LEASE

Atty. Crisostomo A. Uribe

Characteristics of a Contract of Lease
1997 Bar Exam Question No. 17(a)

Stating briefly the thesis to support your answer

to each of the following cases, will the death

(a) of the lessee extinguish the lease agreement?

Formalities
1981 Bar Exam Question No. 9

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.
Formalities
1988 Bar Exam Question No. 2(b)

Is the lease of the entire community property in

co-ownership an act of administration or an act of
ownership or alteration? Explain, in relation to
the need of consent of the co-owners.
Formalities
1987 Bar Exam Question No. 10

Lino entered into a written agreement for the

repair of his private plane with Airo Repair Works,
Inc. for P500,000. Additional work was done
upon the verbal request and authority of a duly
recognized representative of Lino. 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?

Formalities / Period
1992 Bar Exam Question No. 8
A as principal appointed B as his agent granting him general
and unlimited management over As properties, stating that
A withholds no power from B and that the agent may
execute such acts as he may consider appropriate.
Accordingly, B leased As parcel of land in Manila to C for
four (4) years at P60,000.00 per year, payable annually in
advance.
B leased another parcel of land of A in Caloocan City to D
without a fixed term at P3,000.00 per month payable
monthly.

All those contracts were executed by B while A was confined

due to illness in the Makati Medical Center.
Rule on the validity and binding effect of each of the above
contracts upon A the principal. Explain your answer.
Rights and Obligations of the Lessor
1983 Bar Exam Question No. 14

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 Cs
restaurant? Why?
Rights and Obligations of the Lessor
2004 Bar Exam Question No. 1(B) (5%)

B. TX filed a suit for ejectment against BD for

non-payment of condominium rentals amounting
to P150,000. During the pendency of the case,
BD offered and TX accepted the full amount due
as rentals from BD, who then filed a motion to
dismiss the ejectment suit on the ground that the
action is already extinguished.

Is BDs contention correct? Why or why not?

Reason.
Rights and Obligations of the Lessor
1990 Bar Exam Question No. 1
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. On the tenth (10th) 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 that 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?
Rights and Obligations of the Lessor
1996 Bar Exam Question No. (7)(4)

Bartolome constructed a chapel on the land of

Eric. What are Bartolomes rights if he were:

(4) a lessee of the land?

Rights and Obligations of the Lessor
1981 Bar Exam Question No. 13

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.
Rights and Obligations of the Lessee
1985 Bar Exam Question No. 15(B)

B) A leased to B a fishpond for 5 years. During

the second year of the lease, he received only 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?
Rights and Obligations of the Lessee
Right of First Refusal
1998 Bar Exam Question No. X(5%)

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 know 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.
Rights and Obligations of the Lessee
Right of First Refusal
2008 Bar Exam Question No. XVI(5%)

Dux leased his house to Iris for a period of 2 years, at the rate of P25,000.00
monthly, payable annually in advance. The contract stipulated that it may be
renewed for another 2-year period upon mutual agreement of the parties.
The contract also granted Iris the right of first refusal to purchase the
property at any time during the lease, if Dux decided to sell the property at
the same price that the property is offered for sale to a third party. Twenty-
three months after execution of the lease contract, Dux sold the house to his
mother for P2 million. Iris claimed that the sale was a breach of her right of
first refusal. Dux said there was no breach because the property was sold to
his mother who is not a third party. Iris filed an action to rescind the sale and
to compel Dux to sell the property to her at the same price. Alternatively, she
asked the court to extend the lease for another 2 years on the same terms.

(a) Can Iris seek rescission of the sale of the property to Duxs mother?

(b) Will the alternative prayer for extension of the lease prosper?
Rights and Obligations of the Lessee :
Sublease/Assignment of Lease
1999 Bar Exam Question No. XIV (a)

(a) May a lessee sublease the property leased

without the consent of the lessor, and what are
the respective liabilities of the lessee and sub-
lessee to the lessor in case of such sublease?
(3%)
Rights and Obligations of the Lessee :
Sublease/Assignment of Lease
1994 Bar Exam Question No. 8

In January 1993, Four-Gives Corporation leased the entire

floors of the GQS Towers Complex, for a period of ten years
at a monthly rental of P3,000,000.00. There is a provision in
the contract that the monthly rentals should be paid within
the first five days of the month. For the month of March,
May, June, October and December 1993, the rentals were not
paid on time with some rentals being delayed up to ten days.
The delay was due to the heavy paper work involved in
processing the checks.
Four-gives Corporation also subleased five of the twelve
floors to wholly owned subsidiaries. The lease contract
expressly prohibits the assignment of the lease contract or
any portion thereof. The rental value of the building has
increased by 50% since its lease to Four-Gives Corporation.

2) Can the building owner ask for the cancellation of the

contract for violation of the provision against assignment?
Rights and Obligations of the Lessee :
Sublease/Assignment of Lease
1990 Bar Exam Question No. 6

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 As 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) Bs sublease to C? and Cs assignment of the

sublease to D?
Rights and Obligations of the Lessor/Lessee
2005 Bar Exam Question No. XIV

Under a written contract dated December 1, 1989, Victor

leased his land to Joel for a period of five (5) years at a
monthly rental of P1,000.00, to be increased to P1,200.00 and
P1,500.00 on the third and fifth year, respectively. On January
1, 1991, Joel subleased the land to Conrad for a period of two
(2) years at a monthly rental of P1,500.00
On December 31, 1992, Joel assigned the lease to his
compadre, Ernie, who acted on the belief that Joel was the
rightful owner and possessor of the said lot. Joel has been
faithfully paying the stipulated rentals to Victor. When Victor
learned on May 15, 1992 about the sublease and assignment,
he sued Joel, Conrad and Ernie for rescission of the contract of
lease and for damages.
a. Will the action prosper? If so against whom? Explain. (2%)
b. In case of rescission, discuss the rights and obligations of
the parties. (2%)
Rights and Obligations of the Lessor/Lessee
2009 Bar Exam Question No. VIII

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%)
Termination of the Lease
1993 Bar Exam Question No. 9
A is the owner of a lot on which he constructed a
building in the total cost of P10,000,000.00. Of that
amount B contributed P5,000,000.00 provided that the
building as a whole would be leased to him (B) for a
period of ten years from January 1, 1985 to December
31, 1995 at a rental of P100,000.00 a year. To such
condition, A agreed. On December 20, 1990, the
building was totally burned. Soon thereafter, As
workers cleared the debris and started construction of a
new building. B then served notice upon A that he
would occupy the building being constructed upon
completion, for the unexpired portion of the lease term,
explaining that he had spent partly for the construction
of the building that was burned. A rejected Bs demand.

Did A do right in rejecting Bs demand?

Termination of the Lease
1999 Bar Exam Question No. XIV (b)

(b) Under what circumstances would an implied

new lease or a tacita reconduccion arise? (2%)
Termination of the Lease
2001 Bar Exam Question No. XIV(5%)

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 Jun 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?