Friday, 26 January 2018 Lease Art, 1642 Three kinds of lease contracts: 1. Lease of Things 2. Lease of Wark 3. Lease of Service Art, 1643 Lease of Things- one of the parties binds himsetf to give to another the use of a thing for ‘price certain, and for a periad such period must not be more than 99 years. Art. 1644 Lease of work ar service- one of the parties binds himself to execute a piece of work or to render a service for a price certain, but the relationship of principal and agent does not exist between them. Art, 1645 General Rule: Consumable goods cannot be the subject matter of a contract of lease of things. Ratio: To use or enjoy hem, they will have to be consumed. This cannot be done by a lease since ownership aver them is not transferred to him by the contract of lease. Exception: a. If they are merely exhibited b. Ifthey are accessory to an industrial establishment. Art. 1646 Persons Disqualified to buy under Art. 1490 and 1491 are also disqualified to become lessees. ‘Art. 1490. The husband and the wite cannot sell property to each oth; except: (1) When a separation of property was agraed upon in the marriage settlements; or (2) When there has been a judicial separation of property under article 191.Friday, 26 January 2018 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; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferiar 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. Art, 1647- It a lease is to be recorded in the Registry of Property, the following persons must have proper authority (power of attorney ) to constitute the lease 1. The husband with respect to the paraphernal real estate of the wife 2. The father or guardian with respect to the property of the minor or the ward 3. The manager (administrator) with respect to the property under his administration. Manager may be: a. The administrator conjugal property b. Administrator of co-ownership ¢. ¢. Administrator of state patrimonial propertyFriday, 26 January 2018 Art. 1648. Every lease of real estate may be recorded in the Registry of Property. Unless a lease is recorded, it shall not be binding upon third persons. Ratio: Its purpose is to notify strangers to the transaction, General Rule : Lease of real property is personal right Exceptions : Lease partakes of the nature of real right if: 1. Lease of real property is more than 1 year 2. Lease of real property is registered regardless of duration Note: Lease of personal property cannot be registered. To be binding against third persons, the parties must execute a public instrument. Art. 1649.The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary. (n) Ratio: The objective of the law in prohibiting assignment of lease without the lessor's consent is to protect the lessor or owner of the leased property. Assignment of this Nature constitutes a novation (by substituting the person of the debior-lessee) so the creditor -lessor must consent, ‘Art. 1650. When in the contract of lease of things there is no express prohibition, the lessee may sublet the thing leased, in whole or in part, without prejudice to his responsibility tar the performance of the contract toward the lessor. SUBLEASE - A separate and distinct contract of lease wherein the original lessee becomes a sublessor to a sublessoe. Sublease distinguished from Assignment of lease. As to # of Relationships: SL- There are two leases and two distinct juridical relationships although immediately connected and related to each other, AOL-There is only one juridical relationship, that of the lessor and the assignee, who is, converted into a lessee. As to Parsonality: SL- The personality of the lessee does not disappear. AOL: The personality of the lessee disappears. ‘As to the Transmission of Rights:Friday, 26 January 2018 SL- The lessee does not transmit absolutely his rights and obligations to the sublessee. AOL. The lessee transmits absolutely his rights to the assignee ‘As to the right to file an action against the lessor SL-The sublesse, generally, does not have any direct action against the lessor AQL- The assignee has a direct action against the lessor. Art, 1851. Without prejudice to his obligation toward the sublessor, the sublessee is bound to the lessor for all acts which refer to the use and preservation of the thing leased in the manner stipulated between the lessor and the lessee. (1651) General Rule: There is na juridical relationship between the lessor and the sublessee . ‘The lessee is directly liable to the lessor and the sublesses. Exceptions: Aris. 1651 and 1652. Art, 1652. The sublessee is subsidiary liable to the lessor for any rent due trom the lessee. However, the sublessee shall not be responsible beyond the amount of rent due from him, in accordance with the terms of the sublease, at the time of the extrajudicial demand by the lessor. Payments of rent in advance by the sublessee shall be deemed not to have been made, 30 far as the lessor's claim is concerned, unless said payments were effected in virtue of the custom of the place. (1552a) + The purpose of the second paragraph is to prevent collusion between lessee and sublessee. Art. 1653. The provisions governing warranty, contained in the Title on Sales, shall be applicable to the contract of lease. In the cases where the return of the price is required, reduction shall be made in proportion to the time during which the less ‘enjoyed the thing. (1553) Rights and Obligations of the Lessor and Lessee. Art. 1654. The lessor is obliged: (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;PNGey £O valance (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; (8) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the ‘entire duration of the contract. (15542) + The lessor is also obliged not to alter the form in such a way as to impair the use to which the thing is devoted [See Art, 1661] Article 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 or a rescission of the lease. Article 1656. The lessor of a business or industrial establishment may continue engaging in the same business or industry to which the lessee devotes the thing leased, unless there is a stipulation to the contrary. Art, 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 trom the nature of the thing leased, according to the custom of the place; (3) To pay expenses far the deed of lease. (1555) ~ The lessee is also obliged to bring to the knowledge of the proprietor, within the shortest possible time, every usurpation or untoward act which any third person may have committed or may be openly preparing to carry out upon the thing leased [See Art, 1663]. Friday, 26 January 2018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. (n) 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 tor damages, or only the latter, allowing the contract to remain in foros. (1556) Article 1660, If a dwelling place or any ather building intended tor human habitation is in such a condition that its use brings imminent and serious danger to life or health, the lessee may terminate the lease at once by natifying the lessor, even if at the time the contract was perfected the former knew of the dangerous. condition or waived the right to rescind the lease on account of this condition. Art, 1861. The lessor cannot alter the form of the thing leased in such a way as to impair the use to which the thing is devoted under the terms of the lease. (15574) - Lessor can alter provided there is no impairment of the use to which the thing is devated under the terms of the lease (Art. 1661) - Lessee can alter so-long as the value of the property is not substantially impaired ‘Art. 1662. If during the lease it should become necessary to make some urgent repairs upon the thing leased, which cannot be deferred until the termination of the lease, the lessee is obliged to tolerate the work, although it may be very annoying to him, and although during the same, he may be deprived of a part of the premises. If the repairs last more than forty days the rent shail be reduced in proportion to the time - including the first forty days - and the part of the property of which the lessee has been deprived. When the work is of such a nature that the partion which the lessee and his family need for their dwelling becomes uninhabitable, he may rescind the contract if the main purpose of the lease is to provide a dwelling place for the lessee. (1558a) * The lessee is obliged to tolerate the work although it may be very annoying to him and although during the same time he may be deprived of a part of the premises, if repairs last for not more than 49 days. If 40 days or more, lessee can ask for reduction af the rent in proportion to the time ~ including the 1st 40 days — and the part of the property of which he is deprived. Friday, 26 January 2018 If less than 40 days, the lessee cannot ask for reduction of the price or for rescission.- Note: In either case, rescission may be availed of if the main purpose of the lease is to provide a dwelling place and the property becomes uninhabitable. Art. 1663. The lessee is abliged to bring to the knowledge of the proprietor, within the shortest possible tima, avery usurpa tion or untoward act which any third person may have committed or may be openly proparing to: carry out upon t ha thing leased. He is also obliged to advise the owner, with the same urgency, of the need of all repairs included in No. 2 of Article 1654. In both cases the lessee shall be liable for the damages which, thraugh his negli may be sutterad by the proprietor. nce, If the lessor fails to make urgent repairs, the lessee, in order to avoid an imminent danger, may order the repairs at the lessor’s cast, (1569) Effects If Lessor Fails to Make Urgent Repairs (Art. 1663) The lessee may: [OSSA] 1, Order, in order to avoi Iminent danger, repairs at the lessor’s cost 2. Sue for damages 9. Suspend the payment of the rent 4, Ask for rescission, in case of substantial damage to him Art, 1664. The lessor is not obliged to answer for a mere act of trespass which a third person ma y cause on the use of the thing leased; but the lessee shall have a direct action against the intruder. There is a mere act of trespass when the third person claims no right whatever. (1560a) - TRESPASS IN LEASE : 1. Trespass in fact (perturbacion de mero hecho): * There is a mere physical disturbance on the property leased such as an intrusion of an intruder without any legal claim to justify his entry into the property. + Lossor will not be heldliabl «. Reason : The duty to maintain the lessee in the peaceful enjoyment of the lease is a warranty that the lessee shall not be disturbed in his legal , and not physical possession (Bercero vs. Capitol Dev't. Corp., G.R. No. 154765, Mar. 28, 2007 ) Friday, 26 January 2018 + Lessee is authorized by law to pursue a direct action like forcible entry against the intruder.2. Trespass in law ( perturbacion de derecho): + Athird person claims legal right to enjoy the premises + Lessor will be held liable Note: In the