01 TAN SIOK KUAN AND PUTE CHING v. HO, et.al.

o Respondents: they have been in possession of the subject

premises for 37 years without any rentals being paid to any
G.R. No. 175085; 1 June 2016 landlord or his agents, and that there are no existing lease
contracts between respondents and petitioners
Topic: definition of lease | Ponente: J. Perez| Author: Pineda

Notes:
In the unlawful detainer cases filed, there were several defendants. The
respondents in this case are composed of four out of the seven defendants. The
three others (referred to as Bombita et.al.) did not appeal.
 Petitioners won, as MeTC and RTC found the existence of lessor-lessee
relationship. CA reversed decision.
o Note: Bombita et.al. considered to have impliedly admitted lessor-
lessee relationship.

Also, the case did not provide definition of lease. I took the definition from another
source.
W/N there was a lessor-lessee relationship

Held: NO. Thus, ejectment not proper.

Doctrine: A contract of lease is a consensual, bilateral, onerous, and commutative
contract by virtue of which one person binds himself to grant temporarily the use of
a thing or to render some service to another who undertakes to pay some rent. Ruling:

 Except for petitioners' bare claims, they have not shown any evidence of a
lease between them and respondents, be it express or implied. There was
no mention of how and when the alleged contract of lease started, there
Emergency Recit: Unlawful detainer case failed as Petitioners failed to establish was no proof of prior payment of rentals or any prior demand for such
payment considering petitioners' allegation that respondents failed to pay
existence of lessor-lessee relationship.
rentals since 1997 and that the case was instituted only in 2003.

 Bombita et.al.’s implied admission of lessor-lessee relationship does not

Facts: bind Respondents herein due to the principle or res inter alios acta.

 Petitioners are owners of a parcel of land in QC. Petitioners leased portions

of the property to the defendants (Respondents in this case + Bombita et.
al.) since 1972. On 7 February 2003, petitioners notified defendants that
they failed to pay rentals from 1996/1997 up to December 2007.
Defendants were given 10 days to pay the rentals due or else vacate.
Defendants refused.

 Petitioners filed 7 complaints for unlawful detainer against defendants.

o Bombita et. al.: lease agreements void ab initio because

Petitioners are Chinese nations who are not entitled to own real
property
02. Manlaraz v Salazar
52 O.G. No.2, p. 802, Reyes,
TOPIC: Rights and Obligations of Lessor and Lessee
FACTS:
1. A fishpond formerly belonged to three co-owners who took turns
leasing it to Bernando
2. The last lease was signed in 1931 and was to last until June 1967
3. After the death if Bernardo, his wife sub-leased the fishpond to
respondent, Salazar from May 1947 to May 1967
4. When the three co-owners died, their sole heir, petitioner Manlapat
filed an action with the CFI against Salazar to recover possession of
the fishpond, claiming that the lease and subleases were void
5. CFI: The leases were valid
6. Manlaraz impugned the validity of the sublease on the theory that
it is not really a sublease but an assignment of lease, which he
claims is void for want of consent.
ISSUE: Whether the sublease is valid.
HELD: YES
 Assignment of lease: the lessee makes an absolute transfer of his
interest as such lessee, thus dissociating himself from the original
contract of lease so that his personality disappears and there
remains only in the juridical relation between two persons, the
lessor and the assignee, who is converted into lessee
o BUT if the lessee retains reversionary interest, however
small, the transfer is deemed mere a lease
 SC held that the examination of the terms of the document
between Salazar and Bernardo’s wife shows that is only a sublease.
 The sublease was supposed to end on May 1967, while the actual
lease would end on June 1967
o It would appear that the sublease is for a shorter period
that the original lease
o A reservation of even so short of a period as the last
day of the term is enough to make the transfer a
sublease
 Moreover, the terms of the sub-lease did not show that she
disassociated herself from the lease
o The agreement contained several conditions between the
lessee and the sublessee, such as, the sublessee is
required to return the property to the lessee in good
condition
o These conditions show that the lessee never lost her
personality in the lease contract as she required the
property to be returned to her.
03 Nava v Yaptinchay - VALCOS
44 O.G. No. 9, p. 3332 | Oct. 21, 1947
Lease
DOCTRINE: In the contract of sublease, the personality of the lessee does
not disappear; the lessee does not transmit absolutely his rights and
obligations to the sub-lessee; and the sub-lessee does not have any direct
action against the owner of the premises as the lessor, to require the
compliance of the obligations contracted with the lessee, or vice-versa.
Moreover, the alleged assignment of cession could not have been held
valid in this case, because the owner of the premises did not give his
consent to the substitution of the sub-lessee in lieu of the lessee.
FACTS:
1. Nava was permitted to occupy the property of Sps. Quillen located in
Taft ave., Pasay for P100 per month
2. Mr. Quillen formally leased the house to Nava, for which the latter paid
the corresponding rent for 3 months, it having been understood that
Nava can stay there for 1 year
3. Defendant Yaptinchay proposed to buy Nava’s right of occupancy to
the house which was accepted by the latter
4. Their agreement was Yaptinchay will buy Nava’s right to the actual and
physical occupancy of the apartment for a period of 10 months
5. Pursuant to the agreement, the defendant paid the first installment of
P1,600 but failed to satisfy the balance
6. Defendant Yaptinchay alleges that before the expiration of the 3
months, Mr. Quillen objected to his stay in the apartment for he
considered the premises not subject to sublease
7. Defendant also alleges that as a consequence, Mr. Quillen took over
the control of the premises and entered into a separate agreement
with the defendant; and that the failure of the plaintiff to provide a
garage (a handwritten addendum to the contract) the contract was
deemed cancelled
ISSUE: WON the contract entered into by Nava and Yaptinchay was a
sublease | YES
RULING:
 In the agreement, it was provided that all rents to be paid to the owner
within the period of 10 months shall be for the account of the plaintiff,
thereby making the plaintiff responsible directly to the owner for
obligations arising out of the agreement
 In the contract, the plaintiff’s personality as lessee does not disappear,
the plaintiff does not absolutely transmit his rights and obligations to
the defendant and the defendant does not have any direct action to
the owner as lessor.
 Whether the plaintiff had the right to sublease the premises is not a
proper defense for the defendant not only because the defendant is a
stranger to the lease contract between the plaintiff and the owner, but
also because the defendant, for being privy of plaintiff, cannot attack
the lease collaterally for the simple reason that the tenant is not
permitted to deny the title of his landlord.
 On the issue of the garage, it was clearly shown that when the parties 04 Sime Darby v. Goodyear
entered into the sublease agreement, the stipulation on the provision
of the garage was not included, it was only placed as an addendum G.R. No. 182148
without any consideration.
 Court AFFIRMS the judgment appealed from with costs against Topic: RIGHTS AND OBLIGATIONS OF LESSOR AND LESSEE| Ponente: J. Mendoza | Author:
defendant. Valera

