Lease1

[Follow the Outline]

Part ONE
Modified True or False. Consider the statement true only when it is absolutely true.
Explain ALL your answers.

1. A contract where one of the parties delivers a thing to another for the enjoyment or use of the
thing is a lease of thing.
2. Consumable goods cannot be the subject matter of a contract of lease.
3. The husband and the wife cannot lease property to each other.
4. The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to
the contrary.
5. The sublessee is solidarily liable to the lessor for any rent due from the lessee.
6. 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.
7. 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.
8. 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, save always when
there is a specific stipulation to the contrary.
9. The lease of an urban 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.
10. 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.

Part TWO
Multiple Choice. Choose the best answer.

1. In this contract, one of the parties binds himself to give to another the use of the thing for a price
certain:
a. Commodatum b. Mutuum c. Lease d. Deposit e. Pledge

2. In lease of thing, the thing is NOT:

a. Consumable b. Non-consumable c. Fungible d. Non-fungible

3. If the guardian leased the property of his ward, the contract is:
a. Valid b. Rescissible c. Voidable d. Unenforceable e. Void
4. If the lessor failed to maintain the lessee in peaceful and adequate enjoyment of the thing leased,
the remedies of the lessee are, EXCEPT:
a. Consider the contract of lease extinguished
b. Rescission of the lease
c. Rescission with damages
d. Damages only
e. Suspend the payment of the rent

5. A contract of lease is void if it is for more than:

a. 5 years b. 20 years c. 50 years d. 100 years e. none of the above

6. If the thing leased is destroyed partially by a fortuitous event, the lessee may choose between a
proportional reduction of the rent and:
a. specific performance b. rescission c. damages
d. accion subrogatoria e. accion quanti minoris

7. If at the end of the contract the lessee should continue enjoying the thing leased for _____ 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.
a. 15 days b. 30 days c. 3 months d. 6 months d. 1 year

8. 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
a. ½ of their value at the time the lease is extinguished.
b. their value at the time the lease is extinguished.
c. ½ of the amount spent for the improvement
d. the amount spent for the improvement
e. nothing.

9. The contractor is responsible for the damage if the edifice falls, within ______ from the
completion of the structure, 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.
a. 1 year b. 4 years c. 10 years d. 15 years e. 25 years

10. The lease of a 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
_______, or which it may yield once, although two or more years have to elapse for the purpose.
a. 1 season b. 2 seasons c. 1 year d. 2 years e. none of the above
Part THREE
Give direct and concise but complete answers.
Cite authorities, if any.

1. Stating briefly the thesis to support your answer to each of the following cases, will the death of
the lessee extinguish the lease agreement?

2. “O” verbally leased his house and lot to “L” for two years at a monthly rental of P250.00 a
month. After the first year, “O” demanded a rental of P500.00 claiming that due to the energy
crisis, with the sudden increase of the price of oil, which no one expected, there was also a
general increases in prices. “O” proved an inflation rate of 100%. When “L” refused to vacate
the house, “O” brought an action for ejectment. “O” denied that he had agreed to a lease for two
years.

a) Can the lessee testify on a verbal contract of lease? Reasons.

3. Lino entered into a written agreement for the repair of his private plane with Aero Repair Works,
Inc. for P500,000. Additional work was done by Aero incurring an expense of P250,000. Lino
refused to pay for the additional work, interposing as a defense the absence of a written contract
for the additional work done.

Is the defense put up by Lino valid? Explain?

4. After leasing his restaurant to B, A leased the adjoining room to C knowing fully well that C was
going to put up another restaurant, which he did.

Is A liable to B for the damage he may have suffered as a result of the opening of C’s restaurant?
Why?

5. A vacant lot several blocks from the center of the town was leased by its owner to a young
businessman B, for a term of fifteen (15) years renewal upon the agreement of the parties. After
taking possession of the lot, the lessee built thereon a building of mixed materials and a store. As
the years passed, he expanded his business, earning more profits. By the tenth (10 th) year of his
possession, he was able to build a three-storey building worth at least P300,000.00. Before the
end of the term of the lease, B negotiated with the landowner for its renewal, but despite their
attempts to do so, they could not agree on the new conditions for the renewal. Upon the
expiration of the term of the lease, the landowner asked B to vacate the premises and remove his
building and other improvements. B refused unless he was reimbursed for necessary and useful
expenses. B claimed the he was a possessor and builder in good faith, with right of retention.
This issue is now before the court for resolution in a pending litigation.

a) What are the rights of B?

b) What are the rights of the landowner?

6. Anselmo is the registered owner of a land and a house that his friend Boboy occupied for a
nominal rental and on the condition that Boboy would vacate the property on demand. With
Anselmo's knowledge, Boboy introduced renovations consisting of an additional bedroom, a
covered veranda, and a concrete block fence, at his own expense.

