. Lease of rural and urban lands
Property, the following persons cannot constitute the
same without proper authority:
1. Disqualifications of lessee
1. the husband with respect to the wife's
Art. 1646. The persons disqualified to buy referred to in
paraphernal real estate,
Articles 1490 and 1491, are also disqualified to become
2. the father or guardian as to the property of
lessees of the things mentioned therein. (n)
the minor or ward, and
Husband and wife 3. the manager without special power. (1548a)
Guardians,
agents, Reason the registration of lease is an act of
executors and administrators, strict ownership. But if the lease is NOT to be
PO and PE, recorded, the lease entered into by said
Justices, judges, prosecuting attorneys, clerks persons is valid even without special power.
of superior and inferior courts, and other Lease for more than one year Art. 1647 does
officers and employees connected with the not specify the term of the lease. The
administration of justice, requirement under Art. 1878 is imposed
whether or not the lease will be recorded. In the
Rural land v. Urban land absence of special power, a lease for more than
one year executed by persons mentiond in Art.
Location of the property generally determining 1647 is valid ONLY FOR 1 YEAR but void to the
the word rural has been defined as relating to excess.
or associate with or typical of, the country.
Meaning intended by the legislative the word Manager includes:
rural has been defined as relating to or
constituting tenement in land adopted and a. The administrator of conjugal property
used for agricultural or pastoral purposes. b. Administrator of co-ownership
c. Administrator of state patrimonial property.

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Art. 1648. Every lease of real estate may be recorded in An assignment of lease without the consent of
the Registry of Property. Unless a lease is recorded, it the less is a GROUND FOR RESCSISSION of
shall NOT be binding upon third persons. (1549a) lease.

Lease is a mere personal right. Its inscription in When there is assignment?


the registry of property to bind third persons
does not in any way alter or modify the rights It exists when the lessee made an ABSOLUTE
and obligations of the parties under the Transfer of his leasehold rights in a contract,
contract which has a life of its own. and he has disassociated himself from the
Applies only to lease of real estate; hence, original contract of lease.
leases of personal or movable cannot be
Art. 1650. When in the contract of lease of things there
registered.
is no express prohibition, the lessee may sublet the thing
Effect of notice of unregistered lease by purchaser leased, in whole or in part, without prejudice to his
responsibility for the performance of the contract
where a purchaser of land at the time of the toward the lessor. (1550)
purchase has full knowledge of the fact that the
land has been leased to a third person and is
informed of the terms of such lease or he was
4. Sublease
aware of the existence of the lease, he is bound
to respect said lease, although it is not entered
upon the certificate of title. What is sublease?
Where the plaintiff believed in GF the
representation of the land lords, which was not A separate and distinct contract of lease
true. His information was that the lease had wherein the original lessee becomes
expired. He was considered an innocent third sublessor to a sublessee of the thing, in whole
person. or in part without prejudice to his
responsibility for the performance of the
Lease as personal right or real right contract toward the lessor.
This does not include accepting boarders.
GR: Lease is only personal right.
Reason: the lessee remains a party (bound by
Exceptions: the terms and conditions of the contract) to the
lease even if he has already created a sublease
1. Lease or real property is more than 1 year, and to thereon.
be enforceable must be in writing. It terminates upon the termination of the
2. Lease of real property is registered regardless of lease, unless the lease is for a shorter term.
duration with Registry of property.
Rights of the lessor if Sublease is Prohibited but
Note: Lease of personal property cannot be registere. To subsequently entered into by the lessee
be binding against third persons, parties must execute a
public instrument. 1. Rescission and damages
2. Damages only (contract remain in force)

3. Assignment of Lease
Art. 1651. Without prejudice to his obligation toward
Art. 1649. The lessee cannot assign the lease without the the sublessor, the sublessee is bound to the lessor for all
consent of the lessor, unless there is a stipulation to the acts which refer to the use and preservation of the thing
contrary. (n) leased in the manner stipulated between the lessor and
the lessee. (1551)
Reason: in an assignment, the personality of
the lessee disappears; there arises a new
juridical relation between the lessor ad the
assignee who is converted into a new lessee. Direct liability of sublessor to lessor
There is, in effect, a novation by substituting the
GR: The sublesse is not a party to the contract between
person of the debtor and novation cannot
the lessor and the lessee; hence under the general rule in
take effect without the consent of the
contracts, the sublessee can only be held liable
debtor.
directly to the sublessor.

