Part 1:
7. Lease of professional services may be implied
1. Dean Jara and Ulan may enter into a single
sale, lease and mortgage of the same property in
one and same document without affecting their
validity. – True
2. Caveat emptor and venditor apply to voluntary
sale, forced sale, and lease of things. – False, Both
do not apply to lease of things.
3. In a sale of goods, there is a possibility that
vendor may be deemed to have complied with
the prestation even if he does not deliver the
goods. – True, Art. 1477: The ownership of the
thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof
4. Recto law applies to assignment of credit and
incorporeal rights. – True, seller may validly
assign his credit in favor of another. When the
vendor assigns his credit to another person, the
latter is likewise bound by the same law.
Accordingly, when the assignee forecloses on the
mortgage, there can be no further recovery of the
deficiency and the seller-mortgagee is deemed to
have renounced any right thereto. Article 1484(3),
however, does not bar one to whom the seller-
mortgagee has assigned on a with-recourse basis
his credit against the buyer from recovering from
the seller the assigned credit in full al- though the
seller may have no right of recovery against the
buyer for the deficiency (p. 127-128, De Leon)
5. An informal settler can validly lease but not to
sell the land and improvement occupied by him.
– True, to sell is an act of strict dominion which
only the owner of a thing may validly do. An
informal settler has no title and merely has
possession. The lessor need not be the owner of
the thing leased as long as he can transmit its
enjoyment or use to the lessee since ownership is
not being transferred (p. 563, De Leon)
6. A contract of lease is consensual, nominate,
bilateral, onerous, and remunatory. – False,
Principal, Nominate, Bilateral, Onerous,
Commutative, and Consensual, not
Remuneratory.
because no specific form is required. – True, lease
of service is not a formal contract which requires
formalities for their validity.
8. Lease of work, lessee becomes the agent of the
lessor but only with respect to the particular work
performed. – False, 1644 – In the lease of work or
service, one of the parties binds himself to
execute a piece of work or to render to the other
some service for a price certain, but the relation of
principal and agent does not exist between them
9. Exceptionally, a portion of the town plaza
which is property for public use may be the object
of lease. – T/F, The essence or essential purpose
of the lease of things is the transmission of the
temporary enjoyment or use by the lessee of a
thing for a certain period in consideration of the
undertaking to pay rent therefor. Hence, the
object of the lease must be within the commerce
of man (Art. 1374.); otherwise, it is void. Thus, a
lease of property belonging to the public do-
main such as a road or a public plaza is void ab
initio (p. 562, De Leon).
Note: Samplex answer was True, not sure if lease
of “portion” of public plaza makes a difference.
10. Persons enumerated in 1491 are prohibited
from entering into the contract of lease of service.
– False, The persons disqualified to buy referred
to in Articles 1490 and 1491 are also disqualified
to become lessees of the things mentioned
thereon. (Art. 1646.) (p. 149, De Leon)
11. A right may also be the object of a contract of
lease and the compensation is referred to as
royalty. – True
12. The lessee is obliged to answer even for a
mere act of trespass which a 3rd party may cause
on the use of the thing leased but lessee shall
have a different action against intruder. – False,
Not obliged to answer. Where the disturbance in
the lessee’s possession is caused by a mere
intruder who acted without any color of title or
right, the disturbance is a mere act of trespass for
which the lessor is not liable. The lessee has a
direct action against the trespasser (p. 612, De
Leon)
13. When lessor repairs the thing leased but the
lessee is not satisfied, latter may suspend
payment of rent. – False, 1658 – Lessee may
suspend payment of rent in case lessors fail to
make necessary repairs or maintain lease in a
peaceful and adequate enjoyment of property
leased. It is sufficient that the repairs were made,
without regard of the lessee’s preference.
14. If lessee fails to comply with his obligations,
lessor may file an action for rescission and action
for damages only. – False, ART. 1659 provides: if
the lessor or the lessee should not comply with
the obligations set forth in Articles 1654 and 1657,
the aggrieved party may ask for the rescission of
the contract and indemnification for damages, or
only the latter, allowing the contract to remain in
force.
15. If lessor sells the leased property to a 3rd
person in violation of the right of 1st refusal given
to lessee, contract is rescissible regardless of GF of
buyer. – False, rescissible only when in Bad faith.
