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2. Object certain which is the subject matter of the
X. Lease
A. Concepts and scope
Art. 1642. The contract of lease may be of things, or
of work and service.
The contract of lease is an agreement whereby one
person (lessor) binds himself to grant temporarily the
enjoyment or use of a thing or to render some work or
service to another (lessee) who undertakes to pay rent,
compensation or price therefore.
General Rule: Lease is only a personal right.
Exception: It is a real right only by exception as in case of
lease of real estate recorded in the Registry or Property
which makes it binding upon third persons, like a
purchaser.
A lease contract is not essentially personal in character
in the sense that the rights and obligations therein are
transmissible to the heirs.
Kinds of Lease according to subject matter:
1. Lease of things whether real or personal,
involving an obligation on the part of the lessor
to deliver the thing which is the object thereof
and the correlative right of the lessee to the
peaceful and adequate enjoyment thereof for a
price certain (Art. 1654); or
2. Lease of work which refers to a contract for
a piece of work, involving an obligation on the
part of the contractor (lessor) to execute a
piece of work for the employer (lessee) in
consideration of a certain price or
compensation (Art. 1713); or
3. Lease of service involving an obligation on
the part of the housekeeper, laborer or
employee, or common carrier to do or perform
a service for the head of a family, or master,
employer, or passenger or shipper of goods,
respectively, in consideration of compensation.
Characteristics
1. Consensual
2. Bilateral
3. Onerous
4. Commutative
5. Nominate, and
6. Principal
3 Elements
1. Consent of the contracting parties;
contract; and
3. Cause of the obligation which is established.
Art. 1643. 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.
LEASE OF THINGS
Landlord lessor or owner
Tenant lessee
Essence: the transmission of the temporary enjoyment
or use by the lessee of a thing for a certain period in
consideration of the undertaking to pay rent therefor.
The object of lease must be within the commerce of man;
otherwise it is void.
The lease of a building includes the lease of the lot on
which it stands, and the rentals of a building include
those of the land.
Subject-matter of lease movable or immovable
In a lease of chattels, the lessor loses complete control
over the chattel leased although the lessee would be
responsible to the lessor should he make bad use thereof.
The lessor need not be the owner of the thing leased as
long as he can transmit its enjoyment or use to the lessee
since ownership is not being transferred.
Even the lessee himself may lease the property to
another; in such case, a sublease results.
Consideration of lease of things must be price certain
generally called rent or rental in money or its
equivalent, such as products, fruits, or other useful
things, or some other prestation or labor which the
lessee binds himself to undertake. The important thing is
that what is given by the lessee has value.
Price certain means that the price of the
lease or rent has been determined by the
parties or is at least capable of determination
under the contract. A price certain exists when
the same can be ascertained according to the
usages or customs of the place.
The amount must not be nominal or so
insignificant as to indicate an intention to enter
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into a contract of commodatum which is
essentially gratuitous.
Since lease is essentially a consensual contract,
in the absence of a law fixing a ceiling on
rentals, the lessor has the right to fix the
amount of the rent, and upon the expiration of
the contract, to demand an increase thereof.
During the period fixed in the contract where
there is a stipulated rent, the lessor cannot
increase the rental without the consent of the
lessee. Neither can a court fix a different rental,
even where there is an increase in realty taxes.
Period of lease may be definite or indefinite. In any
case, the period is temporary, not perpetual.
When the period is definite or fixed, the longest
is 99 years.
Reason: because it is an unsound economic policy
to allow ownership and enjoyment to be separated
for a very long time.
In case the period fixed is more than 99 years, the
lease should be considered as having expired after the
end of said term. Where there is an implied new lease,
the lease will be for an indefinite time.
If the term is fixed but it is indefinite but from the
circumstances it can be inferred that a period was
intended, the court may fix the duration thereof.
If not term is fixed, Art. 1682 applies for leases of rural
lands, and Art. 1687, for leases of urban lands.
A verbal contract of lease for as long as the lessee
are doing business and as long as they can pay just
rents has been held to be a lease from month to month
under Art. 1687 and not one of indefinite duration,
terminable without necessity of a special notice upon
expiration of any month.
A lease of things during the lifetime of one of the
parties is for an indefinite period. A lease for such time
as the lessor or the lessee may please, is one for life,
ending upon the death of either party.
The continuance and fulfillment of a lease of a house
cannot be made to depend solely upon the uncontrolled
choice of the lessee on whether or not the lessee would
pay rentals, thus depriving the lessor of any say on the
matter.
Q: Is a stipulation in the contract of lease to the effect
that a contract may be renewed for a like term at the
option of the lessee is void for being potestative?