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Exception: The sublessee is responsible to the lessor for: The lessee does not The lessee transmits
transmit absolutely his absolutely his rights to
1. All acts which refer to the use and rights and obligations to the assignee
preservation of the thing in the manner the sublessee
stipulated. Right of Action against lessor
Not necessary that the sublessor be joined The sublessee, generally, The assignee has direct
as defendant. does not have any direct action against the lessor.
2. Rent due to the lessor from the lessee which the action against the lessor
latter failed to pay.
5. Obligations of the lessor

Art. 1652. The sublessee is subsidiarily liable to the a) General obligations


lessor for any rent due from the lessee. However, the
sublessee shall not be responsible beyond the amount of Art. 1654. The lessor is obliged: (DeNeMa)
rent due from him, in accordance with the terms of the
(1) To deliver the thing which is the object of the
sublease, at the time of the extrajudicial demand by the
contract in such a condition as to render it fit for the use
lessor.
intended;
Payments of rent in advance by the sublessee shall be
(2) To make on the same during the lease all the
deemed not to have been made, so far as the lessor's
necessary repairs in order to keep it suitable for the use
claim is concerned, unless said payments were effected
to which it has been devoted, unless there is a stipulation
in virtue of the custom of the place. (1552a)
to the contrary;

(3) To maintain the lessee in the peaceful and


Amount of rent recoverable adequate enjoyment of the lease for the entire duration
of the contract. (1554a)
The liability of the sublessee is limited to the
amount of rent due from him to the
sublessor under the terms of the sublease at
Delivery of the property
the time of the extrajudicial demand by the
lessor. At the time of the delivery, the thing must be in
He is liable only to the lessor only for rents the a condition fit for the use intended; otherwise,
lessee failed to pay. lessees cause of action is against the lessor for
breach of contract.
Necessity of judgement against the lessee
The LESSEE has no cause of action against
There must be a judgement against the lessee the possessor because he has no relation.
evicting the latter from the premises, or
Making of necessary repairs
cancelling the lessees lease contract, when he
cannot pay the rentals and the sublessee is in In default of a special stipulation, the custom of
possession. the place shall be observed as to the kind of
repairs.
Sublease v. Assignment of lease
If the lessor fails in the performance of this
Sublease Assignment of lease duty, the lessee MAY:
Number of juridical relations created a. Suspend the payment of rent
There are two leases and There is only one b. Avail other remedies provided in the law.
two distinct juridical juridical relationship, The lessor shall not be liable for repairs for
relationships although that of the lessor and the damages caused by the lessee.
immediately connected assignee, who is repair implies the putting back of something
and related to each other converted into a lessee in the condition in which it was originally, while
As to Personality of Lessee an improvement is the adding of something
The personality of the The personality of the new.
lessee does not lessee disappears.
disappear. Keeping lessee in peaceful and adequate enjoyment.
Transfer of Rights and obligations
The lessors obligation to maintain the lessee
arises when acts termed legal trespass
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disturb, dispute, or place difficulties in the substance of the property leased, the lessor upon the
lessees peaceful and adequate enjoyment of termination of the lease shall pay the lessee one-half of
the leased premises that in some manner or the value of the improvements at that time. Should the
other cast doubt upon the right of the lessor to lessor refuse to reimburse said amount, the lessee may
execute the lease. remove the improvements, even though the principal
Protect not only against third person but also to thing may suffer damage thereby. He shall not, however,
the lessor. cause any more impairment upon the property leased
The warranty of the lessor is that the lessee than is necessary.
shall not be disturbed in his legal, NOT physical
possession of the property. With regard to ornamental expenses, the lessee shall not
This obligation persists only for the duration of be entitled to any reimbursement, but he may remove
the contract. the ornamental objects, provided no damage is caused to
the principal thing, and the lessor does not choose to
Where Lease Contract contains Right of First Refusal retain them by paying their value at the time the lease is
extinguished. (n)
The lessor is under a legal duty to the lessee not
to sell to anybody at any price until after he has
made an offer to sell to the latter at a certain
price and the lessee has failed to accept it. Rights of Lessee in case of Useful Improvement

