A. General provisions

1. IN GENERAL

The contract of lease may be of things, or of work and service. (Article 1642, Civil Code)

a. Things

Definite period; Indefinite period – subject to 99-year lease limitation. In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than ninety-nine years shall be valid. (Article 1643, Ibid.)

Excludes consumable – subject to exception. Consumable goods cannot be the subject matter of a contract of lease, except when they are merely to be exhibited or when they are accessory to an industrial establishment. (Article 1645, Ibid.)

b. Work and Service

⦁ In the lease of work or service, one of the parties binds himself to execute a piece of work or to render to the other some service for a price certain, but the relation of principal and agent does not exist between them. (Article 1644, Ibid.)

2. LEASE OF RURAL AND URBAN LANDS

a. In General

Disqualified to become lessees 

⦁ The persons disqualified to buy referred to in Articles 1490 and 1491, are also disqualified to become lessees of the things mentioned therein. (Article 1646, Ibid.)

The husband and the wife cannot sell property to each other, except:
1) When a separation of property was agreed upon in the marriage settlements; or
2) When there has been a judicial separation or property under Article 191. (Article 1490, Ibid.)
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 entrusted 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 inferior 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. (Article 1491, Ibid.)

Non-assignment of lease by lessee – unless otherwise stipulated

⦁ The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary. (Article 1649, Ibid.)

Sub-leasing allowed – unless otherwise prohibited

⦁ 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 for the performance of the contract toward the lessor. (Article 1650, Ibid.)

Sublessee bound to lease between to lessor and lessee. 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. (Article 1651, Ibid.)

Sublessee subsidiarily liable for lessee’s rent to lessor – to he extent of rent for sublease. The sublessee is subsidiarily liable to the lessor for any rent due from 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. (Article 1652, Ibid.)

⦁ Payments of rent in advance by the sublessee shall be deemed not to have been made, so far as the lessor’s claim is concerned, unless said payments were effected in virtue of the custom of the place.(Paragarph 2, Article 1652, Ibid.)

⦁⦁⦁⦁⦁

BAR EXAM QUESTION

(Question XV, Civil Law, 2018 Bar Exam)

Simon owned a townhouse that he rented out to Shannon, a flight attendant with Soleil Philippine Airlines (SPA). They had no written contract but merely agreed on a three (3)-year lease. Shannon had been using the townhouse as her base in Manila and had been paying rentals for more than a year when she accepted a better job offer from Sing Airlines. This meant that Singapore was going to be her new base and so she decided, without informing Simon, to sublease the townhouse to Sylvia, an office clerk in SPA.

(b) Does the sublease without Simon’s knowledge and consent constitute a ground for terminating the lease? (2.5%)

SUGGESTED ANSWER:

No. Answer

Under the Civil Code, the lessee may sublease unless otherwise prohibited by the lessor. Rule

In the case at bar, there was no prohibition on subleasing. Apply

Thus, the sublease without Simon’s knowledge and consent may not constitute a ground for terminating the lease. Conclusion

⦁⦁⦁⦁⦁

Warranty in lease

Sales warranty provisions applicable. The provisions governing warranty, contained in the Title on Sales, shall be applicable to the contract of lease.(Article 1653, Ibid.)

Return of price in pro rata. In the cases where the return of the price is required, reduction shall be made in proportion to the time during which the lessee enjoyed the thing. (Paragraph 2, Article 1653, Ibid.)

Fortuitous event

⦁ 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 and a rescission of the lease. (Article 1655, Ibid.)

Sale with right of redemption

⦁ The purchaser in a sale with the right of redemption cannot make use of the power to eject the lessee until the end of the period for the redemption. (Article 1677, Ibid.)

Place and time for payment of lease

⦁ If nothing has been stipulated concerning the place and the time for the payment of the lease, the provisions or Article 1251 shall be observed as regards the place; and with respect to the time, the custom of the place shall be followed. (Article 1679, Ibid.)

⦁ Payment shall be made in the place designated in the obligation. (Article 1251, Ibid.)

⦁ There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made wherever the thing might be at the moment the obligation was constituted.(Paragraph 2, Article 1251, Ibid.)

⦁ In any other case the place of payment shall be the domicile of the debtor. (Paragraph 3, Article 1251, Ibid.)

⦁ If the debtor changes his domicile in bad faith or after he has incurred in delay, the additional expenses shall be borne by him.(Paragraph 4, Article 1251, Ibid.)

⦁ These provisions are without prejudice to venue under the Rules of Court. (Paragraph 5, Article 1251, Ibid.)

b. Recording in the Registry of Property

Authority, required

⦁ If a lease is to be recorded in the Registry of Property, the following persons cannot constitute the same without proper authority: the husband with respect to the wife’s paraphernal real estate, the father or guardian as to the property of the minor or ward, and the manager without special power. (Article 1647, Ibid.)

Binds third persons

⦁ 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. (Article 1648, Ibid.)

Non-recorded lease of land

Buyer allowed to terminate lease – unless otherwise stipulated or knowledge of lease. The purchaser of a piece of land which is under a lease that is not recorded in the Registry of Property may terminate the lease, save when there is a stipulation to the contrary in the contract of sale, or when the purchaser knows of the existence of the lease.(Article 1676, Ibid.)

⦁ 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 vendor indemnify him for damages suffered. (Paragraph 2, Article 1676, Ibid.)

Presumption of fictitious sale. If the sale is fictitious, for the purpose of extinguishing the lease, the supposed vendee cannot make use of the right to terminate the lease. The sale is presumed to be fictitious if at the time the supposed vendee demands the termination of the lease, the sale is not recorded in the Registry of Property.(Paragraph 2, Article 1676, Ibid.)

c. Leases of rural land – Special Provisions

Reduction of rent

When no right to reduce rent. 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. (Article 1680, Ibid.)

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. (Article 1681, Ibid.)

When there is a right to reduce rent. 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. (Article 1680, Ibid.)

Same; Extraordinary fortuitous events.

⦁ Extraordinary fortuitous events are understood to be: fire, war, pestilence, unusual flood, locusts, earthquake, or others which are uncommon, and which the contracting parties could not have reasonably foreseen. (Paragraph 2, Article 1680, Ibid.)

When duration not stipulated

⦁ The lease of a piece of rural land, when its duration has not been 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, although two or more years have to elapse for the purpose. (Article 1682, Ibid.)

Preparation for labor for incoming lessee or lessor; Gathering /harvesting of fruits

⦁ The outgoing 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. (Article 1683, Ibid.)

Disclaimer: All information herein is for educational and general information only intended for those preparing for the bar exam. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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