CIVIL LAW REVIEW 2

Dean Genevieve Marie D.B. Paulino

April 2, 2022

1. Differentiate USUFRUCT and LEASE as to:

A) ORIGIN
B) NATURE OF RIGHT
C) CREATOR OF RIGHT
D) EXTENT OF ENJOYMENT,
E) CAUSE,
F) REPAIRS AND TAXES
G)LIMITATIONS ON THE USE OF PROPERTY. ( 20 pts.)

The following are the differences between usufruct and lease:

a. As to the origin, in usufruct, it is created by law, contract, will of
testator or by prescription while in lease, it is created by contract, by
way of exception, an implied new lease, or when a builder has built
in good faith on the land of another a building, when the land is
considerably more in value than the building;
b. As to the nature of right, usufruct is always a real right while in lease,
real right is only if, as in the case of a lease over a real property, the
lease is registered, or is more than one (1) year, otherwise, it is a
personal right;
c. As to the creator of right, in usufruct, it is the owner or his agent
while in lease, it may not be the owner, as in the case of a sub-lessor
or a usufructuary;
d. As to the extent of enjoyment, usufruct involves all fruits, uses and
benefits while lease involves only those particular or specific use;
e. As to the cause, in, usufruct, it is the passive owner who allows the
usufructuary to enjoy the object of the usufruct while in lease, it is
the active owner who makes the lessee enjoy;
f. As to repairs and taxes, in usufruct, the usufructuary is obliged to
make the ordinary repairs pays the annual charges and taxes on the
 fruits while in lease, the lessee cannot constitute a usufruct on the
property leased;
g. As to the limitations on the use of property, in usufruct, the
usufructuary may lease the property to another but cannot alienate
the thing itself while in lease, the lessee cannot constitute a usufruct
on the property leased.

2. Tess leased her commercial building to Tony. The agreement

was reduced in writing. The contract of Lease contains a
right of first refusal. Tony subleased the property to Tina.
The subletting was with the consent of Tess.

a) Can Tina exercise the right of first refusal? Explain fully.

( 10 pts.)

No, Tina cannot exercise the right of first refusal.

The Supreme Court has held that the contract of sublease is an

agreement between the sublessor and the sublessee only. The
original lessor (the owner) stands as a third party therein. He is
not bound by the covenants entered into under the sublease
agreement. Neither does the sublease affect the efficacy of the
contract of lease in any manner.

Here, Tina cannot exercise the right of first refusal because she
is not bound by the agreement made between Tess and Tony
concerning the right of first refusal of the commercial building.

Hence, Tina cannot exercise the right of first refusal.

b) Will your answer be the same if Tony assigned the lease to

Tina and such assignment was with the consent of Tess?
Explain fully. ( 10 pts.)

No, my answer would not be the same if Tony assigned the

lease to Tina and such assignment was with the consent of Tess.
 In the case of Inocencio v. Hospicio de San Jose, the Supreme
Court has held that in the case of cession or assignment of lease
rights on real property, there is a novation by the substitution of
the person of one of the parties — the lessee. The personality of
the lessee, who dissociates from the lease, disappears; only two
persons remain in the juridical relation — the lessor and the
assignee who is converted into the new lessee.

Here, if Tony assigns the lease to Tina and such assignment

was with the consent of Tess, Tina can now exercise the right of
first refusal because as an assignee, Tina is converted into as the
new lessee.

Hence, my answer would not be the same.

c) Tony built a 3-story building on the leased property. He

spent P10 million in the construction of the building. Upon
the termination of the lease contract, Tony demands Tess
to pay him the depreciated amount of the building which
is P5 million. Tony refused to vacate the leased premises
until Tess reimburses him the P5 million. Rule on the
matter. ( 10 pts.)

Yes, Tony can refuse to vacate the leased premises until Tess
reimburses him the P5 million.

Under Article 1678 of the Civil Code, 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 substance
of the property leased, the lessor upon the termination 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
though the principal thing may suffer damage thereby. He shall
not, however, cause any more impairment upon the property
leased than is necessary.
 Here, the 3 storey building is a useful improvement. Tess must
first reimburse Tony half of the price of the building before Tony
can vacate the leased premises.

Hence, Tony can refuse to vacate the leased premises.