a. to remove the improvements should the lessor


effuse to reimburse although the principal may
b) Warranties of lessor suffer damage
b. to be reimbursed one-half of the value of said
Art. 1653. The provisions governing warranty, improvements at the time of termination of the
contained in the Title on Sales, shall be applicable to lease.
the contract of lease. Only because the lessee also enjoyed the
In the cases where the return of the price is required, same.
reduction shall be made in proportion to the time To be entitled to either two remedies, the following
during which the lessee enjoyed the thing. (1553) must concur:

a. Lessee must be a considered a builder in GF.


c) Alteration of the thing leased b. Improvements must be suitable to the use for
which the lease is intended
Art. 1661. The lessor cannot alter the form of the thing c. The form and substance of the property should
leased in such a way as to impair the use to which the not be altered.
thing is devoted under the terms of the lease. (1557a)
Rights of Lessee in case of Ornamental Expenses
Alteration to constitute alteration, the
modification must be in such manner that it The lessee has no right of reimbursement, but he may
would destroy the substance remove them, provided:

Alteration of form of lease a. No damage is caused to the principal thing and


b. Lessor does not choose to retain them by
By the lessor - the lessor CAN alter the form of paying their value at the time of lease.
the lease PROVIDED there is no impairment
in the use to which the thing is devoted under Note: Ornamental Expenses are expenses incurred
the terms of the lease. which cater only to the personal comfort,
By the lessee the lessee may alter the form so convenience or enjoyment of a person.
long as the value of the property is not Right of Lessee over necessary repairs
impaired by the alteration.
Entitled to full reimbursement of the total
d) Useful improvements and ornamental amount spent therefor.
expenses

Art. 1678. If the lessee makes, in good faith, useful


improvements which are suitable to the use for which
the lease is intended, without altering the form or
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6. Obligations of the Lessee


b. Urgent repairs
a. General obligations
Art. 1662. If during the lease it should become necessary
Art. 1657. The lessee is obliged: Pa-U-Pa to make some urgent repairs upon the thing leased,
which cannot be deferred until the termination of the
(1) To pay the price of the lease according to the terms lease, the lessee is obliged to tolerate the work, although
stipulated; it may be very annoying to him, and although during the
same, he may be deprived of a part of the premises.
(2) To use the thing leased as a diligent father of a
family, devoting it to the use stipulated; and in the If the repairs last more than forty days the rent shall be
absence of stipulation, to that which may be inferred reduced in proportion to the time - including the first
from the nature of the thing leased, according to the forty days - and the part of the property of which the
custom of the place; lessee has been deprived.
(3) To pay expenses for the deed of lease. (1555) When the work is of such a nature that the portion which
the lessee and his family need for their dwelling becomes
uninhabitable, he may rescind the contract if the main
Payment of the agreed price of the lease purpose of the lease is to provide a dwelling place for the
lessee. (1558a)
The obligation to pay the price arises only when
the thing lese has been delivered to the lessee
for the purposes stipulated in the contract.
Need to make repairs
Who has the right to fix the rents? only the
lessor and the court cannot determine the rent The lessor has the obligation to make necessary
and compel the lessor to conform thereto and repairs and the lessee is obliged to notify the
allow the lesse to enjoy the premises on the lessor of the urgency of such repair.
basis of the rents fixed by it. Note that the article speaks of repairs.
the lessor has the right to increase the rent in Improvements are not covered.
case of renewal. The lessee is obliged to pay
rentals during the pendency of the action for Length of time for repair
rescission of the lease.
Because the lessee is deprived of his If forty days or more the lessee can ask for
property. reduction of the rent in proportion to the time
The proper rate for back rentals is 6% per including the first 40 days and the part of the
annum computed from the time of demand. property of which he is deprived.
If less than 40 days the lessee cannot ask for
Proper use of the thing leased reduction.

