Professional Documents
Culture Documents
Using the contract that you have (Part I) and applying Philippine law, answer the following
questions:
The property to be leased is located in ground floor with an area of Forty Square Meters (40 sq. m.)
of a three storey building located at Caneja Street comer Castin Street, Naval, Biliran owned by
RICARDO R. KHO (Lessor).
RICARDO R. KHO (Lessor) is to make available the area to be leased mentioned in the paragraph
before.
Finally, at the end of the lease, the lessor must return the deposit of TWELVE THOUSAND PESOS
(P12, 000.00) without any interest thereon, within thirty (30) days after the LESSEE shall have
completely and satisfactorily vacated and delivered the Leased Property to the LESSOR, deducting
therefrom whatever amount/s the LESSEE may owe the LESSOR.
In the case of violation by one of the parties of any of the terms and conditions set forth herein
results as a right or basis for the termination of this contract. If termination ensues due to the
destruction of the leased premises without fault of the parties, the LESSOR shall return any of the
advance rentals for the unexpired portion of the term and the deposit. The LESSOR shall not be
answerable or responsible for any damage caused by natural events or to any cause that is beyond
the LESSOR'S control. Any party may terminate the contract for any cause at any time before the
expiration of the term agreed upon by giving the other party a written notice of termination for thirty
(30) days prior to the intended date
The main obligation that is incumbent upon the lessee is to provide the (P12, 000.00) deposit, pay
the rent, and any charges that will arise from specified violations in the contract to the LESSOR.
Furthermore, the LESSEE must pay for withholding tax and provide LESSOR the withholding tax
certificate.
Upon the duration of the stay, LESSEE can only use the premises for which it was intended to and
to maintain the same clean and sanitary subject to the building rules and regulations. LESSEE must
not bring any hazardous articles that could cause fire or explosions or else, if such accidents
happen then LESSEE shall be held responsible for all damages. Improvement plans shall be
submitted to the LESSOR for review and approval. LESSEE may call building electrician and
handyman for the purpose but charges will be shouldered by LESSEE. There is also a right to
remove the improvements provided that no damage will be caused to the property; except those
caused by wear and tear, inevitable causes, and lapse of time. Utility bills and busted lights will be
paid by the LESSEE. Furthermore, LESSEE shall comply and abide with the ordinances of the city
regarding the use of the premises, comply with health regulations and secure permits or license for
its business operations. Any plans for sublease would require a written notice to the LESSOR.
Finally, at the end of the lease, the LESSEE must vacate the premises within seven days and return
the premises in the same condition it was first entered into or else LESSEE shall be charged with
the corresponding daily rentals of the premises to be affected when the grace period is up. They
must assume responsibility for rental damage other than normal wear and tear, unless they can
prove that they were not responsible for such damage. For termination of contract for anytime and
for any cause, there must be a written notice for thirty days prior to the intended date.
6. Are the following provisions present in the contract and are these provisions consistent
with the Civil Code provisions on lease:
a. Assignment;
In the Art. 1654. The lessor is obliged: (1) To deliver 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.
While in Art. 1657. The lessee is obliged: (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.
These articles in the Civil Code have been complied with and are present in the contract of lease.
b. Sub-lease;
In the contract of lease, the terms given under sublease is the following:
SUBLEASE, TRANSFER OF RIGHTS. The transfer of rights of the LESSEE under this contract
and,/or the sublease of any part or portion of the leased premises shall not be made unless a
written notice to the LESSOR is given and approval of the latter is secured. Any violation of this
condition will be a basis for the termination of the contract.
According to the civil code on lease, there is no particular law stipulating the need of the LESSEE to
make a written notice to the LESSOR for a sublease/ transfer of rights. However, the law allows
LESSEES to go into subleases.
c. Rescission;
In the contract of lease above, it is clearly stated that termination is possible for destruction of the
leased premises without fault of the parties. The LESSOR shall return any of the advance rentals for
the unexpired portion of the term and the deposit of P12,000 The LESSOR shall not be answerable
or responsible for any damage or injury to the properties or personalities of the LESSEE caused by
the destruction of the leased premises due to natural events or to any cause that is beyond the
LESSOR'S control.
