INTEROFFICE MEMORANDUM

TO: Atty. Salvador Roque, Senior Partner,

ALLEN & JONES LAW FIRM
FROM: Atty. Abad-Santos-485912, Senior Associate
SUBJECT: Non-payment of Lease is a Breach of Contract
DATE: February 24, 2020

ISSUE
Whether or not the refusal to pay the lease on either heirs of the
deceased lessor would constitute possible legal consequence.

BRIEF ANSWER
Yes. Article 1657 of the New Civil Code of the Philippines provides for
the obligation of the lessee, to to pay the price of the lease according to the
terms stipulated. The refusal of Ms. Roxy to give monthly rental to any of
them constitutes a non-compliance or non-performance as a lessee to her
obligation resulting to breach of her contract on lease.
This refusal to pay produces effect against Ms. Roxy. Article 1659
provides that if either a 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. Article 1673, provides
that a lessor may be judicially ejected due to non-payment of price
stipulated in the contract of lease.
I recommend that Ms. Roxy B. must pay either to Rey or Rex Chua
pursuant to Article 1311 of the Civil Code, the heirs sre bound by the
contracts entered into by their predecessors-in-interest. The contract she
entered into with Mr. Chua is a contract of lease which is transmissible to
his heirs.

STATEMENT OF FACTS
Ms. Roxy B. entered into a Contract of Lease with RC Realty owned
by Mr. Rodolfo Chua, for the lease of a 40-sq.m. commercial space in RC
Building. The contract is good for one year effective October 1, 2019 with a
monthly rental fee of Php 30,000. She religiously pays the monthly rental
fee to Mr. Chua until January 2020 which started on February 2020. She
stopped paying due to the death of Mr. Chua on December 2019. His two
sons, Rey and Rex Chua have been claiming on separate occasions that the
rent should be given to them. However, she refused to give the monthly
rental to any of them to avoid conflict.

DISCUSSION

“Every right implies a responsibility; every opportunity, an obligation,

every possession, a duty.”
 -John D. Rockefeller

Ms. Roxy B. entered into a contract of lease with Mr. Rodolfo Chua
with Php 30,000 monthly fee. She has been religiously paying until the
death of the lessor. In her letter, she said that she refused to pay the
amount to either of the heirs of Mr. Chua to avoid conflict. However, the
conflict she is trying to avoid will cause her more trouble if she continues to
refuse payment.
Article 1159 of the New Civil Code provides that obligations arising
from contracts have the force of law between the contracting parties and
should be complied with in good faith. Ms. Roxy entered into a contract of
lease which obligations she must comply with in good faith and for as long
as it is existing. Her obligations, as a lessee, are covered in Article 1657 of
the New Civil Code of the Philippines.

Article 1657. The lessee is obliged:

(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.

The contract she entered into obliges her to pay the price as
stipulated in the first paragraph of Article 1657. When the lessor, Mr. Chua
died, it does not render the lease contract ineffective or void. As provided
in the case of Soriano vs Heirs of Roxas, the Supreme Court says, that the
death of lessor does not ipso facto terminate the agreement or contract of
lease. This means, the obligation of Ms. Roxy B. still continues which is to
pay her lease fee of Php 30,000, as the contract remains valid and existing.
The effects of non-payment of lease fee by Ms. Roxy B. would
constitute a breach of contract and would result to some effects against her
as provided in Article 1659, which states that, 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 of damages, or only the latter, allowing the contract to
remain in force. Moreover, in Article 1673, the lessor may judicially eject
the lessee for the reason enumerated in paragraph 2 which is the lack of
payment of price stipulated.
Since the reason of the refusal to pay of Ms. Roxy B. to her lease fee
is because she does not know whether she would pay Rex or Rey, the law
provides that she can deliver her payment to either of them. Under Article
1311 of the Civil Code, heirs are bound by the contracts entered into by
their predecessors-in-interest except when the rights and obligations
therein are not transmissible or by provision of law.
 A contract of lease is generally transmissible to the heirs of the
lessor. Thus, since the nature of the agreement she entered into is that of a
contract of lease, Ms. Roxy may deliver to Rey or Rex Chua, as heirs of Mr.
Rodolfo Chua,provided she asks for a proof of payment in case there would
arise a question of property or judicial or extrajudicial conflicts among the
heirs of Mr. Chua regarding the distribution and partition of properties.
To conclude, Ms. Roxy has cannot avoid her obligation arising from
the contract she entered into with Mr. Chua, her refusal to pay the rental
fee must not be the answer to avoid conflict with both heirs of Mr. Chua,
because such will trouble her more in the legalities of contract. It is her
duty and responsibility to pay her lease fee as stipulated in the contract and
that must be her first priority. Ms. Roxy B. must deliver her payment of
lease to either Rey or Rex Chua because failure to do so constitutes a
breach of contract she entered into with Mr. Chua that would result to
either rescission of contract and payment of damages with interest or
judicial ejectment which would cost her more.