Must devote the thing to the: Rescission of the lease


a. Use stipulated
b. If none was stipulated, to that which may Regardless of the length of time taken up for
be inferred from the nature of the thing repairs, rescission may be availed of by the
leased according to the custom of the lessee if the main purpose of the lease is to
place. provide a dwelling place for the lessee and
The use of the thing for an illegal purpose work done has made the same uninhabitable.
entitles the lessor to terminate the contract.
c. Trespass made by a third person
Payment of expenses for deed of lease
Art. 1663. The lessee is obliged to bring to the
In sale, the expenses for the execution and knowledge of the proprietor, within the shortest possible
registration of the deed of sale shall be borne by time, every usurpation or untoward act which any third
the vendor, unless there is a stipulation to the person may have committed or may be openly preparing
contrary. to carry out upon the thing leased.
In lease, the law imposes the obligation to pay
expenses for the deed of lease on the lessee. By He is also obliged to advise the owner, with the same
agreement, the obligation may be assumed by urgency, of the need of all repairs included in No. 2 of
the lessor. Article 1654.

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In both cases the lessee shall be liable for the damages 7. Remedies of a party in case of failure of the
which, through his negligence, may be suffered by the other to comply with his obligation
proprietor.
a. Remedies of lessee
If the lessor fails to make urgent repairs, the lessee, in
order to avoid an imminent danger, may order the (1) Extinguishment of the lease when the thing
repairs at the lessor's cost. (1559a) lease is totally destroyed by Fortuitous
event
Art. 1664. The lessor is not obliged to answer for a mere
(2) Proportional reduction of the rent or
act of trespass which a third person may cause on the use
rescission of the lease in case of partial
of the thing leased; but the lessee shall have a direct
destruction of the thing leased by fortuitous
action against the intruder.
event.
There is a mere act of trespass when the third person
Art. 1655. If the thing leased is totally destroyed by a
claims no right whatever. (1560a)
fortuitous event, the lease is extinguished. If the
destruction is partial, the lessee may choose between a
proportional reduction of the rent and a rescission of the
When Obligation of lessee to notify lessor arises lease. (n)
1. When there is usurpation or untoward act
by a third person the purpose of this notice
is to enable the owner to maintain his civil Destruction total
possession, by suit if necessary.
Lease extinguished, because of the absence of
2. Need of repairs it is not the duty of the lessor
object of contract
to constantly inspect the premises to see if
there is a need to make repairs. Destruction partial
Rules in cases of trespass in lease The lessee is given the option to choose:
a. Proportionate reduction of the rent
1. Trespass in fact (perturbacion de mere
b. Rescission
hecho) physical disturbance on the property
If reduction is chosen, the same shall be
leased such as an intrusion without any legal
retroactive to the date the partial destruction
claim to justify an entry into the property.
occurred.
Lessor is not liable. The lessee shall have
In case of rescission, the partial destruction
a direct action against the usurper.
should be substantial as to defeat the purpose
2. Trespass in law (perturbacion de derecho)
of the lease.
a third person claims legal right to enjoy the
premises.
(3) Rescission and indemnification for damages
The lessor will be held liable to the
or only the latter allowing the contract to
lessee. The lessor may maintain an action
remain in force, in case of failure of the
to recover the title (accion
lessor to comply with the article 1654.
reinvindicatoria), or to establish his better
right of possession (accion publiciana.) Art. 1659. If the lessor or the lessee should not comply
with the obligations set forth in Articles 1654 and 1657,
In Goldstein v. Roces, trespass in fact is the aggrieved party may ask for the rescission of the
distinguished from legal transfer. If the contract and indemnification for damages, or only the
trespass is not accompanied or preceded by latter, allowing the contract to remain in force. (1556)
anything which reveals a juridical intention
on the part of the trespasser, in such wise
that the lessee can only distinguish the material
fact, stripped of all legal forms or reasons, it is Remedies of the lessee in case of non-compliance of
only in fact. the obligation by the lessor
a lessor is not responsible for the lessees 1. Rescission and damages
eviction through condemnation proceedings. 2. Damages only, allowing the contract to remain
The lessee must look to the expropriating in force.
plaintiff for his compensation.

