LEASE OF THINGS

CONSENSUAL PRINCIPAL NOMINATE ONEROUS TEMPORARY

Consumable things cannot be subject matter of lease except: (1645)

Consumable only for display or advertising (lease ad pompam et ostentationem) Goods are accessory to an industrial establishment, e.g. coal in a factory

Lease 1. only use or enjoyment is transferred 2. transfer is temporary

Sales 1. ownership is transferred 2. transfer is permanent

3. lessor need not be the owner

4. the price of the object, distinguished from the rent, is usually not mentioned.

3. seller must be the owner at the time the property is supposed to be delivered
4. usually, the selling price is mentioned.

Lease 1. lessor does not lose ownership and lessee 2. relationship is one of lessor

Simple Loan 1. lender loses ownership 2. relationship is one of obligor and obligee 3. governed by the Usury Law 4. not governed by the Statute of Frauds 5. refers only to personal property

3. not governed by the Usury Law 4. if what is leased is real property for more than one year, the statute of frauds must be complied with 5. refers to real and personal property

Lease 1. onerous contract (although the rent may later on be remitted) (NOTE: The lease, however, in favor of the U.S. Mil. Bases is gratis.) 2. not essentially personal in character, hence right may be transmitted to heirs 3. consensual contract

Commodatum 1. this is essentially gratuitous; if there is a price or rent, the contract ceases to be a commodatum

2. personal in character, thus death of either bailor or bailee ends the commodatum 3. real contract requires delivery for perfection (NOTE: A contract, however, to enter into a commodatum is a consensual, not a real contract.)

BASIS 1. as to EXTENT 2. as to NATURE of the right

USURFRUCT 1. covers all fruits and uses as a rule 2. is always a real right

LEASE 1. Generally covers and uses as a rule only a particular or specific use 2. is a real right only if, as in the case of a lease over REAL PROPERTY, the lease is REGISTERED, or is for MORE THAN ONE YEAR, otherwise, it is only a personal right 3. the lessor may or may not be the owner (as when there is a sublease)

3. as to the CREATOR of the right

3. can be created only by the owner, or by duly authorized agent, acting in behalf of the owner

BASIS 4. as to ORIGIN

USURFRUCT 4. may be created by law, contract, last will, or prescription 5. The owner or lessor (Art. 563) is more or less ACTIVE, and he MAKES the lessee enjoy hace gozar 5. The owner is more or less PASSIVE and he ALLOWS the usufructuary to enjoy the thing given in usufruct dejagozar

LEASE 4. may be created as a rule only by contract; and by way of exception by law (as in the case of an implied new lease, or when a builder has built in good faith a building on the land of another, when the land is considerably worth more in value than the building, etc.) (See Art. 448) 5. The owner or lessor is more or less ACTIVE, and he MAKES the lessee enjoy hace gozar

5. as to CAUSE

BASIS 6. as to REPAIRS

USURFRUCT

LEASE

6. The usufructuary has the duty 6. The lessee generally has no to make the ordinary repairs duty to pay for repairs

7. as to TAXES 7. The usufructuary pays for the 7. The lessee generally pays no annual charges and taxes on the taxes fruits

8. as to other things

8. A usufructuary may lease the property itself to another. (See Art. 572)

8. The lessee cannot constitute a usufruct on the property leased

BASIS 6. as to REPAIRS

USURFRUCT

LEASE

6. The usufructuary has the duty 6. The lessee generally has no to make the ordinary repairs duty to pay for repairs

7. as to TAXES 7. The usufructuary pays for the 7. The lessee generally pays no annual charges and taxes on the taxes fruits

8. as to other things

8. A usufructuary may lease the property itself to another. (See Art. 572)

8. The lessee cannot constitute a usufruct on the property leased

Lease period
Definite not more than 99 years (Art 1643) Indefinite not fixed
Rural lands (1682) - one year minimum, two or more years, depending on how long to plant and harvest crops / fruits Urban lands (1687) depends when rent paid
Daily lease is day to day Weekly lease is week to week Monthly lease is month to month Yearly lease is year to year

Lease period
Extra rule urban lands (1687)
If daily rent, may fix a longer period if the lessee has stayed for over one month. If weekly rent, court may fix a longer period if the lessee has stayed for over six months. If monthly rent, court may fix a longer period if the lessee has stayed for over one year.