A: No. The lessor is bound by the option he has conceded
to the lessee. The lessee likewise becomes bound only
when he exercises his option and the lessor cannot
thereafter be excused from performing his part of the
agreement. The clause simply means that the lessees
exercise of the option resulted in the automatic extension
of the contract of lease under the same terms and
conditions.
Rule: In case of uncertainty as to the meaning of a
provision granting extension to a contract of lease, the
tenant is the one favored and not the landlord.
Reason: the landlord having the power of stipulating in
his own favor, has neglected to do so; and also upon the
principle that every mans grant is to be taken most
strongly against himself.
Q: When the parties to a contract agreed that the
lease period shall subsist for an indefinite period
provided the lessee is up-to-date in the payment of
his monthly rentals, is the contract void?
A: No. The lease period between the parties is with a
period subject to a resolutory condition. Such a
stipulation
Does not make either the validity or the fulfillment of the
contract dependent upon the will of the party to whom it
is conceded the privilege of cancellation; for where the
contracting parties have agreed that such option shall
exist, the exercise of the option is as much in the
fulfillment of the contract as any other act which may
have been the subject of agreement.
Estoppel against lessee
A lessee is estopped from asserting title to the thing
leased as against the lessor, or to deny the lessors title,
or to assert a better title not only in himself, but also in
some third person., including the State while he remains
in possession of the leased property and until he
surrenders possession to the lessor.
Exception: Where the lessee would, in effect, be paying
rental twice for the use of the same property for the same
period of time to the real owner if he were to pay the
lessor.
Conclusive presumptions include: (b) The tenant is not
permitted to deny the title of his landlord at the time of
the commencement of the relation of landlord and tenant
between them. (Sec. 3-b, Rule 131, RC)
Lease vs. Sale
LEASE OF THINGS SALE
Only the enjoyment or Ownership is transferred
use is transferred
Transfer is temporary Transfer is permanent,
unless
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The lessor need not be The owner must be the The lessee cannot The usufructuary may
the owner owner or at least constitute a usufruct on lease the thing in
authorized by the owner the property usufruct to another
to ransfer ownership, of As a rule may be created May be created by law,
the thing sold at the time only by contract contract, last will and
it is delivered testament or
The price of the subject The price of the thing is prescription
matter, is usually not usually fixed in the Generally covers As a rule covers all
mentioned, being contract particular uses limited by possible uses of the
immaterial the contract property

Lease Commodatum Lease of things Lease of services

Onerous contract, Essentially gratuitous Object of a contract is a Object is some work or
although the rent may thing service
subsequently be Lessor has to deliver the Lessor has to perform
condoned or remitted thing leased some work or service
Not essentially personal Purely personal in In case of breach, there In case of breach, no
in character and, character, and can be an action for action for specific
therefore, the right may consequently, the death specific performance performance
be transmitted to the of either the bailor or the
heirs bailee extinguishes the
contract Lease of services Agency
Consensual contract Real contract It is based on It is based on
Both contract consist in the transmission of the employment representation agent
enjoyment or use of a thing to another represents his prinicipal
Lessor does not enter and enters into juridical
into juridical acts in acts.
By the contract of loan, one of the parties delivers to behalf of the lessee.
another, either something not consumable so that the Principal contract Preparatory contract; the
latter may use the same for a certain time and return it, purpose is for the agent
in which case the contract is called commodatum; or to enter into other
money or other consumable thing, upon the condition contracts which he is
that the same amount of the same kind and quality shall authorized to enter.
be paid, in which case the contract is simply called a loan The lessor performs a The agent executes a
or mutuum. material act for the juridical act for and in
benefit of his employer behalf of the principal.
without representation
of the latter
Lease Usufruct Work or service must be Presumed to be for a
Real right only in the case Always a real right for consideration. price or consideration
of lease of real property For its extinguishment, For its extinguishment,
where the lease is will of both parties will of one is sufficient.
registered necessary.
The lessor may or may The creator of the right Risk of loss before Risk of loss before
not be the owner must be the owner or one delivery - Borne by the delivery - Borne by the
duly authorized by him independent contractor principal since agent
The lessor has the active The owner has the merely acts as
obligation to maintain passive duty to allow the representative.
the lessee in the usufructuary to enjoy or Independent contractor GR: agent is not liable for
enjoyment or use of the use the same personally liable for his third eprsons.
property contract with third
The lessee generally pays The usufructuary pays persons. XCP: When the agenet
the taxes annual charges and taxes expressly binds himself
on the fruits or exceed the limit of his
The lessee generally has The usufructuary is authority.
no obligation to pay for obliged to make the Lessor is only limited to Agent exercises
repairs ordinary repairs ministerial duties. discretionary power.