Subsequently, Anselmo needed the property as his residence and thus asked Boboy to vacate and
turn it over to him. Boboy, despite an extension, failed to vacate the property, forcing Anselmo
to send him a written demand to vacate.

In his own written reply, Boboy signified that he was ready to leave but Anselmo must first
reimburse him the value of the improvements he introduced on the property as he is a builder in
good faith. Anselmo refused, insisting that Boboy cannot ask for reimbursement as he is a mere
lessee. Boboy responded by removing the improvements and leaving the building in its original
state.

Can Boboy be held liable for damages for removmg the improvements over Anselmo's
objection?

7. “O”, lot owner, contracted with “B”, builder, to build a multi-story office building designed by
“A”, architect. “A” was paid a fee to supervise the construction and execution of his design.
When completed, “O” accepted the work and occupied the building, but within one year, it
collapsed in an earthquake that destroyed only the building and not the surrounding buildings.
Construction was faulty. The building cost P3,000,000.00, but reconstruction cost would reach
P10,000,000.00.

a) What are the rights of “O” against “A” and “B”? Explain briefly.
b) Could “O” demand reconstruction of the building? On what ground? Amplify.

8. A leased to B a fishpond for 5 years. During the second year of the lease, he received only ½ of
the usual harvest from the fishpond as he could visit and supervise it only occasionally due to the
presence of armed men who were extorting money from him and other fishpond operators by
threats to their lives.

May B demand the reduction of the rent for the second year and the extension of the lease for one
year on the ground that the lessor failed to comply with his obligation to maintain the lessee in
the peaceful and adequate enjoyment of the lease?

9. In a 20-year lease contract over a building, the lessee is expressly granted a right of first refusal
should the lessor decide to sell both the land and building. However, the lessor sold the property
to a third person who knew about the lease and in fact agreed to respect it. Consequently, the
lessee brings an action against both the lessor-seller and the buyer (a) to rescind the sale and (b)
to compel specific performance of his right of first refusal in the sense that the lessor should be
ordered to execute a deed of absolute sale in favor of the lessee at the same price. The defendants
 contend that the plaintiff can neither seek rescission of the sale nor compel specific performance
of a “mere” right of first refusal. Decide the case. (5%)

10. Tess leased her 1,500 sq. m. lot in Antipolo City to Ruth for a period of three (3) years, from
January 2010 to February 2013. On March 19, 2011, Tess sent a letter to Ruth, part of which
reads as follows:

“I am offering you to buy the property you are presently leasing at P5,000.00 per
sq. m. or for a total of P7,500,000.00. You can pay the contract price by installment for
two (2) years without interest. I will give you a period of one (1) year from receipt of this
letter to decide whether you will buy the property.”

After the expiration of the lease contract, Tess sold the property to her niece for a total
consideration of P4 million.

Ruth filed a complaint for the annulment of the sale, reconveyance and damages against Tess and
her niece. Ruth alleged that the sale of the leased property violated her right to buy under the
principle of right of first refusal.

Is the allegation of Ruth tenable?

11. May a lessee sublease the property leased without the consent of the lessor?

12. A leased a parcel of land to B for a period of two years. The lease contract did not contain any
express prohibition against the assignment of the leasehold or the subleasing of the leased
premises. During the third year of the lease, B subleased the land to C. In turn, C, without A’s
consent, assigned the sublease to D. A then filed an action for the rescission of the contract of
lease on the ground that B has violated the terms and conditions of the lease agreement. If you
were the judge, how would you decide the case, particularly with respect to the validity of:

a) B’s sublease to C? and

b) C’s assignment of the sublease to D?

Explain your answers.

13. Jude owned a building which he had leased to several tenants. Without informing his tenants,
Jude sold the building to Ildefonso. Thereafter, the latter notified all the tenants that he is the new
owner of the building. Ildefonso ordered the tenants to vacate the premises within thirty (30) days
from notice because he had other plans for the building. The tenants refused to vacate, insisting
that they will only do so when the term of their lease shall have expired. Is Ildefonso bound to
respect the lease contracts between Jude and his tenants? Explain your answer. (3%)

14. Under what circumstances would an implied new lease or a tacita reconduccion arise?
15. On January 1, 1980, Nestor leased the fishpond of Mario for a period of three years at a monthly
rental of P1,000.00 with an option to purchase the same during the period of the lease for the
price of P500,000.00. After the expiration of the three-year period, Mario allowed Nestor to
remain in the leased premises at the same rental rate. On June 15, 1983, Nestor tendered the
amount of P500,000.00 to Mario and demanded that the latter execute a deed of absolute sale of
the fishpond in his favor. Mario refused, on the ground that Nestor no longer had an option to
buy the fishpond. Nestor filed an action for specific performance. Will the action prosper or not?
Why?