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Damages recoverable in ejectment cases are


the rents or the fair rental value of the promises This right of the lessee to terminate or rescind
and liquidated damages if agreed upon. is a precaution for public safety which is
above of any stipulation.
(4) Suspension of payment when the lessor fails
to make repairs

Art. 1658. The lessee may suspend the payment of the (6) Return of the thing leased
rent in case the lessor fails to make the necessary repairs
Art. 1665. The lessee shall return the thing leased, upon
or to maintain the lessee in peaceful and adequate
the termination of the lease, as he received it, save what
enjoyment of the property leased. (n)
has been lost or impaired by the (1) lapse of time, or (2)
by ordinary wear and tear, or (3) from an inevitable
cause. (1561a)
Suspension of payment of rent
Such obligation to return the leased premises is
The provision mentions 2 grounds which give the lesse no deemed fulfilled if the lessor cannot resume
the right to suspend payment: possession because of some impediment.

1. In case of repairs, the lesse may suspend the Art. 1666. In the absence of a statement concerning the
payment from the time demand is made upon condition of the thing at the time the lease was
the lessor and the latter fails to perform his constituted, the law presumes that the lessee received it
obligation. in good condition, unless there is proof to the contrary.
2. In the case of eviction, the lessee is released (1562)
from the obligation to pay rents from the time
he is unlawfully dispossessed. If it is mere act of No such presumption arises where there is a
trespass, the lessee should bring action directly statement or representation, written or oral,
against the intruder. concerning the actual condition of the thing at
the time the lease was constituted.
If the cause for suspending the payment has to
exist, the lessee has no liability to pay the rents, (7) Liability for loss or deterioration
for the intervening period unless the lessor can
Art. 1667. The lessee is responsible for the deterioration
prove that the suspension was not legally
or loss of the thing leased, unless he proves that it took
justifiable.
place without his fault. This burden of proof on the lessee
does not apply when the destruction is due to
(5) Termination of the lease in case of
earthquake, flood, storm or other natural calamity.
dangerous condition of the thing leased for
(1563a)
habitation

Art. 1660. If a dwelling place or any other building


intended for human habitation is in such a condition that GR: the lessee is responsible for deterioration or loss of
its use brings imminent and serious danger to life or thing leased.
health, the lessee may terminate the lease at once by
notifying the lessor, even if at the time the contract was Exception: when it is due to earthquake, flood, storm, or
perfected the former knew of the dangerous condition or other natural calamity.
waived the right to rescind the lease on account of this
Ordinarily, fire is not a natural calamity. It is not
condition. (n)
mentioned in Art. 1667. The lessee must prove
he was without fault.

Immediate termination of Lease with notice under Art. 1668. The lessee is liable for any deterioration
Art. 1660 applies caused by members of his household and by guests and
visitors. (1564a)
1. Only to dwelling places or any other building
INTENDED for human habitation
2. Even if at the time the contract was perfected,
the lessee knew of the dangerous condition or
waived the right to rescind on account of such
condition
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MAD

Deterioration caused by others C. Duration of the lease

Made legally responsible for their acts as in The period may be definite or indefinite but in any case,
quasi-delicts under the principle of command the period is only temporary, not perpetual.
responsibility
The liability of the lessee for the acts of third The longest period that may be stipulated is only 99
persons is based on the contract itself, under years.
which the lessee has assumed custody of the
If the period is more than 99 years, the lease is
thing of which the lessor has been
considered as having expired at the end of 99 years.
dispossessed.
There is no need of proving that he was 1. Definite time or period
negligent in selecting and supervising his
household helpers, visitors and guests. He is Art. 1669. If the lease was made for a determinate time,
liable from because he allowed them into the it ceases upon the day fixed, without the need of a
immovable leased. demand.