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Lease of consumable goods
Art. 1645. 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.
Under the old Civil Code, fungible things which
are consumed by use cannot be the subject of
lease.
The rule is the same under Art. 1645 with the
qualification now that consumable goods may
be the object of lease when they are merely to
be exhibited or when they are accessory to an
industrial establishment.
The essence of a lease of things is the
enjoyment or use of the property with the
obligation on the part of the lessee to return the
same upon the expiration of the lease.
Ownership is not transferred to the lessee.
Hence, things which by their nature cannot be
used without being consumed, cannot be the
subject matter of lease.
B. Lease of rural and urban lands
1. Disqualifications of lessee
Art. 1646. The persons disqualified to buy referred to in
Articles 1490 and 1491, are also disqualified to become
lessees of the things mentioned therein. (n)
Husband and wife
Guardians,
agents,
executors and administrators,
PO and PE,
Justices, judges, prosecuting attorneys, clerks
of superior and inferior courts, and other
officers and employees connected with the
administration of justice,
Rural land v. Urban land
Location of the property generally determining
the word rural has been defined as relating to
or associate with or typical of, the country.
Meaning intended by the legislative the word
rural has been defined as relating to or
constituting tenement in land adopted and
used for agricultural or pastoral purposes.
Lease of property to Aliens
Foreigners are prohibited under the
Constitution, except only in cases of hereditary
succession, to acquire lands in the Philippines.
Nevertheless, the can lease real or
immovable property in the Philippines.
In lease, the lessee does not exercise any
proprietary right.
Where lease contract amounts to visual transfer of
ownership
A contract whereby an alien is given ot only a
lease but also an option to buy a parcel of land
by virtue of which Filipino owner cannot sell or
otherwise dispose of her property; this is to last
50 years, is a virtual transfer of ownership and
circumvents the constitutional ban against
alien landholding.
Maximum period of lease to aliens
25 years, renewable for another period of 25
years
2. Recording of Lease
Art. 1647. If a lease is to be recorded in the Registry of
Property, the following persons cannot constitute the
same without proper authority:
1. the husband with respect to the wife's
paraphernal real estate,
2. the father or guardian as to the property of
the minor or ward, and
3. the manager without special power. (1548a)
Reason the registration of lease is an act of
strict ownership. But if the lease is NOT to be
recorded, the lease entered into by said
persons is valid even without special power.
Lease for more than one year Art. 1647 does
not specify the term of the lease. The
requirement under Art. 1878 is imposed
whether or not the lease will be recorded. In the
absence of special power, a lease for more than
one year executed by persons mentiond in Art.
1647 is valid ONLY FOR 1 YEAR but void to the
excess.
Manager includes:
a. The administrator of conjugal property
b. Administrator of co-ownership
c. Administrator of state patrimonial property.
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Art. 1648. 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. (1549a)
Lease is a mere personal right. Its inscription in
the registry of property to bind third persons
does not in any way alter or modify the rights
and obligations of the parties under the
contract which has a life of its own.
Applies only to lease of real estate; hence,
leases of personal or movable cannot be
registered.
Effect of notice of unregistered lease by purchaser
where a purchaser of land at the time of the
purchase has full knowledge of the fact that the
land has been leased to a third person and is
informed of the terms of such lease or he was
aware of the existence of the lease, he is bound
to respect said lease, although it is not entered
upon the certificate of title.
Where the plaintiff believed in GF the
representation of the land lords, which was not
true. His information was that the lease had
expired. He was considered an innocent third
person.
Lease as personal right or real right
GR: Lease is only personal right.
Exceptions:
1. Lease or real property is more than 1 year, and to
be enforceable must be in writing.
2. Lease of real property is registered regardless of
duration with Registry of property.
Note: Lease of personal property cannot be registere. To
be binding against third persons, parties must execute a
public instrument.
3. Assignment of Lease
Art. 1649. The lessee cannot assign the lease without the
consent of the lessor, unless there is a stipulation to the
contrary. (n)
Reason: in an assignment, the personality of
the lessee disappears; there arises a new
juridical relation between the lessor ad the
assignee who is converted into a new lessee.
There is, in effect, a novation by substituting the
person of the debtor and novation cannot
take effect without the consent of the
debtor.
An assignment of lease without the consent of
the less is a GROUND FOR RESCSISSION of
lease.
When there is assignment?
It exists when the lessee made an ABSOLUTE
Transfer of his leasehold rights in a contract,
and he has disassociated himself from the
original contract of lease.
Art. 1650. 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. (1550)
4. Sublease
What is sublease?