Assignment of lease
General rule lessee cannot (1649)
Without consent of lessor Or stipulation to the contrary
WHY? Constitutes a NOVATION by substitution of the debtor. Assignment is an absolute transfer of a lessees interest, thus creditor/lessor must consent.

Sublease
Unlike in assignment, lessee may generally sublease in absence of express prohibition (1650)
WHY? Lessee remains party to lease even if he creates a sublease. He must still pay rents to the lessor, for example.

Sublease distinguished from assignment

SUBLEASE a) the lessee retains an interest in the lease; he remains a party to the contract b) the sublessee does not have any direct action against the lessor ASSIGNMENT a) the lessee makes an absolute transfer of his interest as lessee; thus, he dissociates himself from the original contract of lease b) the assignee has a direct action against the lessor

c) can be done even without the c) cannot be done unless the lessor permission of the lessor (unless there be consents an express prohibition)

Liability of sublessor
Even if sublessee is not party to lease, he is still DIRECTLY liable to lessor for USE and PRESERVATION of the property. (1651) If sublessee misuses property, lessor may bring an action against him directly (ACCION DIRECTA)

Liability of sublessor - rent

Sublesee is only SUBSIDIARILY liable to lessor for rent owed by lessee. This liability is LIMITED to rent owed at the time of the EXTRA-JUIDICIAL demand by lessor. (1652) Payment in advance is disregarded insofar as lessor is concerned, except if justified by custom of place (1652) WHY? To prevent collusion between sublessor and sublessee (sublessor may claim insolvency)

Obligations of LESSOR
Three important duties (1654)
(a) Delivery of the object (b) Making of necessary repairs (c) Maintenance in peaceful and adequate possession

When place is dangerous to Life or Health

Lesee may terminate (1661)
Applies only to dwelling place or other building intended for human habitation even if at the time contract was perfected, lessee KNEW of dangerous condition or WAIVED right to rescind on account of condition WHY? Public safety cannot be stipulated against

Obligations of LESSEE
Three important duties (1657)
(a) Pay the lease price (RENT) (b) Use properly thing leased (c) Pay expenses deed of lease

RENT
Who fixes the rent?
LESSOR, not court. If LESSEE does not agree, no lease. EXCEPT lease under Art. 448 (builder in good faith) Not fixed in consignation case (Lim Si v. Lim L-8496 Apr 25, 1956), disagreement to be decided not in action for consignation but in unlawful detainer case lessor institutes when lessee refuses to pay rents.

RENT
What can the court do?
Fix the time rent can be effective (Mayon Trading Co. v. Co Bun Kim, L-11251, Jul 31, 1958)

Increase in rent
Lessor has right, but NOT ABSOLUTE. New rate must be reasonable. Rent presumed reasonable, burden of proof is on LESSEE.

Urgent repairs
In case of URGENT REPAIRS (not improvements), lessee must TOLERATE the work, even if very annoying to him, unless the place becomes UNINHABITABLE, in which case he can ask for RESCISSION if main purpose of leaseis to provide dwelling place for lessee. (1662) If repairs < 40 days, lessee cannot ask for reduction of rent or rescission If repairs >= 40 days, lessee can ask for proportionate reduction (including first 40 days)

Duty of lessee concerning usurpation and repairs

NOTIFY lessor of usurpation or untoward acts (so that lessor may bring proper ouster actions such as forcible entry) NOTFY lessor of need for REPAIRS (lessee must notify because he is in possession, lessor has no duty to make constant inspection) If LESSEE fails to comply he would be responsible for damages suffered by lessor which could have been avoided by lessees diligence (1663)

Duty of lessee to return property leased

Lessee must return at end of lease the property in the SAME CONDITION. But he is excused for what has been lost or impaired by:
lapse of time ordinary wear and tear inevitable cause (fortuitous event) (1665)

Deterioration caused by others

Lessee is liable for deterioration caused by a) Himself b) Members of his household c) Guests and visitors
(1668)

Deterioration
There is a presumption that lessee is responsible for DETERIORATION or LOSS. (1667) Presumption must be INVOKED, otherwise cannot be considered by court. EXCEPTION: In case of NATURAL CALAMITY, no presumption. Ordinarily, FIRE is not a natural calamity. But if tenant can prove that he had no fault in the case of fire, and that it was impossible for him to stop its spread, he will not be liable.