Notice to vacate constitutes an express act on


the part of the lessor that he no longer consents
b. Remedies of the lessor to the renewal of the contract and the lessee has
no other option except to vacate the property.
(1) Rescission and indemnification for The continuous possession of the leased
damages or only the latter allowing the premises after the end or expiration of the time
contract to remain in force, in case of fixed in the contract, with the acquiescence of
failure of the lessor to comply with the the lessor, constitutes and implied renewal of
article 1654. the lease.
Under the Rules of court, a demand on the
Remedies of the lessor in case of non-compliance of
lessee is a prerequisite to an action for
the obligation by the lessee
unlawful detainer, when the action is for
1. Rescission and damages failure to pay rent due or to comply with the
2. Damages only, allowing the contract to remain condition of his lease and not where the action
in force. is to terminate the lease because of the
The lessor may directly file an action for expiration of its term.
ejectment against the lessee instead of In contract of lease of urban property for an
rescinding the contract. indefinite period, a notice to increase rent is
equivalent to a notice of the termination of the
(2) May hold the sublessee bound for all contract.
acts which refer to the use and
Extension or renewal of lease
preservation of the things leased.
The court has no authority to extend a lese
Art. 1651. Without prejudice to his obligation toward
where the stipulated period of the contract has
the sublessor, the sublessee is bound to the lessor for all
already expired, if the lessor is unwilling to
acts which refer to the use and preservation of the thing
extend.
leased in the manner stipulated between the lessor and
Where a lease contrct expressly stipulates that
the lessee. (1551)
the lease shall ot be deemed extended or
renewed by implication beyond the contractual
period for any cause but only by negotiations,
(3) Hold the sublessee subsidiarily liable the mere fact that the lessee was willing to pay
for any rent due from the lease what he claimed to be a reasonable rent which
was less than that demanded by the lessor did
Art. 1652. The sublessee is subsidiarily liable to the not operate in any sense to extend the lease.
lessor for any rent due from the lessee. However, the A stipulation that a lease is extendible for a
sublessee shall not be responsible beyond the amount of further similar period is to be understood as
rent due from him, in accordance with the terms of the giving the lessee the right to the additional
sublease, at the time of the extrajudicial demand by the period or to quit upon the expiration of the first
lessor. term.

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A stipulation renewable at the option of both 5. Where the loss of fruits occurred after they
parties means that there should be mutual have been already gathered.
agreement as to the renewal of the lease.
If the option to renew is given to the lessor, the
lessee cannot renew against lessors refusal.
Art. 1687. If the period for the lease has not been fixed,
Where option to renew is given to the lessee
it is understood to be from year to year, if the rent agreed
and is silent upon the rentals, the old terms are
upon is annual; from month to month, if it is monthly;
to be followed in the renewed lease.
from week to week, if the rent is weekly; and from day to
The continued possession of the lessee is day, if the rent is to be paid daily.
evidence of his exercise of the option.
2nd part: However, even though a monthly rent is paid,
2. No fixed period and no period for the lease has been set, the courts may
fix a longer term for the lease after the lessee has
Art. 1680. The lessee shall have no right to a reduction occupied the premises for over one year. If the rent is
of the rent on account of the sterility of the land weekly, the courts may likewise determine a longer
leased, OR by reason of the loss of fruits due to period after the lessee has been in possession for over six
ordinary fortuitous events; but he shall have such right months. In case of daily rent, the courts may also fix a
in case of the loss of more than one-half of the fruits longer period after the lessee has stayed in the place for
through extraordinary and unforeseen fortuitous events, over one month. (1581a)
save always when there is a specific stipulation to the
contrary. Duration of the lease for Urban lands