A separate and distinct contract of lease
wherein the original lessee becomes
sublessor to a sublessee of the thing, in whole
or in part without prejudice to his
responsibility for the performance of the
contract toward the lessor.
This does not include accepting boarders.
Reason: the lessee remains a party (bound by
the terms and conditions of the contract) to the
lease even if he has already created a sublease
thereon.
It terminates upon the termination of the
lease, unless the lease is for a shorter term.
Rights of the lessor if Sublease is Prohibited but
subsequently entered into by the lessee
1. Rescission and damages
2. Damages only (contract remain in force)
Art. 1651. 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. (1551)
Direct liability of sublessor to lessor
GR: The sublesse is not a party to the contract between
the lessor and the lessee; hence under the general rule in
contracts, the sublessee can only be held liable
directly to the sublessor.
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Exception: The sublessee is responsible to the lessor for:
1. All acts which refer to the use and
preservation of the thing in the manner
stipulated.
Not necessary that the sublessor be joined
as defendant.
2. Rent due to the lessor from the lessee which the
latter failed to pay.
Art. 1652. 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.
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. (1552a)
Amount of rent recoverable
The liability of the sublessee is limited to the
amount of rent due from him to the
sublessor under the terms of the sublease at
the time of the extrajudicial demand by the
lessor.
He is liable only to the lessor only for rents the
lessee failed to pay.
Necessity of judgement against the lessee
There must be a judgement against the lessee
evicting the latter from the premises, or
cancelling the lessees lease contract, when he
cannot pay the rentals and the sublessee is in
possession.
Sublease v. Assignment of lease
Sublease Assignment of lease
Number of juridical relations created
There are two leases and There is only one
two distinct juridical juridical relationship,
relationships although that of the lessor and the
immediately connected assignee, who is
and related to each other converted into a lessee
As to Personality of Lessee
The personality of the The personality of the
lessee does not lessee disappears.
disappear.
Transfer of Rights and obligations
The lessee does not The lessee transmits
transmit absolutely his absolutely his rights to
rights and obligations to the assignee
the sublessee
Right of Action against lessor
The sublessee, generally, The assignee has direct
does not have any direct action against the lessor.
action against the lessor
5. Obligations of the lessor
a) General obligations
Art. 1654. The lessor is obliged: (DeNeMa)
(1) To deliver the thing which is the object of the
contract in such a 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. (1554a)
Delivery of the property
At the time of the delivery, the thing must be in
a condition fit for the use intended; otherwise,
lessees cause of action is against the lessor for
breach of contract.
The LESSEE has no cause of action against
the possessor because he has no relation.
Making of necessary repairs
In default of a special stipulation, the custom of
the place shall be observed as to the kind of
repairs.
If the lessor fails in the performance of this
duty, the lessee MAY:
a. Suspend the payment of rent
b. Avail other remedies provided in the law.
The lessor shall not be liable for repairs for
damages caused by the lessee.
repair implies the putting back of something
in the condition in which it was originally, while
an improvement is the adding of something
new.
Keeping lessee in peaceful and adequate enjoyment.
The lessors obligation to maintain the lessee
arises when acts termed legal trespass
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disturb, dispute, or place difficulties in the
lessees peaceful and adequate enjoyment of
the leased premises that in some manner or
other cast doubt upon the right of the lessor to
execute the lease.
Protect not only against third person but also to
the lessor.
The warranty of the lessor is that the lessee
shall not be disturbed in his legal, NOT physical
possession of the property.
This obligation persists only for the duration of
the contract.
Where Lease Contract contains Right of First Refusal
The lessor is under a legal duty to the lessee not
to sell to anybody at any price until after he has
made an offer to sell to the latter at a certain
price and the lessee has failed to accept it.
b) Warranties of lessor
Art. 1653. The provisions governing warranty,
contained in the Title on Sales, shall be applicable to
the contract of lease.
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. (1553)
c) Alteration of the thing leased
Art. 1661. 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. (1557a)
Alteration to constitute alteration, the
modification must be in such manner that it
would destroy the substance
Alteration of form of lease
By the lessor - the lessor CAN alter the form of
the lease PROVIDED there is no impairment
in the use to which the thing is devoted under
the terms of the lease.
By the lessee the lessee may alter the form so
long as the value of the property is not
impaired by the alteration.
d) Useful improvements and ornamental
expenses
Art. 1678. 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.
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. (n)
Rights of Lessee in case of Useful Improvement
a. to remove the improvements should the lessor
effuse to reimburse although the principal may
suffer damage
b. to be reimbursed one-half of the value of said
improvements at the time of termination of the
lease.
Only because the lessee also enjoyed the
same.