The Court held that a lease with a proviso
granting the lessee the right of first priority ‘all
things and conditions being equal’ meant that
there should be identity of the terms and
conditions to be offered to the lessee and all other
prospective buyers, with the lessee to enjoy the
right of first priority. A deed of sale executed in
favor of a third party who cannot be deemed a
purchaser in good faith, and which is in violation
of a right of first refusal granted to the lessee is
not voidable under the Statute of Frauds but
rescissible under Articles 1380 to 1381(3) of the
New Civil Code Riviera Filipina, Inc. vs. Court of
Appeals, 380 SCRA 245 [2002] (p. 97, De Leon).
16. Lessor has subrogatory right against sub-
lessee for unpaid rent. – False, Article 1652. Sub-
lessee is subsidiarily liable to the lessor for any
rent due from the lessee. However, sublessee
should not be responsible beyond the amount of
rent due from him. Furthermore, advance
payments made by the sub-lessee shall be
deemed not to have been made, so far as the
lessor's claim is concerned., unless said payments
were effected by virtue of custom of the place.
17. A lease extendible by mutual agreement
would simply amount to right first refusal in
favor of the lessee so that even if a third party
would offer a higher rent, lease in favor of first
lessee will not be extended unless he matches the
offer. – True
18. A contract for the lease of vibrator is personal
and thus terminated by death of lessee. – False, a
lease contract is not essentially personal in
character, thus it is not terminated by death of
either except if the contract states otherwise.
19. An implied new lease may result even if there
is an express stipulation to the contrary. – False,
No implied renewal of lease where parties
stipulated that there would be no renewal by
implication. In Agalo-os vs IAC, it was held that
no implied new lease when there is contrary
stipulation.
20. An implied new lease is for the same period as
the original lease but a guaranty executed by a
third person in favor of the lessor shall cease with
respect to the new lease. – False:
a. PERIOD of the new lease is not that stated in
the original contract but the time established in
Article 1682 and 1687—according to the character
of property and mode of payment of rent.
b. GUARANTY – Article 1672. Accessory
obligations contracted by third person are
extinguished.
21. Failure to pay rent makes possession
unlawful. – False, For possession to be unlawful,
the lessee must have failed or refused to pay after
lawful demand.
22. Provision in contract of lease that
improvements introduced by lessee will accrue to
lessor upon termination of lease shall be
governed by rules on sale of property. – False, No
need to apply rules on sales of property.
23. Lessor may terminate lease when rentals are
not paid without need of court action. – True
24. Contract of sale entered in violation of right of
first refusal is valid. – True, The lessor is under
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 failed
to accept it. However, the sale in violation of such
right is valid. It may be rescinded, or may be the
subject of an action for specific performance.
25. Lessee in a lease of rural lands has a right to
reduction of rental on account of sterility of land
and for loss of fruits due to extraordinary and
unforeseen event. – False, Article 1680. Only
entitled to right of reduction when loss be more
than one-half of fruits.
26. A provision in a contract of lease that all
improvements introduced by lessee without
reimbursement is not valid. – False, Stipulation is
not contrary to law thus it is valid and binding.
27. Lease of determinate time ceases upon day
fixed without need of demand. – True, Article
1669. If there is determinate time or period fixed,
the lease will be for said period and ends on the
day fixed without need of demand.
Modes to terminate lease:
28. purchaser of piece of land under an
unrecorded sale
29. expiration of period
30. total destruction due to fortuitous event
31. dwelling/ building intended brings imminent
and serious danger to life/health.
Part 2:
1. A contract of lease is consensual, nominate,
bilateral, onerous, and remunatory.
FALSE. A contract of lease is consensual,
bilateral, onerous, and commutative contract by
which the owner temporarily grants the use of his
property to another who undertakes to pay the
rent. (Aquino. p. 590)
2. Lease of professional services may be implied
because no specific form is required.
TRUE. A contract of lease is not required to be in
any form in order to be valid. (Rabuya, p. 492)
3. In a lease of work, lessee becomes the agent of
the lessor but only with respect to the particular
work performed.
ARTICLE 1644 In the lease of work or service, one
of the parties binds himself to execute a piece of
work or to render to the other some service for a
price certain, but the relation of principal and
agent does not exist between them.
4. The term ‘price certain’ must be in money or its
equivalent.
The price is considered certain if:
(1) it is a fixed amount;
(2) it is certain with reference to another thing
certain; or
(3) that the determination thereof is left to the
judgment of a special person or persons.
(Aquino, p. 546)
5. Contract of lease for 99 years is void.
TRUE. With respect to lease of things, the law
states that it may be definite or indefinite.
However, no lease for more that 99 years shall be
valid. (Aquino, p. 590)
6. Exceptionally, a portion of the town plaza
which is property for public use may be subject of
lease.
