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G. Lease

1. CONCEPT

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

a. Things

1) Definite period

2) 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.)

3) 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

1) 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.)

2) 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.)

3) 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.)

a) 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.)

b) 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.)

4) Warranty in lease

a) 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.)

b) 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.)

5) 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.)

6) 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.)

7) 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

1) 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.)

2) 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.)

3) Non-recorded lease of land

a) 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.)

b) 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. Rights and obligations

1) Lessor

a) Obligations of the lessor

(1) To deliver the thing leased

To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended (Article 1654[1], Ibid.)

(2) To necessary repairs

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 (Article 1654[2], Ibid.)

(3) To maintain lessee in peaceful an adequate enjoyment of the lease

To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract (Article 1654[3], Ibid.)

(4) To refrain from alterations that might impair the thing leased

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. (Article 1661, Ibid.)

b) Rights of the lessor

(1) To rescission and indemnification for damages

If the lessor or the lessee should not comply with the obligations set forth in Articles 1654 [lessor’s obligations] and 1657 [lessee’s obligations], the aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force. (Article 1659, Ibid.)

(2) To continue in same business of lessee – unless otherwise prohibited

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. (Article 1656, Ibid.)

(3) To be not obligated for an intruders’ mere act of trespass

The lessor is not obliged to answer for a mere act of trespass which a third person may cause on the use of the thing leased; but the lessee shall have a direct action against the intruder.(Article 1664, Ibid.)

There is a mere act of trespass when the third person claims no right whatever. (Paragraph 2, Article 1664, Ibid.)

(4) To judicially eject lessee

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 leases under Articles 1682 and 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; or if he does not observe the requirement in No. 2 of Article 1657, as regards the use thereof. (Article 1673, Ibid.)

The ejectment of tenants of agricultural lands is governed by special laws.(Paragraph 2, Article 1673, Ibid.)

Except in cases stated in Article 1673, the lessee shall have a right to make use of the periods established in Articles 1682 and 1687. (Article 1675, Ibid.)

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.)

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 the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month. (Article 1687, Ibid.)

2) Lessee

a) Obligations of the lessee

(1) To pay stipulated price of lease

To pay the price of the lease according to the terms stipulated (Article 1657[1], Ibid.)

(2) To use the thing leased

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 from the nature of the thing leased, according to the custom of the place (Article 1657[2], Ibid.)

(3) To pay for expenses for deed of lease

To pay expenses for the deed of lease (Article 1657[3], Ibid.);

(4) To tolerate urgent repairs

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.(Article 1662, Ibid.)

If the repairs last more than forty days the rent shall 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.(Paragraph 2, Article 1662, Ibid.)

(5) To inform proprietor of every usurpation or untoward act

The lessee is 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. (Article 1663, Ibid.)

… the lessee shall be liable for the damages which, through his negligence, may be suffered by the proprietor. (Paragraph 3, Article 1663, Ibid.)

(6) To advise owner of the need of all repairs, including necessary repairs

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. (Paragraph 2, Article 1663, Ibid.)

… the lessee shall be liable for the damages which, through his negligence, may be suffered by the proprietor. (Paragraph 3, Article 1663, Ibid.)

(7) To return the thing leased

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. (Article 1665, Ibid.)

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. (Article 1666, Ibid.)

If the lease was made for a determinate time, it ceases upon the day fixed, without the need of a demand.(Article 1669, Ibid.)

(8) To be responsible for deterioration or loss – with exceptions

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.(Article 1667, Ibid.)

The lessee is liable for any deterioration caused by members of his household and by guests and visitors.(Article 1668, Ibid.)

b) Rights of the lessee

(1) To suspend rent payments

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. (Article 1658, Ibid.)

(2) To rescission and indemnification for damages

If the lessor or the lessee should not comply with the obligations set forth in Articles 1654 [lessor’s obligations] and 1657 [lessee’s obligations], the aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the contract to remain in force. (Article 1659, Ibid.)

(3) To terminate lease of dwelling if it brings imminent and serious danger to life/health

If a dwelling place or any other building intended for 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 notifying 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. (Article 1660, Ibid.)

(4) To terminate lease of dwelling if urgent repairs render it uninhabitable

When the work [for urgent repairs] is of such a nature that the portion 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. (Paragraph 3, Article 1662, Ibid.)

(5) To be protected against impairment

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. (Article 1661, Ibid.)