If rent is paid daily, lease is from day to day


If rent is paid monthly, lease is from month to
Duration of the lease for rural lands month
It shall be for all the time necessary for the A month to month lease expires afte the
gathering of fruits which the whole estate may last day of any given 30-day period, upon
yield; OR proper demand and notice by lessor to
Which it may yield only once although two or vacate.
more years have elapsed If rent is paid yearly, lease is from year to
year.
The lessee of rural land is entitled to reduction of
rent if the following requisite are present Note: Even if the parties have agreed as to the periodical
payment of rentals, the law empowers the courts to
1. The land is rural exercise their discretion in fixing the term, if the lessee
2. More than one-half of the fruits have been lost has stayed in the premises for a certain length of time.
3. The loss occurred through extraordinary and
unforeseen events 3. Implied new lease
4. There is no stipulation that lessee is not entitled
Art. 1670. If at the end of the contract the lessee should
to reduction.
continue enjoying the thing leased for fifteen days
Cases that do not justify reduction with the acquiescence of the lessor, and unless a notice to
the contrary by either party has previously been given, it is
1. On account of sterility of land understood that there is an implied new lease, not for the
2. By reason of the loss of the fruits due to period of the original contract, but for the time
ordinary fortuitous events, regardless of the established in Articles 1682 and 1687. The other terms
extent of loss of the original contract shall be revived. (1566a)
3. By reason of loss of less than one half of the
fruits even though extraordinary and Terms which are revived
unforeseen events
The original terms of the original contract
Typhoons are not extra-ordinary in this which are revived are only those which are
country and also war already existing germane to the lessees right of continued
when the contract was entered into. enjoyment of the property leased or related to
4. By reason of the loss of more than one half of such possession.
the fruits through extraordinary and
unforeseen events, where there is a specific Requisites of Implied New Lease
stipulation to the contrary
1. The term of the original contract has expired
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MAD

2. The lessor or lessee has not previously given favor of the lessee. Hence, ordinarily the lessee
notice to vacate at the end of the original period may either:
3. The lessee continued enjoying the thing leased a. Leave the premises or
for at least fifteen days at the end of the b. Remain in possession
contract with the acquiescence of the lessor. 4. In co-ownership, assent of all is needed,
otherwise it is void or ineffective against non-
Note: A lessor who gives notice after the 15 day period consenting co-owners.
has no cause of action for unlawful detainer as there is 5. Where according to the terms of the contract
already an implied lease. the lease can be extended only by the written
consent of the parties, no right of extension can
Instances when implied renewal not applicable
arise without such written consent.
1. Stipulation against implied renewal 6. If the option is given to the lessor, the lessee
2. Invalidity of the original lease cannot renew the lease against the formers
3. Acceptance of rentals beyond original term by refusal. The lease is deemed terminated.
the lessor who had previously informed the 7. Where a lessee is given the option to continue
lessee that she was not renewing the lease. or renew the contract of lease and is silent upon
4. Acceptance of rentals less than amount the rentals, the old terms are to be followed.
stipulated 8. The lessor may impose additional conditions
5. Nonpayment of rentals after the expiration of the original period.
9. A verbal agreement to extend the lease is
4. Perpetual lease admissible to qualify the terms of a written
contract.
Jespajo realty v. CA, 10. The extension granted shall be commensurate
with the period of occupation.
ISSUE: Whether the parties to a contract of lease
stipulated for an indefinite period and shall continue for Remedy of the lessor if the lessee continues in
as long as the lessee is paying the rent, is the said contract possession
interminable even by the lessor.
Bring an action of unlawful detainer to recover
HELD: Yes. The fact that such option is binding only on the possession of the premises and the rents or
the lessor and can be exercised only by the lessee does fair rental value
not render it void for lack of mutuality. After all, the
lessor is free to give or not to give the option to the lessee. D. Termination of the lease
And while the lessee has a right to elect whether to
continue with the lease or not, once he exercises his 1. By expiration of the period
option to continue and the lessor accepts, both parties
are thereafter bound by the new lease agreement. Their Art. 1673. The lessor may judicially eject the lessee for
rights and obligations become mutually fixed, and the any of the following causes:
lessee is entitled to retain possession of the property for
(1) When the period agreed upon, or that which is
the duration of the new lease, and the lessor may hold
fixed for the duration of leases under Articles 1682
him liable for the rent therefor. The lessee cannot
and 1687, has expired;
thereafter escape liability even if he should subsequently
decide to abandon the premises. Mutuality obtains in (2) Lack of payment of the price stipulated;
such a contract and equality exists between the lessor
and the lessee since they remain with the same faculties (3) Violation of any of the conditions agreed upon in the
in respect to fulfillment. contract;