To be entitled to either two remedies, the following
must concur:
a. Lessee must be a considered a builder in GF.
b. Improvements must be suitable to the use for
which the lease is intended
c. The form and substance of the property should
not be altered.
Rights of Lessee in case of Ornamental Expenses
The lessee has no right of reimbursement, but he may
remove them, provided:
a. No damage is caused to the principal thing and
b. Lessor does not choose to retain them by
paying their value at the time of lease.
Note: Ornamental Expenses are expenses incurred
which cater only to the personal comfort,
convenience or enjoyment of a person.
Right of Lessee over necessary repairs
Entitled to full reimbursement of the total
amount spent therefor.
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6. Obligations of the Lessee
a. General obligations
Art. 1657. The lessee is obliged: Pa-U-Pa
(1) To pay the price of the lease according to the terms
stipulated;
(2) 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;
(3) To pay expenses for the deed of lease. (1555)
Payment of the agreed price of the lease
The obligation to pay the price arises only when
the thing lese has been delivered to the lessee
for the purposes stipulated in the contract.
Who has the right to fix the rents? only the
lessor and the court cannot determine the rent
and compel the lessor to conform thereto and
allow the lesse to enjoy the premises on the
basis of the rents fixed by it.
the lessor has the right to increase the rent in
case of renewal. The lessee is obliged to pay
rentals during the pendency of the action for
rescission of the lease.
Because the lessee is deprived of his
property.
The proper rate for back rentals is 6% per
annum computed from the time of demand.
Proper use of the thing leased
Must devote the thing to the:
a. Use stipulated
b. If none was stipulated, to that which may
be inferred from the nature of the thing
leased according to the custom of the
place.
The use of the thing for an illegal purpose
entitles the lessor to terminate the contract.
Payment of expenses for deed of lease
In sale, the expenses for the execution and
registration of the deed of sale shall be borne by
the vendor, unless there is a stipulation to the
contrary.
In lease, the law imposes the obligation to pay
expenses for the deed of lease on the lessee. By
agreement, the obligation may be assumed by
the lessor.
b. Urgent repairs
Art. 1662. 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.
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.
When the work 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. (1558a)
Need to make repairs
The lessor has the obligation to make necessary
repairs and the lessee is obliged to notify the
lessor of the urgency of such repair.
Note that the article speaks of repairs.
Improvements are not covered.
Length of time for repair
If forty days or more the lessee can ask for
reduction of the rent in proportion to the time
including the first 40 days and the part of the
property of which he is deprived.
If less than 40 days the lessee cannot ask for
reduction.
Rescission of the lease
Regardless of the length of time taken up for
repairs, rescission may be availed of by the
lessee if the main purpose of the lease is to
provide a dwelling place for the lessee and
work done has made the same uninhabitable.
c. Trespass made by a third person
Art. 1663. 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.
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.
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In both cases the lessee shall be liable for the damages 7. Remedies of a party in case of failure of the
which, through his negligence, may be suffered by the other to comply with his obligation
proprietor.
a. Remedies of lessee
If the lessor fails to make urgent repairs, the lessee, in
order to avoid an imminent danger, may order the (1) Extinguishment of the lease when the thing
repairs at the lessor's cost. (1559a) lease is totally destroyed by Fortuitous
event
Art. 1664. The lessor is not obliged to answer for a mere
(2) Proportional reduction of the rent or
act of trespass which a third person may cause on the use
rescission of the lease in case of partial
of the thing leased; but the lessee shall have a direct
destruction of the thing leased by fortuitous
action against the intruder.
event.
There is a mere act of trespass when the third person
Art. 1655. If the thing leased is totally destroyed by a
claims no right whatever. (1560a)
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
When Obligation of lessee to notify lessor arises lease. (n)
1. When there is usurpation or untoward act
by a third person the purpose of this notice
is to enable the owner to maintain his civil Destruction total
possession, by suit if necessary.
Lease extinguished, because of the absence of
2. Need of repairs it is not the duty of the lessor
object of contract
to constantly inspect the premises to see if
there is a need to make repairs. Destruction partial
Rules in cases of trespass in lease The lessee is given the option to choose:
a. Proportionate reduction of the rent
1. Trespass in fact (perturbacion de mere
b. Rescission
hecho) physical disturbance on the property
If reduction is chosen, the same shall be
leased such as an intrusion without any legal
retroactive to the date the partial destruction
claim to justify an entry into the property.
occurred.
Lessor is not liable. The lessee shall have
In case of rescission, the partial destruction
a direct action against the usurper.
should be substantial as to defeat the purpose
2. Trespass in law (perturbacion de derecho)
of the lease.
a third person claims legal right to enjoy the
premises.
