Ateneo Central Bar Operations 2007 Civil Law Summer Reviewer

ATENEO CENTRAL BAR OPERATIONS 2007 Civil Law SUMMER REVIEWER LEASE CONTRACT OF LEASE – a contract by which one person binds himself to grant temporarily, the use of a thing or the rendering of some service to another who undertakes to pay some rent, compensation, or price.

CHARACTERISTICS: (lease of things) 1. Consensual 2. Principal contract 3. Nominate 4. Subject matter must be within the commerce of man 5. Purpose should not be minimal 6. Onerous 7. Period is temporary 8. Period may be definite or indefinite 9. Lessor need not be the owner RENT – the compensation either in money, provisions, chattels or labor, received by the lessor from the lessee Requisites: 1. must not be fictitious or nominal otherwise the contract is considered essentially gratuitous 2. must be capable of determination 3. may be in the form of products, fruits, construction; as long as it has value LEASE DISTINGUISHED FROM USUFRUCT LEASE USUFRUCT Ownership on the part Ownership of the thing on of the lessor is not the part of the grantor is necessary to constitute necessary to constitute a a contract of lease usufruct It is generally a It is always a real right personal right and is a real right only by QuickTime™ and a TIFF (Uncompressed) decompressor exception are needed to see this picture. It is limited to the use It includes all possible specified in the uses and enjoyment of contract the thing Lessor places and Owner allows the maintains the lessee in usufructuary to use and the peaceful enjoy the property enjoyment of the thing Its term is generally for Its term may be for an a definite period indefinite period

It may be created by contract as a general rule Lessee has not duty to make repairs Lessee has not duty to pay taxes Lessee cannot constitute a usufruct of the property leased

It may be created by law, contract, last will or prescription Usufructuary has duty to make repairs Usufructuary has duty to pay taxes Usufructuary may constitute a sublease

WHEN LEASE OF REAL PROPERTY IS REAL RIGHT Generally, a lease of real property is a personal right. Exceptions: 1. if it is for more that one year and to be enforceable it must be in writing 2. if it is registered with Registry of Property, regardless of its period EFFECTS IF LEASE OF REAL PROPERTY IS NOT REGISTERED: 1. the lease is not binding on third persons; 2. such third person is allowed to terminate the lease in case he buys the property from the owner-lessor; 3. actual knowledge of existence and duration of lease, is equivalent to registration; 4. stranger knows of the existence of the lease, but was led to believe that the lease would expire soon or before the new lease in favor of him begins, the stranger can still be considered innocent. KINDS OF LEASE 1. Lease of things or properties whether immovable or movable property ƒ one of the parties binds himself to give to another the enjoyment or use of a thing ƒ for a price certain ƒ for a period which may be definite or indefinite ƒ but in no case will the period exceed 99 years. WHAT CAN BE THE SUBJECT OF A LEASE - only things which are within the commerce of man; lease of properties belonging to the public domain cannot be proper subjects of lease; such contracts are void.

—Adviser: Dean Cynthia Roxas-Del Castillo; Heads: Joy Marie Ponsaran, Eleanor Mateo; Understudies: Joy Stephanie Tajan, John Paul Lim—

Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 PERSONS DISQUALIFIED TO BECOME LESSEES: (a) husband and wife cannot lease to each other their separate properties (exception: separation of property) (b) those disqualified due to fiduciary relationship - guardian: ward - agent: principal - executor & administrators - public officer: state property - justices, judges: property under litigation - others disqualified by law

NOTE: - Owner has the right t fix the rent because the contract is consensual and not imposed by law - Increasing the rent is NOT an absolute right of the lessor - If the rent is fixed for the first time, courts cannot interfere; but if it is a renewal, the courts can settle the disagreements 2. Lease of work which refers to contract for a piece of work - one of the parties binds himself to produce a result out of his work or labor and the other party binds himself to pay a remuneration therefor.