Rules on Extension of the Lease period (4) When the lessee devotes the thing leased to any use
or service not stipulated which causes the deterioration
1. If a lease contract for a definite term allows thereof; or if he does not observe the requirement in No.
lessee to extend the term, there is no necessity 2 of Article 1657, as regards the use thereof.
for lessee to notify lessor of his desire to extend
the term unless the contrary is stipulated. The ejectment of tenants of agricultural lands is
2. may be extended as stipulation lessee can governed by special laws. (1569a)
extend without lessors consent but lessee must
notify the lessor Note: In all cases except number 1, for the case of
3. may be extended for 6 years agreed upon by unlawful detainer to prosper, a demand to pay and
both aprties as stipulation interpreted in vacate should be given to the lessee.
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MAD

Possession of land by tolerance becomes an 3. By the will of the purchaser or transferor of the
unlawful detainer, from the time a demand to thing
vacate is made.
A notice giving the lessee the alternative either Art. 1676. The purchaser of a piece of land which is
to pay the increased rental or otherwise to under a lease that is not recorded in the Registry of
vacate the leased premises is not the demand Property may terminate the lease, save when there is a
contemplated in an unlawful detainer case. stipulation to the contrary in the contract of sale, or when
The demand to vacate must be definite, the purchaser knows of the existence of the lease.
subject to no condition. If the buyer makes use of this right, the lessee may
The omission of the word to vacate in the demand that he be allowed to gather the fruits of the
notice is immaterial. It is sufficient that the harvest which corresponds to the current agricultural
demand letter puts the lessee on notice that if year and that the vendor indemnify him for damages
he does not pay the rentals or comply with the suffered.
terms of the lease contract, he should move out
of the leased premises. If the sale is fictitious, for the purpose of extinguishing
the lease, the supposed vendee cannot make use of the
Period for filing action for unlawful detainer within right granted in the first paragraph of this article. The
one year after the occurrence of the unlawful deprivation sale is presumed to be fictitious if at the time the
or withholding of possession. Beyond the one-year supposed vendee demands the termination of the lease,
period, the real right of possession may be recovered the sale is not recorded in the Registry of Property.
through the filing of an accion publiciana. (1571a)
Expiration of the period General Rule: Purchases of the thing leased can
Demand or notice to vacate is not a terminate lease.
jurisdictional requirement when the action is Exceptions:
based on the expiration of the lease.
A lease on a month-to-month basis is for a 1. Lease is recorded in Registry of Property
definite period and may be terminated at the An unrecorded lease is terminable at the
end of any month. will of the new owner who is an innocent
The lessor has the right no only to terminate the purchaser for value.
lease at the expiration of the term, but to 2. There is a stipulation in the contract of sale that
demand a new rate of rent. The question purchaser shall respect the lease until
whether or not the new rate of rent fixed by the termination of its period.
owner is reasonable must be decided according 3. Purchaser has actual knowledge of the
to the evidence. existence of the lease
4. Sale is fictitious there is rebuttable
If the action for ejectment is anchored on the non-
presumption that sale is fictitious if it is not
payment of rentals, two requisites must concur:
registered.
a. There must be failure to payy rent or to comply 5. Sale is made with right of repurchase.
with the condition of the lease
b. There must be demand both to pay or to comply 4. By total loss of the thing Discussion on page 6
and vacate within the periods specified in Sec.
Art. 1655. If the thing leased is totally destroyed by a
2, Rule 170 of the ROC, particularly 15 days in
fortuitous event, the lease is extinguished. If the
case of land and 5 days in the case of buildings.
destruction is partial, the lessee may choose between a
Violation of any of the conditions agreed upon proportional reduction of the rent and a rescission of the
lease. (n)
Violations of conditions would constitute
breach of the lease contract. Therefore, it is 5. By rescission due to non-performance of the
enough ground to eject the lessee. obligation
A demand is a prerequisite in an action for
Art. 1659. If the lessor or the lessee should not comply
unlawful detainer based on this ground.
with the obligations set forth in Articles 1654 and 1657,
the aggrieved party may ask for the rescission of the
2. By the resolution of the right of the lessor
contract and indemnification for damages, or only the
latter, allowing the contract to remain in force. (1556)

14