Goldstein case, trespass in fa ct is distinguished from legal transfer; if the trespass is not accompanied or preceded by 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 lega ! forms or reasons, it is only trespass in fact (de mera hecho) (Goldstein v. Roces, G.R. No. L- 869, March 30, 1916) While the Japanese Occupation was a fortuitous event, the lessor is still not excused from his obligation to warrant peaceful legal possession. Lease is a contract that calls for prestations both reciprocal and repetitive; the obligations of either party are not discharged at any given moment, but must be fulfilled all throughout the term of the contract (Villaruel v. Manila Motor Co., G.R. No. 10384, December 13, 1958). Friday, 26 January 2018 ‘Art.1665. The lessee shall return the thing leased, upon the termination of the lease, as he received it, save what has been lost or impaired by the lapse of time, or by ordinary wear and tear or from an inevitable cause. (15G1a)‘Art.1666. In the absence of a statement concerning the condition of the thing at the time the lease was constituted, the law presumes that the lessee received it in good condition, unless there is proof to the contrary. (1562) Art, 1667. The lessee is responsible for the deterioration or loss of the thing leased, unless he proves that it took place without his fault. This burden of proof on the lessee does not apply when the destruction is due to earthquake, flood, storm or other natural calamity. (1563a) Art.1668. The lessee is liable for any deterioration caused by members of his household and by quests and visitors. (1564a) Art, 1669. If the lease was made for a determinate time, it ceases upon the day fixed, without the need of a demand. Art. 1670. If at the end of the contract the lessee should continue enjoyi ng the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but f or the time established in Articles 1682 and 1687. The other tarms of the original contract shall be revived. (1566a) IMPLIED NEW LEASE (Tacita Reconducion) Lease which arises if at the end of the contract the lessee should continue enjoying the thing leased for 15 days with the acquiescence of the lessor, unless a notice to the contrary had previously been given by either party. - Requisites: 1. The term of the original contract has expired; 2. The lessor has not given the lessee a notice to vacate; and 3. The lessee continued enjoying the thing leased for at least 15 days with the acquiescence of the lessor. - When there is no implied new lease: Friday, 26 January 2018 1. When betore or after the expiration of the term, there is a notice to vacate given b y either party. 2. When there is no definite fixed periad in the original lease contract as in the case of+ Effects: 1. The period of the new lease is nat that stated in the original contract but the time in Articles 1682 and 1687. 2. Accessory obligations contracted by a third person are xxtinguished (Art. 1672) 3. Other terms of the original contract are revived. = Note: Terms that are revived are only those which are germane to the enjoyment of possession, but not those with respect to special agreements which are by nature foreign to the right of occupancy or enjoyment inherent in a contract of lease - such as an option to purchase the leased premises. Art. 1671. If the lessee continues enjoying the thing after the expiration of the contract, over the lessor’s objection, the former shall be subject to the responsibilities of a possessor in bad faith. (n} Article 1672. In case of an implied new lease, the obligations contracted by a third person for the security of the principal contract shall cease with respect to the new lease. (1567) Art. 1673. The lessor may judicially eject the lessee for any of the following causes: (1) When the period agreed upon, or that which is fixed for the duration of lease under Articles 1682 and 1687, has expired; (2) Lack of payment of the price stipulated; (8) Violation of any of the conditions agreed upon in the contract; (4) When the lessee devotes the thing leased to any use or service nat stipulated, which causes the deterioration thereof; or if he does nat observe the requirement in No. 2 of Article 1657, as regards the use thereof. = The demand of payment must be coupled with demand to vacate the premises. (Otherwise, the Unlawful Detainer case will not prosper. ‘The ejectment of tenants of agricultural lands is governed by special laws. (15692) 10 iday, 26 January 2018 ~ Grounds For Judicial Ejectment Under Art. 1673: [ ELVU ] 1. Expiration of the period agreed upon or the period under Arts. 1682 and 1687; Note: If and when the term expires and the lessee is still in possession, the contract is NOT deemed terminated. The lessor must notify the lessee that he has no intention to‘extend the lease in order for the imy new lease nat to apply. 