LEASE BY FILIPINOS - may lease lands of public domain with an area of 500 has. and may acquire not more than 12 has.

DUTIES OF CONTRACTOR WHO FURNISHES WORK & MATERIAL: (a) duty to deliver (b) duty to transfer ownership (c) duty to warrant eviction and hidden defects

LEASE BY CORPORATIONS - at least 60% Filipino-owned, may lease lands of public domain for a period of 25 years, renewable for not more than 25 years; the area not to exceed more than 1,000 has. [one thousand hectares] RULE ON LEASE OF THINGS WHEN LESSEE IS AN ALIEN (a) 99-year limit applies to aliens as long as it is a lease of personal property (b) aliens CANNOT lease public lands, and cannot acquire private lands except through succession (c) if lease of real property (private lands), maximum of 25 years renewable for another 25 years (P.D. 713) (d) under the Investor’s Lease Act of 1995, the 25-year period was extended to 50 years renewable for another 25 years provided the following conditions are met: i. lessee must make investments ii. lease is approved by DTI iii. if terms are violated, DTI can terminate it NOTE: the ILA did not doQuickTime™ away with and a P.D. 713, under TIFF (Uncompressed) decompressor ILA the consent of DTI required while in P.D. 713 it are is needed to see this picture. is not. FORM OF CONTRACT OF LEASE OF THINGS - may be made orally but if the lease of real property is for more than one year, it must be in writing under the statue of frauds [still valid but unenforceable]

REMEDY OF EMPLOYER IN CASE OF DEFECTS: - ask contractor to remove the defect or to execute another work; if contractor fails or refuses, employer can ask another at the contractor’s expense 3. Lease of service -one party binds himself to render some service to the other party consisting his own free activity of labor, and not its result and the other party binds himself to pay a remuneration therefor. 3 KINDS: a. household b. contract of labor c. common carriers CONTRACT OF PIECE OF WORK (Locatio Operis) The object of contract is the result of the work without considering the labor that produced it If the result promised is not accomplished, the lessor or promissor is not entitled to compensation

CONTRACT OF LEASE OF SERVICE (Locatio Operarum) The object of contract is the service itself and not the result which it generates Even if the result intended is not attained, the services of the lessor must still be paid

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Civil Law Summer Reviewer ATENEO CENTRAL BAR OPERATIONS 2007 OBLIGATIONS OF THE LESSOR (Art. 1654) 1. to deliver the thing which is the object of the contract in such condition as to render it fit for the use intended; 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; 3. to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. OBLIGATIONS OF THE LESSEE (Art. 1657) 1. pay the price of the lease according to the terms stipulated; 2. 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. pay the expenses for the deed of lease.

Subleasing is Assignment is not allowed unless there allowed unless the is an express lessor gives his consent prohibition RESPONSIBILITIES OF A SUBLESSEE TO THE LESSOR: 1. for all acts which affect the use and preservation of the thing leased 2. for any rent due to the lessor from the lessee which the latter failed to pay - the lessor must collect first form the lessee - if the lessee is insolvent, the sublessee becomes liable (subsidiary liability)

GROUNDS FOR EJECTMENT 1. when the period agreed upon or that which is fixed for the duration of leases (see 1682, 1687) has expired; 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. 5. (1657, par. 2)

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SUBLEASE a lessee may sublease the thing unless there is an express prohibition to do so if the prohibition to sublease is not express but only implied, the sublease will still be allowed remedy of lessor if lessee violates prohibition: action for rescission of the lease and may seek for damages duration of sublease cannot be longer than that of the lease to which it is dependent

DISTINGUISH A SUBLEASE ASSIGNMENT OF A LEASE QuickTime™ and a

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to see this picture. are needed SUBLEASE ASSIGNMENT Lessee remains a Lessee is disassociated party in the contract from the original contract of lease Sublessee does not Assignee has a direct have any direct action against the action against the lessor, there being lessor novation

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