Manuelito C.

Bagasina II October 22, 2018

Law 123 – C Project on Lease
An analysis of lease: Development Bank of the Philippines and Bohol Tropics Corp
A. Applying Philippine law to this contract of lease
1. Consent
The two parties signed the contract using their signatures on every page. Both parties
seem to be of sound judgement and of valid status as lawful parties capable of making
decisions in the name of their respective party. Under Article V of the lease contract, the
contract will be in effect as soon as the parties (and Notary Public) have signed the contract.
2. Object
“The Project” as described in the contract, is DBP requesting a training seminar on
the “Post-Streamlining and Centralization Rollout Review and Synergy in Change and
Transition Program” for select personnel. A venue, amenities, food, and beverages will also
be provided. The number of participants are not to exceed 52 people.
3. Cause and Consideration
DBP shall pay the amount of Php 262,000 to BTR along with other expenses such as
taxes or “Out of pockets expenses”. The BTR will issue an invoice to DBP.
4. Obligations of the Lessor
BTR is obligated to:
 Provide required facilities, venue, food, beverages, and other related amenities
required for “The Project” from September 11 to 13 of the year 2015
 Provide venue, room accommodations, food and beverages, room amenities, seminar
amenities, and other facilities good for 52 persons
 Submit the invoice to DBP
 Be liable to all damages due to a consequence of its personnel or representative’s
 Not assigned any parts of this Contract to other parties

5. Obligations of the Lessee
DBP is obligated to:
 Pay the Contract price, including taxes, of Php 262,600
 Perform all its obligations pursuant to the Civil Code of the Philippines.
 Withhold the Expanded Withholding Tax from any payment to the BTR
 Submit Certificate of Creditable Tax Withheld at Sources to the BTR within 15
calendar days from receipt of payment by the BTR
 Pay an additional amount if the number of participants exceeds 52 but pays the same
price if the number of participants is less than 52
Obligations of Both Parties
Both parties are obligated to:
 Disclose to third parties data concerning the other party, unless the disclosure is
demanded by a competent court
 o Any breach of confidentiality done by a party will give rise for the offending
party to pay for damages sustained by the injured party
 Follow the governance of the Philippines’ laws
 Obey the jurisdiction of the appropriate courts of Tagbilaran City or Makati City,
Philippines
 Force Majeure would release the parties from liability on delay or damages
o The parties must notify one another if they cannot perform their obligation due
to a fortuitous event
6. Consistency with the Civil Code on Lease
a. Assignment: The contract makes states that BTR shall not assign any part of “this
Contract” to any other party unless given consent by DBP.
b. Sub-lease: BTR is still the owner of the venue and merely grants DBP temporary use of
that venue. There is no mention of DBP’s specific rights regarding the rooms but using the
trade of this industry, it is assumed that DBP has no express right to do what they wish in
their use of BTR’s facility.
c. Rescission: There is no express recession clause in this contract. BTR seems to be the only
one onerously burdened with fulfilling their obligations until the end of the contract. DBP
merely has to ensure that no more than 52 participants attend and even then, there is no
recession but just a mere additional charge.
d. Damages: Both parties are liable to damage if they breach the confidentiality clause of this
contract. Article III seems to be holding BTR to the higher standard because it only mentions
BTR being liable to damage in case it hinders or injures the fulfillment of the contract. There
is no mention of DBP’s liability to damages.

7. Provision on Improvements
The contract states nothing about improvements. The venue will merely be rented for
a few days.
Recommendations for this contract:
Provision to be amended
There is no mention of delivery of payment. It must be stated on the exact time of the
payment, either paid immediately after the signing of the contract or partial payments be
made until the end of the contract.
There is no mention of the diligence required by both parties. BTR should state that
“The Project” will be carried out in such a way as to help satisfy the objectives of the other
party, to hold an educational seminar for its select personnel. DBP should also state that it
would ensure that BTR’s facilities are not damaged and merely used in a reasonable manner,
such as a guest in a host’s home.
Provision to be modified
Article III must also hold DBP accountable and liable for damages in case DBP or
any of its employees cause damages to the facilities of BTR.
B. General Questions
1. What is the difference between a lease with indeterminate time and implied new lease?
A lease must always have a period and this period may be definite or indefinite. In a
lease with indeterminate time, it speaks of “for all the time the members of the club may
desire”. The indeterminate time can speak of land leasing where the period is not set due to a
different variety of activities. Example: the leasing of a land until the first harvest of corn. It
cannot be said if the 100th day or the 101st day will yield the corn crops, so a lease may not be
specific if it concerns an activity without a set amount of time. An implied new lease
concerns itself with a lessor and a lessee both continuing their roles despite the expiration of a
lease. If for example lessor A leased out his land to lessee B for 2 months and on the end of
the 2nd month, B still hasn’t moved out but still gives payment to A, then a new contract of
lease is made impliedly. The main difference with the two is the circumstance of the
extension/time. The 1st one speaks of a certain time that a member may need and the 2 nd
speaks of the parties simply agreeing to modifying the period of the lease contract.
2. Difference between lease and the other contracts
a. Contract of sale
A full and permanent transfer of an ownership right.
Ex:
A leased B 100 hectares of farm land in Sasmuan, Pampanga for a period of 2 months. After
2 months, B loses the right to use that land. During those 2 months, B may not cause great
damage to the land, such as releasing toxic wastes into those lands because that land is not his
to dispose of as his wish
vs
A sold B 100 hectares of farm land in Sasmuan, Pampanga. B has that land until his dying
days and can put as much salt in the land if he chooses to, unless a competent authority tells
him to stop salting the Earth.
b. Simple Loan
A thing loaned becomes the property of the obligor, but lease merely makes an owner
to relinquish control over his object.
Ex:
A leased to B his trusty steed, Lucky Day, on the 21 st of February 2018. B rode this steed in a
legal racing track and gained money from it by the enthusiastic crowd. B is not entitled to this
money because the fruits belong to the owner but may ask compensation from A.

A rented to B his trusty steed, Lucky Day, a white Filly Courser from Arabia. B is a
racehorse jockey and his last horse died due to a lightning strike. He asked A to rent him
Lucky Day so that B can still compete in the local race. A agreed to give temporary
ownership, via renting, of the horse and B won a race. B is entitled to the fruits of the race
because the horse became his property along with the fruits.
c. Usufruct
The usufructor allows the usufructary to enjoy his thing without altering the object but
he may enjoy the fruits.
Ex:
Hugh is a rich coconut farmer and has many houses and holdings in Masbate. Manny is a
good friend of Hugh and is homeless at the moment. Hugh tells Manny “Manny, you may use
one of my houses but don’t alter it too much. You may use the land to create fruits and sell
because I know you’re poor and need help”.
d. Commodatum;
A commodatum allows a person to enjoy a thing but he is not liable to pay or fulfill
any obligation, but the person borrowing must not alter it.
Ex:
Tommy lets Arthur, his brother, borrow his 1925 Bugatti 13 car. Tommy just tells his
brother to have fun with the car but not too much fun by altering/damaging it.
e. Deposit
Deposit is a real contract where it is perfected when object is delivered. Lease does
not need delivery, but one still has to pay. Deposit obliges the owner of the safe to take care
of it.
Ex:
Jury leases to Prudence a garage in Dunbar, Scotland. Prudence was supposed to use
that garage to store his things but completely forgot about it. Prudence still has to pay for
lease.
Prudence signs a contract of deposit with Jury to store a diamond ring. The contract
only arises when Prudence delivers the diamond ring to the safe. Jury must now take care of
the safe to ensure the well-being of the diamond ring.