The condition stipulated in the contract is in accordance to the Civil Code because according to the
law, if the thing is totally destroyed by a fortuitous event, then the lease is extinguished and both
parties aren’t liable for the damages. If destruction is partial then the lessee can choose between
deduction or rent or a rescission of the lease (1655). Furthermore, if obligations set forth in the
following then 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.
d. Damages
The contract is in line with the law specifically where LESSEE is responsible for the damages that
he/she have caused but not if damage was caused by natural calamity. However, there have been
additions to the conditions related to damages amongst the parties.
According to the contract, should there be damages made by natural calamities, then LESSEE is
not liable but LESSOR must do an immediate repair or restoration granting a moratorium or waiver
of rental payment for the period of time needed for such repair. When damages on the leased
property are made by the LESSEE, then the latter would have to pay for cost of damages. If
termination due to destruction of leased premises is without the fault of both parties then the
LESSOR shall return any advance rentals to LESSEE and LESSOR shall not be liable to the
damages done to the personalities or properties of the LESSEE caused by natural events or to any
cause that is beyond the LESSOR’S control.
7. What is the provision on improvements? Is it the same as the Civil Code provision/s?
According to the case, the provision on improvements stated that LESSEE should submit to the
LESSOR the plans for its proposed improvements within the premises for review and approval. The
LESSOR may also require certain amendments which regards to the correct tapping of electric
service and other utilities necessary. The LESSEE may avail building electrician and handyman for
the improvements, with charges shouldered by LESSEE. Where improvements affect the structure,
the LESSOR will require necessary correction of the submitted plans. Any corrections on
improvements will require submission and approval of the LESSOR. The LESSEE has right to
remove said improvements so long as no material damage may be caused to the property or
material damage be restored to its original structure; except which may be caused by lapse of time,
wear and tear, or inevitable causes.
The provision on improvements as compared to the Civil Code provision is not alike because the
provisions are additional conditions stated by the LESSOR. In the Civil Code, it is only stated that if
lessee makes useful improvements which are suitable to the use for which the lease is intended,
without altering the form of the property leased, then the LESSOR upon termination of the lease
shall pay the LESSEE one-half of the value for improvements at that time. If the LESSOR refuses to
reimburse said amount, then LESSEE may remove improvements, even though LESSOR may
suffer damages.
In the provision, it wasn’t stated that any useful improvements by the LESSEE will be reimbursed by
the LESSOR.
8. If you are the lessee, what provisions do you think should be amended, modified, and/or
deleted in your contract?
If I were the lessee, I would want to modify the following conditions in the contract:
1) Instead of LESSEE shouldering all the amount to be spent in the improvements made in the
property, the LESSOR must also contribute to the improvements spent if LESSOR agrees to
let it remain in the property. According to the civil code, the LESSOR must pay half of what
was spent in the improvements. This way, it would be fair to both parties, because both
made use of the said improvements. It would be unfair if only the LESSEE pays for the
improvements even if such improvements were to remain even after the termination of the
contract of lease.
2) “The monthly lease rate is TWELVE THOUSAND PESOS (P12,000.00) inclusive of all
government required fees and taxes and maintenance cost, etc…” Maintenance cost should
be clarified so that LESSEE will know what are inclusive in the maintenance costs because
maintenance such as light fixtures will be separately shouldered by the LESSEE as stated in
the conditions under LIGHTS AND LIGHTING FIXTURES.
B. General Questions
1. What is the difference between a lease with indeterminate time and implied new lease?
Lease with indeterminate time means that no time was given in the contract to show how long the
lessee is to lease the premises.