(3) Rescission and indemnification for damages
The lessor will be held liable to the
or only the latter allowing the contract to
lessee. The lessor may maintain an action
remain in force, in case of failure of the
to recover the title (accion
lessor to comply with the article 1654.
reinvindicatoria), or to establish his better
right of possession (accion publiciana.) Art. 1659. If the lessor or the lessee should not comply
with the obligations set forth in Articles 1654 and 1657,
In Goldstein v. Roces, trespass in fact is the aggrieved party may ask for the rescission of the
distinguished from legal transfer. If the contract and indemnification for damages, or only the
trespass is not accompanied or preceded by latter, allowing the contract to remain in force. (1556)
anything which reveals a juridical intention
on the part of the trespasser, in such wise
that the lessee can only distinguish the material
fact, stripped of all legal forms or reasons, it is Remedies of the lessee in case of non-compliance of
only in fact. the obligation by the lessor
a lessor is not responsible for the lessees 1. Rescission and damages
eviction through condemnation proceedings. 2. Damages only, allowing the contract to remain
The lessee must look to the expropriating in force.
plaintiff for his compensation.

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Damages recoverable in ejectment cases are
the rents or the fair rental value of the promises
and liquidated damages if agreed upon.
(4) Suspension of payment when the lessor fails
to make repairs
Art. 1658. 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. (n)
Suspension of payment of rent
The provision mentions 2 grounds which give the lesse
the right to suspend payment:
1. In case of repairs, the lesse may suspend the
payment from the time demand is made upon
the lessor and the latter fails to perform his
obligation.
2. In the case of eviction, the lessee is released
from the obligation to pay rents from the time
he is unlawfully dispossessed. If it is mere act of
trespass, the lessee should bring action directly
against the intruder.
If the cause for suspending the payment has to
exist, the lessee has no liability to pay the rents,
for the intervening period unless the lessor can
prove that the suspension was not legally
justifiable.
(5) Termination of the lease in case of
dangerous condition of the thing leased for
habitation
Art. 1660. 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. (n)
Immediate termination of Lease with notice under
Art. 1660 applies
1. Only to dwelling places or any other building
INTENDED for human habitation
2. Even if at the time the contract was perfected,
the lessee knew of the dangerous condition or
waived the right to rescind on account of such
condition
This right of the lessee to terminate or rescind
is a precaution for public safety which is
above of any stipulation.
(6) Return of the thing leased
Art. 1665. 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 (1) lapse of time, or (2)
by ordinary wear and tear, or (3) from an inevitable
cause. (1561a)
Such obligation to return the leased premises is
no deemed fulfilled if the lessor cannot resume
possession because of some impediment.
Art. 1666. 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.
(1562)
No such presumption arises where there is a
statement or representation, written or oral,
concerning the actual condition of the thing at
the time the lease was constituted.
(7) Liability for loss or deterioration
Art. 1667. 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.
(1563a)
GR: the lessee is responsible for deterioration or loss of
thing leased.
Exception: when it is due to earthquake, flood, storm, or
other natural calamity.
Ordinarily, fire is not a natural calamity. It is not
mentioned in Art. 1667. The lessee must prove
he was without fault.
Art. 1668. The lessee is liable for any deterioration
caused by members of his household and by guests and
visitors. (1564a)
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Deterioration caused by others
Made legally responsible for their acts as in
quasi-delicts under the principle of command
responsibility
The liability of the lessee for the acts of third
persons is based on the contract itself, under
which the lessee has assumed custody of the
thing of which the lessor has been
dispossessed.
There is no need of proving that he was
negligent in selecting and supervising his
household helpers, visitors and guests. He is
liable from because he allowed them into the
immovable leased.
b. Remedies of the lessor
(1) Rescission and indemnification for
damages or only the latter allowing the
contract to remain in force, in case of
failure of the lessor to comply with the
article 1654.
Remedies of the lessor in case of non-compliance of
the obligation by the lessee
1. Rescission and damages
2. Damages only, allowing the contract to remain
in force.
The lessor may directly file an action for
ejectment against the lessee instead of
rescinding the contract.
(2) May hold the sublessee bound for all
acts which refer to the use and
preservation of the things leased.
Art. 1651. 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. (1551)
(3) Hold the sublessee subsidiarily liable
for any rent due from the lease
Art. 1652. 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.
C. Duration of the lease
The period may be definite or indefinite but in any case,
the period is only temporary, not perpetual.
The longest period that may be stipulated is only 99
years.
If the period is more than 99 years, the lease is
considered as having expired at the end of 99 years.
1. Definite time or period
Art. 1669. If the lease was made for a determinate time,
it ceases upon the day fixed, without the need of a
demand.