The object of the contract must be within the
commerce of men. Hence, the properties of public
dominion cannot be validly made the subject
matter of a contract of lease, such as public streets
or a public plaza.
With respect to properties of public dominion
owned by the State, the law, in certain instances,
expressly allows lease of properties ordinarily
part of the public domain, as in the case of tidal
swamps, mangroves, marshes, foreshore lands,
and ponds suitable for fishery operations.
(Rabuya, p. 490)

7. Period in a contract of lease for services may be
definite or indefinite
ARTICLE 1643. In the lease of things, one of the
parties binds himself to give to another the
enjoyment or use of a thing for a price certain,
and for a period which may be definite or
indefinite. However, no lease for more than
ninety-nine years shall be valid.
8-12. Persons who are disqualified to become
lessees:
The persons disqualified to buy referred to in Art.
1490-91 are also disqualified to become lessees of
the things mentioned therein. (Aquino, p. 593)
ARTICLE 1490. The husband and the wife cannot
sell property to each other, except:
(1) When a separation of property was agreed
upon in the marriage settlements; or
(2) When there has been a judicial separation of
property under article 191. (1458a)
ARTICLE 1491. The following persons cannot
acquire by purchase, even at a public or judicial
auction, either in person or through the
mediation of another:
(1) The guardian, the property of the person or
persons who may be under his guardianship;
(2) Agents, the property whose administration or
sale may have been intrusted to them, unless the
consent of the principal has been given;
(3) Executors and administrators, the property of
the estate under administration;
(4) Public officers and employees, the property of
the State or of any subdivision thereof, or of any
government-owned or controlled corporation, or
institution, the administration of which has been
intrusted to them; this provision shall apply to
judges and government experts who, in any
manner whatsoever, take part in the sale; cdasia
(5) Justices, judges, prosecuting attorneys, clerks
of superior and inferior courts, and other officers
and employees connected with the administration
of justice, the property and rights in litigation or
levied upon an execution before the court within
whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the
act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights
which may be the object of any litigation in which
they may take part by virtue of their profession;
(6) Any others specially disqualified by law.
(1459a)
13. Persons enumerated in 1491 are prohibited
from entering into the contract of lease of service.
FALSE – prohibition is with respect to things and
not to service.
In lease of urban or rural lands, the person
disqualified to buy referred to in Articles 1490
and 1491 of the CC are also disqualified to
become lessees of the things mentioned therein.
(Rabuya, p. 491)
The persons disqualified to buy referred to in Art.
1490-91 are also disqualified to become lessees of
the things mentioned therein. (Aquino, p. 593)
14. A right may also be the object of a contract of
lease and the compensation is referred to as
royalty.
Object or subject-matter: Either real or personal
property. The object may either be real or
personal property. As to personal property,
consumable goods cannot be the subject matter of
a contract except – when they are merely to be
exhibited; or when they are accessory to an
industrial establishment. (Rabuya, pp. 489-490)
Royalty - A payment reserved by the grantor of a
patent, lease of a mine, or similar right, and
payable proportionately to the use made of the
right by the grantee. (Black’s Dictionary)
15. The lessee is obliged to answer even for a
mere act of trespass which a 3rd party may cause
on the use of the thing leased but lessee shall
have a different action against intruder.
FALSE. The lessor is not answerable for mere acts
of trespass (no right); the lessee has a direct action
against the trespasser. (Aquino, 592)
16. When lessor repairs the thing leased but the
lessee is not satisfied, latter may suspend
payment of rent.
ARTICLE 1658. The lessee may suspend the
payment of the rent in case the lessor fails to
make the necessary repairs or to maintain the
lessee in peaceful and adequate enjoyment of the
property leased.
17. If lessee fails to comply with his obligations,
lessor may file an action for rescission and action
for damages only.
ARTICLE 1659. If the lessor or the lessee should
not comply with the obligations set forth in
articles 1654 and 1657, the aggrieved party may
ask for the rescission of the contract and
indemnification for damages, or only the latter,
allowing the contract to remain in force.
18-19. Warranties in contract of lease
(1) Lessor’s right to lease the thing
(2) Lessee enjoys legal and peaceful possession
(3) Thing is fit for use
(4) Thing is free from hidden defects/fault
20. If lessor sells the leased property to a 3rd
person in violation of the right of 1st refusal given
to lessee, contract is rescissible regardless of GF of
buyer.
Rescissible only when in BF.
21.Lessor has subrogatory right against a sub-
lessee for unpaid rent.
In case of sublease, the lessee’s obligation to the
lessor remains without prejudice to his
responsibility for the performance of the contract
toward the lessor.