If the period for lease has not been fixed, it is understood to be from year to year, if rent agreed
upon is annual from month to month; if it is monthly; from week to week, if rent is weekly; and from
day to day, if the rent is to be paid daily. Even though rent is paid monthly, and not period for the
lease has been set, then the courts may fix a longer term for the lease after the lessee has occupied
the premises for over one year. If rent is paid weekly, the court may also determine a longer period
after lessee has been in possession of premises for over six months. In the case of daily rent, the
courts may fix a longer period if the lessee has stayed for over a month.
There is an implied new lease when at the end of the contract (month to month, week to week, etc),
lessee continues to enjoy 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. An implied new lease has
the following requisites:
a) Term of the original contract of lease has expired
b) The lessor has not given the lessee a notice to vacate
c) The lessee continued enjoying the thing leased for fifteen days with the acquiescence of the
lessor
In conclusion, the main difference between the two is that implied new lease gives the lessee a
chance to stay in the premises so long as it is with the lessor’s acceptance and that the following
requisites above is followed while lease with indeterminate period, is a lease without a specific
period from when to when the lessee would be leasing the premises.
2. What is the difference between lease and the other contracts (give an example of each):
Purpose of Seller or vendor, Return of the Enjoy the Use of the thing Safekeeping,
Contract obligates himself equivalent only property and given but not its mere custody
to deliver and not the preserving its fruits
something to the identical thing form and
other party who because the substance
is the buyer or borrower
vendee who is acquires
bound to pay a ownership
sum of money or thereof
its equivalent.
Cause of Price certain in May be Enjoyment until Liberality of the Liberality of the
Contract money or its gratuitous or time stipulated bailor since it is depositary if
equivalent with a stipulation essentially gratuitous or
to pay interest gratuitous payment of
compensation if
onerous
Requirement Seller must have Creditor must The thing under Bailor need not Depositor is not
that the party the right of have the usufruct is under be the owner of required to be
delivering the ownership to the capacity to the ownership of the thing loaned the owner of the
thing be the thing being transfer the person who thing deposited
owner of the transferred. ownership of the owns it and not since deposit
thing thing to the to the does not transfer
debtor usufructuary. ownership.
Depositary
cannot demand
that the
depositor prove
his ownership of
the thing
deposited.
Ownership Ownership ownership The usufructuary bailor retains the Depositor is not
passes to the passes to the does not own ownership of the required to be
vendee. borrower the property thing loaned; the owner of the
thing deposited.
No transfer of
ownership to the
depositary.
Obligation of The buyer must -Pay the creditor Usufructuary has Bailee is obliged Depositary is
the person in pay the price an equal amount the right to use to pay for obliged to keep
possession of and take the of the same kind the property but ordinary the thing safe
the thing delivery of the and quality cannot damage expenses for the and to return it
thing. -Pay interest, if or destroy it, or use and when required to
stipulated in dispose of the preservation of the depositor.
writing property. the thing loaned
-bailee is liable
for the loss of
the thing, even if
it should be
through a
fortuitous event
Obligations of -The seller must -Deliver to Before entering Bailor cannot -obligation to
the person who transfer, deliver, lender the thing the enjoyment of demand the pay expenses of
delivered the warrant the to be loaned. the property return of the preservation
thing thing, and should make an thing loaned till -obligation to
protect the thing inventory of all after the pay losses
until its delivery the property and expiration of the suffered due to
to the vendee. to give security period the character of
to fulfill stipulated, or the thing
obligations after the deposited,
accomplishment
of the use for
which the
commodatum
has been
constituted.
However, if in
the meantime,
he should have
urgent need of
the thing, he
may demand its
return or
temporary use.
Example Contract of sale *See attached *See attached Ex: Ex: direct
for a second photo photo Commodatum in deposit contract
hand Mitsubishi healthcare
Mirage G4 environment
*See attached
sedan with a
photo
plate number of *See attached
ABC 123 that photo
costs 950,000
pesos.
Simple Loan
Ex: direct deposit contract