2. Lack of payment of the price stipulated; 8. Violation of any of the conditions agreed upon in the contract; and 4. Unauthorized use or service by the lessee of the thing leased. ~ Note: In all cases except number 1, for th @ case of unlawful detainer to prosper, a demand to pay and vacate should be given to the lessee. ~ Anotice or demand to vacate does not have to expressly use the word —"vacate”, as it suffices that the demand letter puts the lessee or occupant on notice that if he does not pay the rentals or comply with the terms of the lease contract, it should move out of the leased premises. ‘Art. 1674. In ejectment cases where an appeal is taken the remedy granted in Article 539, second paragraph, shall also apply, if the higher court is satisfied that the lessee's appeal is frivolous or dilatory, or that the lessor's appeal is prima facie meritorious. The period of ten days referred to in said article shall be counted from the time the appeal is perfected. (n} - Preliminary Mandatory Injunction To Restore Possession In ejectment cases where an appeal is taken, the lessor is entitled to a writ of preliminary injunction to restore him in his possession in case the higher court is satisfied that the lessee's appeal is frivolous or dilatory (Le. without merit) or the lessor’s appeal is prima facie meritorious. " Friday, 26 January 2018 Article 1675. Exce article 1673, the lessee shall have a right to make use of the periods established in articles 1682 and 1687. (1570) ‘Art. 1676. The purchaser of a piece of land which is under a lease that is not recorded in the Registry of Property may termi nate the lease, save when there is a‘SUpUatOn tO tie Comrary I tne con tract OF sale, or when the purcnaser KNOWS OF tha existence of the lease. If the buyer makes use of this right, the lessee may demand that he be allowed to gather the fruits of the harvest which corresponds to the current agricultural year and that the ve ndor indemnity him for damages suffered. If the sale is fictitious, for the purpase of extinguishing the lease, the supposed vendee cannot make use of the right grant ed in the first paragraph of this, article. The sale is presumed to be fictitious if at th e time the supposed vendee demands the termination of the lease, the sale is not recorded in the Registry of Property. (1571a) - General Rule: Purchaser of thing leased can terminate lease. - Exceptions: 1. Lease is recorded in Registry of Property 2. There is stipulation in the contract of sale that purchaser shall respect the lease 3. Purchaser knows, whether actual or constructive, the existence of the lease 4. Sale is fictitious; there is a disputable presumption that it is fictitious if the sale is not registered 5. Sale is made with right of repurchase (Art. 1677) Art, 1877. The purchaser in a sale with the right of redemption cannot make use of the power to eject the lessee until the en d of the period for the redemption. (1572) ‘Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is inten ded, without altering the form or substance of the property leased, the lessor upon the te rmination of the lease shall pay the lessee one - half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even thaugh the principal thing may suffer damage thereby. He sha Il not, however, cause any more impairment upon the property leased than is necessary. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the omamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished. (n)Art. 1679. If nothing has been stipulated conceming the place and the time for the payment of the lease, the provisions 12 Friday, 26 January 2018 or Article 1251 shall be observed as regards the place: and with respect to the time, the custom of the place shall be followed. (1574) SECTION 3. - Special Provisions for Leases of Rural Lands Art. 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 unforeseen fortuitous events, save always when there is, a specific stipulation to the contrary. Extraordinary fortuitous events are understoad to be: fire, war, pestilence, unusual flood, locusts, earthquake, or others which are uncommon, and which the contracting parties could not have reasonably foreseen. (1575) Art. 1681. Neither does the lessee have any right to: a reduction of the rent if the fruits are lost after they have been separated from their stalk, root or trunk. (1576) Art. 1682. The lease of a piece of rural land, when its duration has not bean fixed, is, understood to have been for all the time necessary for the gathering of the fruits which the whole estate leased may yield in one year, or which it may yield once, al though two or more years have to elapse fo r the purpose. (1577a) ‘Art, 1683. The autgoing 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. (1578ay Art. 1684. Land tenancy on shares shall be governed by special laws, the stipulations of the parties, the provisions on partnership and by the customs of the place. (15794) Art. 1685. The tenant on shares cannot be ejected except in cases specified by law. (n) SECTION 4. - Special Provisions of the Lease of Urban Lands Art. 1686. In default of a special stipulation, the custom of the place shall be observed with regard to the kind of repairs on urban property for which the lessor shall be liable. In case of doubt it is understood that the repairs are chargeable against him. (1580a) 13 Friday, 26 January 2018 Art. 1687. If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly: and from day to day, if the rent is to be paid daily. However, even though a monthly rent is paid, and no period for the lease has been set, the courts may fix a longer term for t he lease after the lessee haseet eee ono en iee oe one eee NE likewise determine a longer period atter the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer p riod after the, lessee has stayed in the place for over ane month. (15814) Art, 1688. When the lessor of a house, or part thereof, used as a dwelling for a family, or when the lessor of a store, or industrial establishment, also leases the furniture, the lease of the latter shall be deemed to be for the duration of the lease of the premise s. (1582) 4