The sub-lessee is subsidiariily liable to the lessor
for any rent due from the lessee. However, the
sub-lessee shall not be responsible beyond the
amount fo rent due from him...
(Aquino, p. 597)
22-24. Obligations of lessor
(1) To deliver the thing which is the object of the
contract in such a condition as to render it fit for
the use intended;
(2) To make on the same during the lease all the
necessary repairs in order to keep it suitable for
the use to which it has been devoted, unless there
is a stipulation to the contrary;
(3) To maintain the lessee in the peaceful and
adequate enjoyment of the lease for the entire
duration of the contract;
(4) To be responsible for warranty against
eviction;
(5) To be responsible for warranty against hidden
defects;
(6) Not to alter the form of the things in such a
way as to impair the use to which the thing is
devoted under the terms of the lease;
(7) In lease of rural lands, the outgoing lessee
shall allow the incoming lessee or the lessor the
use of the premises and other means necessary
for the preparatory labor for the following year;
and, reciprocally, the incoming lessee or the
lessor is under obligation to permit the outgoing
lessee to do whatever may be necessary for the
gathering or harvesting and utilization of the
fruits, all in accordance with the custom of the
place.
(Aquino, pp. 591-592)
25-28. Obligations of lessee
(1) To pay the price of the lease according to the
terms stipulated;
(2) To use the thing leased as a diligent father of a
family, devoting it to the use stipulated; and in
the absence of stipulation, to that which may be
inferred from the nature of the thing leased,
according to the custom of the place;
(3) To pay expenses for the deed of lease;
(4) To notify the owner of the need for urgent
repairs;
(5) To tolerate the works of the lessor for urgent
repairs;
(6) To notify the lessee every usurpation or
untoward act of third persons;
(7) To return the thing leased at the termination
of the lease just as he received it except for
ordinary wear and tear;
(8) To be liable for loss or deterioration due to his
own fault or negligence;
(9) To be liable for any deterioration caused by
the members of his household and by guests and
visitors.
(Aquino, pp. 594-595)
29. A lease extendible by mutual agreement
would simply amount to a right of 1st refusal in
favor of the lessee so that even if a 3rd party
would offer a higher rent, lease in favor of 1st
lessee will not be extended unless he matches the
offer.
30. A contract for the lease of vibrator is personal
and thus terminated by death of lessee.
FALSE? Death is not a ground?
The lease may terminate:
(1) By the expiration of the period;
(2) By the total loss of the thing;
(3) By resolution of the right of the lessor;
(4) By will of the purchaser or transferee of the
thing; and
(5) By rescission due to non-performance of
obligation of one of the parties.
(Rabuya, pp. 507-508)
31. An implied new lease may result even if there
is an express stipulation to the contrary.
If the lease was made for a determinate time, it
ceases upon the day fixed, without the need of a
demand.
An implied new lease is created when it is shown
that: (a) the term of the original contract of lease
has expired; (b) the lessor has not given the lessee
a notice to vacate; and (c) the lessee continued
enjoying the thing leased for 15 days with the
acquiescence of the lessor. (Rabuya 508)
If the lessee continued enjoying the thing after the
expiration of the contract when there is no
implied new lease because the lessor objected to
the continued enjoyment by the lessee, the latter
shall be subject to the responsibilities of a
possessor in bad faith. (Rabuya, p. 511)
32. An implied new lease is for the same period as
the original lease but a guaranty executed by a
3rd person in favor of the lessor shall cease with
respect to the new lease.
In case of an implied new lease, the other terms of
the original contract, aside from the period, shall
be revived. (Rabuya, p. 510)
33-36. Rights of lessee.
(1) To demand delivery of the thing leased;
(2) To be in peaceful and adequate enjoyment of
the lease for the entire duration of the contract;
(3) To sublease the property unless there is a
stipulation to the contrary;
(4) To choose between proportional reduction of
rent and rescission of the lease if the thing is
partially destroyed by fortuitous event;
(5) To suspend the payment of the rent in case the
lessor fails to make the necessary repairs or to
maintain the lessee in peaceful and adequate
enjoyment of the property leased;
(6) To terminate the lease if the leased dwelling
place or building intended for habitation is in
such a condition that its use brings imminent and
serious danger to his life or health or
uninhabitable;
(7) To ask for proportional reduction of the rent if
the urgent repairs being made by the lessor will
last for more than 40 days.