(6) To order urgent repairs at lessor’s cost

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 cost. (Paragraph 4, Article 1663, Ibid.)

(7) To have a direct action against intruder

The lessor is not obliged to answer for a mere act of trespass which a third person may cause on the use of the thing leased; but the lessee shall have a direct action against the intruder.(Article 1664, Ibid.)

There is a mere act of trespass when the third person claims no right whatever. (Paragraph 2, Article 1664, Ibid.)

(8) To an implied new lease

If at the end of the contract the lessee should continue enjoying 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 for the time established in Articles 1682 and 1687. The other terms of the original contract shall be revived. (Article 1670, Ibid.)

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. (Article 1671, Ibid.)

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. (Article 1672, Ibid.)

(9) To reimbursement for ½ value of improvements

(10) To remove of improvements if lessor refuses reimbursement

(11) To remove ornamental expenses

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.(Article 1678, Ibid.)

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental 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. (Paragraph 2, Article 1678, Ibid.)

d. Leases of rural land – Special Provisions

1) Reduction of rent

a) 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.)

b) 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.)

(1) 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.)

2) 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.)

3) Preparation for labor for incoming lessee or lessor

4) 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.)

e. Leases of urban land – Special Provisions

1) Repairs

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. (Article 1686, Ibid.)

2) When duration not stipulated

a) Year to year, if rent is annual

b) Month to month, if rent is monthly

c) Week to week, if rent is weekly

d) Day to day, if rent is daily

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 the lease after the lessee has occupied the premises for over one year. If the rent is weekly, the courts may likewise determine a longer period after the lessee has been in possession for over six months. In case of daily rent, the courts may also fix a longer period after the lessee has stayed in the place for over one month. (Article 1687, Ibid.)

3) Lease of furniture co-terminus with premises

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 premises. (Article 1688, Ibid.)

3. WORK AND LABOR

a. Household Service

1) R.A. 10361 or the Kasambahay Law

(NB: R.A. 10361 or the Kasambahay Law is the special law governing household service and thus said law supersedes provisions of the Civil Code which are not inconsistent therewith. The topic of the Kasambahay Law is under the subject Labor Law.)

b. Contract of labor

(NB: P.D. 442 or the Labor Code is the special law governing employer-employee and thus said law supersedes provisions of the Civil Code which are not inconsistent therewith. The topic of employer-employee relationship is under the subject of Labor Law.)

c. Contract for a piece of work

1) Concept 

By the contract for a piece of work the contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material. (Article 1713, Ibid.)

2) Quality of work

a) Right to remove defect

b) Right to execute another work

The contract shall execute the work in such a manner that it has the qualities agreed upon and has no defects which destroy or lessen its value or fitness for its ordinary or stipulated use. Should the work be not of such quality, the employer may require that the contractor remove the defect or execute another work. If the contract fails or refuses to comply with this obligation, the employer may have the defect removed or another work executed, at the contractor’s cost.(Article 1715, Ibid.)

3) Waiver or limited liability

a) Void if contractor acted fraudulently

An agreement waiving or limiting the contractor’s liability for any defect in the work is void if the contractor acted fraudulently. (Article 1716, Ibid.)

The contractor who has undertaken to put only his work or skill, cannot claim any compensation if the work should be destroyed before its delivery, unless there has been delay in receiving it, or if the destruction was caused by the poor quality of the material, provided this fact was communicated in due time to the owner. If the material is lost through a fortuitous event, the contract is extinguished.(Article 1718, Ibid.)

4) Acceptance of work

a) Relieves contract of liability for any defect – with exceptions

GENERAL RULE: Acceptance of the work by the employer relieves the contractor of liability for any defect in the work. (Article 1719, Ibid.)

EXCEPTIONS:

1) The defect is hidden and the employer is not, by his special knowledge, expected to recognize the same; or

2) The employer expressly reserves his rights against the contractor by reason of the defect. (Ibid.)

5) Price or compensation

GENERAL RULE: The price or compensation shall be paid at the time and place of delivery of the work. (Article 1720, Ibid.)

EXCEPTION: …unless there is a stipulation to the contrary. (Ibid.)

If the work is to be delivered partially, the price or compensation for each part having been fixed, the sum shall be paid at the time and place of delivery, in the absence if stipulation. (Ibid.)

6) Delay by employer

a) Contractor entitled to reasonable compensation

If, in the execution of the work, an act of the employer is required, and he incurs in delay or fails to perform the act, the contractor is entitled to a reasonable compensation.(Article 1721, Ibid.)