Notice to vacate constitutes an express act on
the part of the lessor that he no longer consents
to the renewal of the contract and the lessee has
no other option except to vacate the property.
The continuous possession of the leased
premises after the end or expiration of the time
fixed in the contract, with the acquiescence of
the lessor, constitutes and implied renewal of
the lease.
Under the Rules of court, a demand on the
lessee is a prerequisite to an action for
unlawful detainer, when the action is for
failure to pay rent due or to comply with the
condition of his lease and not where the action
is to terminate the lease because of the
expiration of its term.
In contract of lease of urban property for an
indefinite period, a notice to increase rent is
equivalent to a notice of the termination of the
contract.
Extension or renewal of lease
The court has no authority to extend a lese
where the stipulated period of the contract has
already expired, if the lessor is unwilling to
extend.
Where a lease contrct expressly stipulates that
the lease shall ot be deemed extended or
renewed by implication beyond the contractual
period for any cause but only by negotiations,
the mere fact that the lessee was willing to pay
what he claimed to be a reasonable rent which
was less than that demanded by the lessor did
not operate in any sense to extend the lease.
A stipulation that a lease is extendible for a
further similar period is to be understood as
giving the lessee the right to the additional
period or to quit upon the expiration of the first
term.
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A stipulation renewable at the option of both
parties means that there should be mutual
agreement as to the renewal of the lease.
If the option to renew is given to the lessor, the
lessee cannot renew against lessors refusal.
Where option to renew is given to the lessee
and is silent upon the rentals, the old terms are
to be followed in the renewed lease.
The continued possession of the lessee is
evidence of his exercise of the option.
2. No fixed period
Art. 1680. 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; but 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.
Duration of the lease for rural lands
It shall be for all the time necessary for the
gathering of fruits which the whole estate may
yield; OR
Which it may yield only once although two or
more years have elapsed
The lessee of rural land is entitled to reduction of
rent if the following requisite are present
1. The land is rural
2. More than one-half of the fruits have been lost
3. The loss occurred through extraordinary and
unforeseen events
4. There is no stipulation that lessee is not entitled
to reduction.
Cases that do not justify reduction
1. On account of sterility of land
2. By reason of the loss of the fruits due to
ordinary fortuitous events, regardless of the
extent of loss
3. By reason of loss of less than one half of the
fruits even though extraordinary and
unforeseen events
Typhoons are not extra-ordinary in this
country and also war already existing
when the contract was entered into.
4. By reason of the loss of more than one half of
the fruits through extraordinary and
unforeseen events, where there is a specific
stipulation to the contrary
5. Where the loss of fruits occurred after they
have been already gathered.
Art. 1687. 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.
2nd part: 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. (1581a)
Duration of the lease for Urban lands
If rent is paid daily, lease is from day to day
If rent is paid monthly, lease is from month to
month
A month to month lease expires afte the
last day of any given 30-day period, upon
proper demand and notice by lessor to
vacate.
If rent is paid yearly, lease is from year to
year.
Note: Even if the parties have agreed as to the periodical
payment of rentals, the law empowers the courts to
exercise their discretion in fixing the term, if the lessee
has stayed in the premises for a certain length of time.
3. Implied new lease
Art. 1670. 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. (1566a)
Terms which are revived
The original terms of the original contract
which are revived are only those which are
germane to the lessees right of continued
enjoyment of the property leased or related to
such possession.
Requisites of Implied New Lease
1. The term of the original contract has expired
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2. The lessor or lessee has not previously given
notice to vacate
3. The lessee continued enjoying the thing leased
for at least fifteen days at the end of the
contract with the acquiescence of the lessor.
Note: A lessor who gives notice after the 15 day period
has no cause of action for unlawful detainer as there is
already an implied lease.
Instances when implied renewal not applicable
1. Stipulation against implied renewal
2. Invalidity of the original lease
3. Acceptance of rentals beyond original term by
the lessor who had previously informed the
lessee that she was not renewing the lease.
4. Acceptance of rentals less than amount
stipulated
5. Nonpayment of rentals
4. Perpetual lease
Jespajo realty v. CA,
ISSUE: Whether the parties to a contract of lease
stipulated for an indefinite period and shall continue for
as long as the lessee is paying the rent, is the said contract
interminable even by the lessor.
HELD: Yes. The fact that such option is binding only on
the lessor and can be exercised only by the lessee does
not render it void for lack of mutuality. After all, the
lessor is free to give or not to give the option to the lessee.