(Aquino, pp. 593-594)
37-40
Grounds for ejectment
(1) When the period agreed upon, or that which is
fixed for the duration of leases under Articles
1682 and 1687, has expired;
(2) Lack of payment of the price stipulated;
(3) Violation of any of the conditions
agreed upon in the contract;
(4) When the lessee devotes the thing leased to
any use or service not stipulated which causes the
deterioration thereof; or if he does not observe the
requirement in No. 2 of Article 1657, as regards
the use thereof.
41. Destruction of thing by FE obligates lessor to
rebuild the thing leased.
False. 1655 – If the thing leased is totally
destroyed by a 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 lease.
42. Failure to pay rentals makes possession
unlawful
False. Unless coupled with a refusal on part of
lessor to pay after lawful demand.
43. Provision in contract of lease that
improvements introduced by lessee will accrue to
lessor upon termination of lease shall be
governed by rules on sale of property
False. No need to apply the rules on sales of
property.
44. Lessor may terminate lease when rentals are
not paid without need of court action.
True.
45. Contract of sale entered in violation of right of
1st refusal is valid.
True.
46. Lessee in a lease of rural lands has a right to
reduction of rental on account of sterility of land
and for loss of fruits due to extraordinary and
unforeseen event.
False. 1680 – The lessee shall have no right to a
reduction of the rent on account of the sterility of
the land leased, or by reason of the loss of fruits
due to ordinary fortuitous events; but he shall
have such right in case of the loss of more than
one-half of the fruits through extraordinary and
unforeseenfortuitous events, save always when
there is a specific stipulation to the contrary.
Extraordinary fortuitous events are understood to
be: fire, war, pestilence, unusual flood, locusts,
earthquake, or others which are uncommon, and
which the contracting parties could not have
reasonably foreseen.
47. A provision in a contract of lease that all
improvements introduced by lessee without
reimbursement is not valid.
F
Stipulation not contrary to law, etc is valid and
binding.
48. Lease of determinate time ceases upon day
fixed without need of demand.
True.
49. In an express trust, acceptance by the trustee
is necessary for creation of trust.
False. It is acceptance by beneficiary which is
needed.1445 – No trust shall fail because the
trustee appointed declines the designation, unless
the contrary should appear in the instrument
constituting the trust.
50. Acceptance by beneficiary is not necessary for
the creation of express trust.
1446 – Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous
condition upon the beneficiary, his acceptance
shall be presumed, if there is no proof to the
contrary.
51. A trustor may or may not have the capacity to
transfer the property.
False. He mut have capacity.
52. An express trust is created by mere
declaration of trustee that he holds property in
trust.
False. It is created by direct and positive acts of
the parties.
53. Trusts over real property are enforceable in
any form.
False. In express trust, a formality is required.
54. Trustee can acquire trust property by adverse
possession even w/o repudiation of trust.
False. There must be repudiation in case of
express trusts.
55. In order to bind 3rd persons to a trust, same
must be in a public instrument.
False. Trusts over personal property may be
proved orally.
56. Statute of limitations apply to express trust.
False. It is impresciptible.
57. Constructive trust is imposed by law to carry
out the actual or presumed intent of the parties if
express trust is prejudicial to the
False. It must be Resulting Trusts.
58. Resulting trusts are established by law,
regardless of intention, in order to prevent fraud,
oppression or unjust enrichment.
False. It must be constructive trusts.
59. No express trust concerning an immovable
property or any interest may be proven by parole
evidence.
True.
60. There is a resulting trust when a donation is
made to a person but appears thought the legal
estate is transmitted to donee, he nevertheless is
either to have no beneficial interest or only a part
thereof.
True.
61. There is a constructive trust when land passes
by succession and causes the legal title to be put
in name of another.
True.
62. There is a constructive trust if the price of sale
of property is loaned or paid by 1 person for
benefit of another and conveyance is made to
lender or payor to secure payment of debt.
True.
63. Laches is a defense in resulting trusts unless
beneficiary had no knowledge of facts.
True.
64. In express trusts, statute of limitations does
not apply to subsisting and continuing trusts so
long as there is no denial or repudiation thereof.
True.
65. An oral trust is sufficient in case of trust over
personalty.
True.
66. In case of impossible trust, court may
authorize deviation in interest of trust.
True.
67. No need for trustee to render an account
under oath.
False. Under ROC, he must render under oath at
least 1x a year until his trust is fulfilled, unless he
is excused, a true account.
68. Trustor cannot prohibit alienation for a period
of more than 25 years.
True.
69. Merger is a mode of extinguishment of
implied or express trust.
True.
70. In an implied trust over a parcel of land,
action to recover must be brought within 5 years
from issuance of title to property.
False. 10 years.