The amount of the compensation is computed, on the one hand, by the duration of the delay and the amount of the compensation stipulated, and on the other hand, by what the contractor has saved in expenses by reason of the delay or is able to earn by a different employment of his time and industry. (Paragraph 2, Article 1721, Ibid.)

7) Materials

a) From the contractor

(1) Contractor to deliver the thing produced and transfer dominion

If the contractor agrees to produce the work from material furnished by him, he shall deliver the thing produced to the employer and transfer dominion over the thing. This contract shall be governed by the following articles as well as by the pertinent provisions on warranty of title and against hidden defects and the payment of price in a contract of sale.(Article 1714, Ibid.)

(2) Contractor to suffer loss if work is destroyed before delivery

If the contractor bound himself to furnish the material, he shall suffer the loss if the work should be destroyed before its delivery, save when there has been delay in receiving it.(Article 1717, Ibid.)

b) From the employer

(1) Work cannot be completed due to defect or orders from employer

If the work cannot be completed on account of a defect in the material furnished by the employer, or because of orders from the employer, without any fault on the part of the contractor, the latter has a right to an equitable part of the compensation proportionally to the work done, and reimbursement for proper expenses made. (Article 1722, Ibid.)

8) Engineer or architect

a) The 15-year warranty

The engineer or architect who drew up the plans and specifications for a building is liable for damages if within fifteen years from the completion of the structure, the same should collapse by reason of a defect in those plans and specifications, or due to the defects in the ground. The contractor is likewise responsible for the damages if the edifice falls, within the same period, on account of defects in the construction or the use of materials of inferior quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect supervises the construction, he shall be solidarily liable with the contractor. (Article 1723, Ibid.)

b) Acceptance, not an implied waiver

Acceptance of the building, after completion, does not imply waiver of any of the cause of action by reason of any defect mentioned in the preceding paragraph. (Paragraph 2, Article 1723, Ibid.)

c) The 10-year prescription

The action must be brought within ten years following the collapse of the building. (Paragraph 3, Article 1723, Ibid.)

9) Contractor

a) Limitations

The contractor who undertakes to build a structure or any other work for a stipulated price, in conformity with plans and specifications agreed upon with the land-owner, can neither withdraw from the contract nor demand an increase in the price on account of the higher cost of labor or materials, save when there has been a change in the plans and specifications, provided:

1) Such change has been authorized by the proprietor in writing; and

2) The additional price to be paid to the contractor has been determined in writing by both parties. (Article 1724, Ibid.)

b) Death

When a piece of work has been entrusted to a person by reason of his personal qualifications, the contract is rescinded upon his death.(Article 1726, Ibid.)

In this case the proprietor shall pay the heirs of the contractor in proportion to the price agreed upon, the value of the part of the work done, and of the materials prepared, provided the latter yield him some benefit.(Paragraph 2, Article 1726, Ibid.)

The same rule shall apply if the contractor cannot finish the work due to circumstances beyond his control.(Paragraph 3, Article 1726, Ibid.)

c) Extent of liability

The contractor is responsible for the work done by persons employed by him. (Article 1727, Ibid.)

The contractor is liable for all the claims of laborers and others employed by him, and of third persons for death or physical injuries during the construction. (Article 1728, Ibid.)

d) Work on movable; right to retain via pledge

He who has executed work upon a movable has a right to retain it by way of pledge until he is paid. (Article 1731, Ibid.)

10) Owner

a) Withdrawal at will

The owner may withdraw at will from the construction of the work, although it may have been commenced, indemnifying the contractor for all the latter’s expenses, work, and the usefulness which the owner may obtain therefrom, and damages. (Article 1725, Ibid.)

b) Subsidarily liable

Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. However, the following shall not prejudice the laborers, employees and furnishers of materials:

1) Payments made by the owner to the contractor before they are due;

2) Renunciation by the contractor of any amount due him from the owner.

This article is subject to the provisions of special laws.(Article 1729, Ibid.)

c) Satisfaction of proprietor

(1) Expert judgment in case of disagreement

If it is agreed that the work shall be accomplished to the satisfaction of the proprietor, it is understood that in case of disagreement the question shall be subject to expert judgment. (Article 1730, Ibid.)

(2) Third person approval

If the work is subject to the approval of a third person, his decision shall be final, except in case of fraud or manifest error. (Paragraph 2, Article 1730, Ibid.)

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