Lessees right to suspend rentals

Lesee may suspend payment of rent: (1658)
a) If the lessor fails to make the NECESSARY REPAIRS b) if lessor fails to maintain the lessee in peaceful and adequate enjoyment of the property leased.

Remedies of aggrieved party

In case of non-fulfillment of duties, aggrieved party can avail of: (1659)
a) Rescission and damages b) Damages only (leaving contract in force)

Mere act of trespass

Lessor not obliged to answer for mere act of trespass, it is lessee with right of direct action (1664)

Two kinds of trespass a) mere act of trespass (perturbacion de mere hecho) 3rd person claims no right whatsoever b) Trespass in law (perturbacion de derecho) 3rd person claims legal right

Mere act of trespass

Lessor not obliged to answer for mere act of trespass, it is lessee with right of direct action (1664)

Two kinds of trespass a) mere act of trespass (perturbacion de mere hecho) 3rd person claims no right whatsoever b) Trespass in law (perturbacion de derecho) 3rd person claims legal right

Grounds for judicial ejectment of lessee (RA 9161)

(a) Assignment of lease or sub-leasing of residential units in whole or in part, including acceptance of boarders or bedspacers, without written consent of owner/lessor. (b) Arrears in payment of rent for a total of 3 mos. (c) Legitimate need of owner/lessor to repossess his or her property for his or her own use of any immediate member of his or her family as residential unit:

Grounds for judicial ejectment of lessee (RA 9161)

(d) Need of lessor to make necessary repairs of leased premises which is subject of an existing order of condemnation by appropriate authorities concerned in order to make said premises safe and habitable (e) Expiration of period of lease contract

Prohibition against ejectment (RA 9161)

No lessor or his successor-in-interest shall be entitled to eject lessee upon the ground that leased premises have been sold or mortgaged by third person regardless of whether lease or mortgage is registered or not.

Grounds for judicial ejectment of lessee (RA 9161)

(1) When the period agreed upon, or that which is fixed for the duration of leases under Articles 1682 and 1687, has expired; (SUSPENDED BY RA 9161) (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.

Right to ask for preliminary injunction in unlawful detainer

Art 1674. In ejectment cases where an appeal is taken, the remedy granted in Article 639, second paragraph, shall also apply, if the higher court is satisfied that the lessees appeal is frivolous or dilatory, or that the lessors 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. Art 539 par. 2. A possessor deprived of his possession through forcible entry may within ten days from the filing of the complaint present a motion to secure from the competent court, in the action for forcible entry, a writ of preliminary mandatory injunction to restore him in his possession.

Implied new lease (tacita reconduccion)

At end of contract, lessee should continue enjoying the thing leased for 15 days with the acquiescence of lessor, unless notice to contrary given by EITHER PARTY. (1670) HOW LONG? Not the time of original lease, but applying either 1682 (rural) or 1687 (urban).

Right of purchaser of lease land

Purchaser may terminate lease if lease not recorded in Registry of Property, or there is stipulation to the contrary in contract of sale, or when purchaser knows of the existence of the lease.

If buyer makes use of right, lessee may DEMAND that he be allowed to gather fruits of current agricultural year and vendor to INDEMNIFY him fro damages suffered. If sale is fictitious, NO RIGHT exists. Sale presumed fictitious if not recorded in Registry of Property at the time of vendee demand. (1676)

Right of purchaser of lease land

Buyer a retro has same right, but must wait until expiry of period of redemption(1677)

Useful improvements in good faith made by lessee

Useful improvements without altering property leased lessor shall pay value to lessee at lease termination Should lessor refuse, lessee may remove improvements, even if property is damaged (just not more than necessary) Ornamental expenses no reimbursement, but lessee entitled to remove if lessor does not choose to retain (1678)

Special provisions
Rural lands (1680-1685) Urban lands (1687-1688)

END