And while the lessee has a right to elect whether to
continue with the lease or not, once he exercises his
option to continue and the lessor accepts, both parties
are thereafter bound by the new lease agreement. Their
rights and obligations become mutually fixed, and the
lessee is entitled to retain possession of the property for
the duration of the new lease, and the lessor may hold
him liable for the rent therefor. The lessee cannot
thereafter escape liability even if he should subsequently
decide to abandon the premises. Mutuality obtains in
such a contract and equality exists between the lessor
and the lessee since they remain with the same faculties
in respect to fulfillment.
Rules on Extension of the Lease period
1. If a lease contract for a definite term allows
lessee to extend the term, there is no necessity
for lessee to notify lessor of his desire to extend
the term unless the contrary is stipulated.
2. may be extended as stipulation lessee can
extend without lessors consent but lessee must
notify the lessor
3. may be extended for 6 years agreed upon by
both aprties as stipulation interpreted in
favor of the lessee. Hence, ordinarily the lessee
at the end of the original period may either:
a. Leave the premises or
b. Remain in possession
4. In co-ownership, assent of all is needed,
otherwise it is void or ineffective against non-
consenting co-owners.
5. Where according to the terms of the contract
the lease can be extended only by the written
consent of the parties, no right of extension can
arise without such written consent.
6. If the option is given to the lessor, the lessee
cannot renew the lease against the formers
refusal. The lease is deemed terminated.
7. Where a lessee is given the option to continue
or renew the contract of lease and is silent upon
the rentals, the old terms are to be followed.
8. The lessor may impose additional conditions
after the expiration of the original period.
9. A verbal agreement to extend the lease is
admissible to qualify the terms of a written
contract.
10. The extension granted shall be commensurate
with the period of occupation.
Remedy of the lessor if the lessee continues in
possession
Bring an action of unlawful detainer to recover
the possession of the premises and the rents or
fair rental value
D. Termination of the lease
1. By expiration of the period
Art. 1673. 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.
The ejectment of tenants of agricultural lands is
governed by special laws. (1569a)
Note: In all cases except number 1, for the case of
unlawful detainer to prosper, a demand to pay and
vacate should be given to the lessee.
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Possession of land by tolerance becomes an
unlawful detainer, from the time a demand to
vacate is made.
A notice giving the lessee the alternative either
to pay the increased rental or otherwise to
vacate the leased premises is not the demand
contemplated in an unlawful detainer case.
The demand to vacate must be definite,
subject to no condition.
The omission of the word to vacate in the
notice is immaterial. It is sufficient that the
demand letter puts the lessee on notice that if
he does not pay the rentals or comply with the
terms of the lease contract, he should move out
of the leased premises.
Period for filing action for unlawful detainer within
one year after the occurrence of the unlawful deprivation
or withholding of possession. Beyond the one-year
period, the real right of possession may be recovered
through the filing of an accion publiciana.
Expiration of the period
Demand or notice to vacate is not a
jurisdictional requirement when the action is
based on the expiration of the lease.
A lease on a month-to-month basis is for a
definite period and may be terminated at the
end of any month.
The lessor has the right no only to terminate the
lease at the expiration of the term, but to
demand a new rate of rent. The question
whether or not the new rate of rent fixed by the
owner is reasonable must be decided according
to the evidence.
If the action for ejectment is anchored on the non-
payment of rentals, two requisites must concur:
a. There must be failure to payy rent or to comply
with the condition of the lease
b. There must be demand both to pay or to comply
and vacate within the periods specified in Sec.
2, Rule 170 of the ROC, particularly 15 days in
case of land and 5 days in the case of buildings.
Violation of any of the conditions agreed upon
Violations of conditions would constitute
breach of the lease contract. Therefore, it is
enough ground to eject the lessee.
A demand is a prerequisite in an action for
unlawful detainer based on this ground.
2. By the resolution of the right of the lessor
3. By the will of the purchaser or transferor of the
thing
Art. 1676. 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.
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.
If the sale is fictitious, for the purpose of extinguishing
the lease, the supposed vendee cannot make use of the
right granted in the first paragraph of this article. 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.
(1571a)
General Rule: Purchases of the thing leased can
terminate lease.
Exceptions:
1. Lease is recorded in Registry of Property
An unrecorded lease is terminable at the
will of the new owner who is an innocent
purchaser for value.
2. There is a stipulation in the contract of sale that
purchaser shall respect the lease until
termination of its period.
3. Purchaser has actual knowledge of the
existence of the lease
4. Sale is fictitious there is rebuttable
presumption that sale is fictitious if it is not
registered.
5. Sale is made with right of repurchase.
4. By total loss of the thing Discussion on page 6
Art. 1655. 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. (n)
5. By rescission due to non-performance of the
obligation
Art. 1659. If the lessor or the lessee should not comply
with the obligations set forth in Articles 1654 and 1657,
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. (1556)
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