SALES and LEASE

LEASE a contract whereby one binds

himself to grant temporary use of a
thing or the rendering of some service
to another who undertakes to pay
some rent, compensation or price.
Rent
It is the cause of the contract of lease,
in money or its equivalent, such as
products, fruits or other useful things,
or other prestation which the lessee
binds himself to undertake.
Right to Fix Rent
It belongs to lessor as lease is a
consensual contract, similar to sale. If
the rentals being claimed are
exorbitant, the courts could intervene
as a matter of fairness and equity.
KINDS (Art. 1642)
1. Things
2. Service
3. Work
Characteristic
1. Consensual
2. Bilateral
3. Onerous
4. Commutative
5. Nominal
6. Principal
7. Purpose is to allow enjoyment
or use of a thing
8. Subject matter must be within
the commerce of man
9. Purpose to which the thing will
be devoted should not be
immoral
10.Period is temporary (only up to
99 years)
11.Period is definite or indefinite
- Article 1682 and Article 1687
12.Lessor need not be the owner
(ex. Usufructuary)
Form of Lease

Lease may be made orally, but if the

lease of real property is more than one
year, it must be in writing, in
compliance with the Statute of Frauds.
Consumable Goods (Article 1645)
Consumable goods cannot be the
subject of a contract of lease, EXCEPT:
1. For purposes of exhibiting
2. Accessory to an industrial
establishment
Persons Disqualified
1. Husband and Wife/Common law
spouses, except:
a. Separation of property was
agreed upon in the marriage
settlements
b. Judicial separation of
property
2. Fiduciary Relationships (Art.
1491)
Note:
Foreigners are allowed to lease lands
in the Philippines.
Lease as a Personal Right
The lease of a real property is a
personal right, EXCEPT:
1. It is for more than a year and in
writing
2. Registered in the registry of
Property
Note:
Lease of personal property cannot be
registered. To be binding against 3rd
persons it must be executed in a
public instrument.
Assignment of Lease
A lessee cannot assign the lease
WITHOUT THE CONSENT of the lessor.
(Art. 1649)
Except: There is a stipulation to the
contrary.

SALES and LEASE

Sublease
A lessee may generally sublease the
property in the absence of express
prohibition. (Art. 1650)
Rights of the Lessor if Sublease is
prohibited but subsequently entered
into by the Lessee:
1. Rescission and damages
2. Damages (Contract allowed to
remain)
3. Ejectment
Responsibility of Sublessee to the
lessor

General Rule: the sublessee is directly

liable to the sublessor and not to the
lessor.
Exceptions:
1. Acts which refer to the use and
preservation of the thing leased
in the manner stipulated
between the lessor and the
lessee. (Art. 1651)
2. Rent due to the lessor from the
lessee which the latter failed to
pay (Art. 1652)