3) Differentiate TRUST from a DONATION. ( 10 PTS.)

As regards the concept, trust is an existing legal relationship and

involves separation of legal and equitable title while donation is the
transfer of property which involves a disposition of both legal and equitable
ownership except gift in trust;

4) Can a trustee acquire the property held in trust by

prescription? Explain fully. ( 10 pts.)

No, as a general rule, a trustee cannot acquire the property held in

trust by prescription.

Jurisprudence expressly provides that to allow prescription would be

tantamount to allowing a trustee to acquire title against his principal and
true owner. However, in cases of implied trust, the trustee may acquire the
property held in trust provided that he sets up a title which is adverse to
that of the beneficiary such that all the normal requisites for extraordinary
acquisitive prescription must be present.

5) Is lease a personal or real right? Explain fully. ( 10 pts.)

Generally, lease is a personal right. However, it partakes of the
nature of a real right if the lease of real property is more than one (1) year
or the lease of real property is registered regardless of duration.

6) Give at least 3 distinctions between sublease and assignment

of lease. (10 pts.)

The following are the distinctions between sublease and assignment of

lease:
a. As to their interest, in sublease, the lessee retains an interest in the
lease and he remains a party to the contract while in assignment of
 lease, the lessee makes and absolute transfer of his interest as lessee
which results in disassociating himself from the original contract of
lease;
b. As to their right of cation, in sublease, the sublessee does not have
any direct action against the lessor while in assignment of lease, the
assignee has a direct action against the lessor;
c. As to their right to conduct the same, sublease can be done even
without the permission of the lessor unless there be an express
prohibition while in assignment of lease, it cannot be done unless the
lessor consents.

7) Exhaustively explain the effects of the sale of the leased

property on the lease contract. (10 pts.)

The first thing to consider is the type of property and amount of rent
involved. If the unit is residential and the monthly rent does not exceed
Php 10,000.00, the lease is covered by Republic Act No. 9653, or the Rent
Control Act. This law guarantees that neither the lessor nor the new owner
may eject the lessee upon the ground that the leased premises have been
sold or mortgaged to a third person. This law applies even if the lease
agreement is not registered.

If the unit involved is not residential or the monthly rent exceeds Php
10,000.00, the lessee must register his lease before the Registry of Deeds
and have the registration reflected in the title of the property in order to
protect his interests. This is because under the Civil Code, if a lease of a
piece of land is recorded in the Registry of Deeds of the place wherein the
property is situated, neither the lessor nor the new owner may terminate
the lease.

Other instances wherein the lease may not be terminated is when the
sale contract between the lessor and the new owner provides otherwise, or
when the purchaser knows of the existence of the lease. The former rarely
happens while the latter scenario is difficult to prove, thus, it is still a
prudent practice for the lessee to register his lease with the Registry of
Deeds.
 This is not to say, however, that the lessee is entirely powerless if his
lease is not registered. As a rule, the owner cannot forcibly evict a tenant.
Article 536 of our Civil Code provides that in no case may possession be
acquired through force or intimidation as long as there is a possessor who
objects thereto. Further, he who believes that he has an action or a right to
deprive another of possession (in this case, the lessor or new owner) must
invoke the aid of the competent court if the possessor refuses to yield.

As a matter of course, the owner must first file a case for Unlawful
Detainer against the tenant in any of the Metropolitan Trial Courts (MTCs)
of the place wherein the property is located. Unlawful detainer is an action
to recover possession of real property from one who illegally withholds
possession after the expiration or termination of his right to hold
possession under any contract, express or implied. The possession by the
defendant in unlawful detainer is originally legal but became illegal due to
the expiration or termination of the right to possess.

If the lessor or new owner proceeds with forced eviction without a

judgment from the MTC, he may be prosecuted criminally for grave
coercion under Article 286 of the Revised Penal Code (RPC). Grave
coercion is committed by any person who, without any authority of law,
shall, by means of violence, threats, or intimidation, prevent another from
doing something not prohibited by law or that he compelled him to do
something against his will, be it right or wrong. Thus, without a judgment
from the MTC, neither the lessor nor the new owner may forcibly evict the
lessee, even if the lease agreement is not registered.

(Source: https://www.divinalaw.com/dose-of-law/lease-concerns-
remedies-owner-sells-leased-property/)