Doctrine: The lessee cannot assign the lease without the consent of the lessor, unless there is
a stipulation to the contrary.

Emergency Recit: Petitioner (Sime Darby) had a lease contract with Macgraphics for a
billboard advertisement. Sime’s rights to the lease was assigned to Goodyear in exchange of
cash incidental to an asset purchase agreement. Goodyear and Macgraphics initially
negotiated as to the design of the billboard advertisement that Goodyear preferred. But,
Macgraphics sent a letter to Sime Darby that it refuses to give consent to the assignment.
Goodyear asked rescission and that he be substituted to sime’s rights against macgraphics.
The RTC held that Macgraphics is not liable to Goodyear despite allowing rescission because it
never consented to the assignment. SC affirmed and ruled that the lessee cannot assign the
lease without the consent of the lessor, unless there is a stipulation to the contrary.

Facts:

1. Macgraphics owned several billboards across Metro. The Magallanes billboard

was leased by Macgraphics to Sime Darby. (Sime paid deposits)

2. Subsequently, Sime Darby executed a Memorandum of Agreement (MOA) with

Goodyear, whereby it agreed to sell its tire manufacturing plants and other assets
to the latter (1.5B).

3. A day after, Goodyear improved its offer (1.6B) in consideration of the assignment
by Sime Darby of the receivables in connection with its billboard advertising.

4. A Deed of Assignmnet was executed through which Sime Darby assigned its
leasehold rights and deposits made to Macgraphics pursuant to its lease contract;

5. Initially, Macgraphics and Goodyear negotiated as to the intended advertisement

design of the latter.
 6. BUT EVENTUALLY, Goodyear refused to give consent to the assignment (letter sent
to Sime) because the transfer of Sime Darbys leasehold rights to Goodyear would
necessitate drastic changes to the design and the structure of the neon display of
the Magallanes billboard and would entail the commitment of manpower and
resources that it did not foresee at the inception of the lease.
7. Macgraphics advised Goodyear that any advertising service it intended to get from
them would have to wait until after the expiration or valid pre-termination of the
lease then existing with Sime Darby.
8. Thus, Goodyear sent Sime Darby demanded partial rescission of the Deed of
Assignment and the refund of P1,239,000.00, the pro-rata value of Sime Darbys
leasehold rights over the Magallanes billboard.
9. As Sime Darby refused to accede to Goodyears demand for partial rescission, the
latter commenced a civil case with the RTC.
Ruling:
The objective of the law in prohibiting the assignment of the lease without the lessor’s
consent is to protect the owner or lessor of the leased property.—Even if the Court should
sidestep this otherwise fatal miscue, the petition of Sime Darby remains bereft of any merit.
Article 1649 of the New Civil Code provides: Art. 1649.
The lessee cannot assign the lease without the consent of the lessor, unless there is a
stipulation to the contrary. (n) In an assignment of a lease, there is a novation by the
substitution of the person of one of the parties—the lessee. The personality of the lessee,
who dissociates from the lease, disappears. Thereafter, a new juridical relation arises
between the two persons who remain—the lessor and the assignee who is converted into the
new lessee. The objective of the law in prohibiting the assignment of the lease without the
lessor’s consent is to protect the owner or lessor of the leased property.

10. Goodyear alleged that Sime Darby [1] was unable to deliver the object of the Deed
of Assignment and [2] was in breach of its warranty (no consent of any third party
with whom Sime Darby has a contractual relationship is required in connection with
the execution and delivery of the MOA, or the consummation of the transactions
contemplated therein)

11. Including Macgraphics as an alternative defendant, Goodyear argued that should

the court find the partial rescission of the Deed of Assignment not proper, it must
be declared to have succeeded in the rights and interest of Sime Darby in the
contract of lease.

12. RTC: consent of Macgraphics required. Thus, counterclaim against it must fail. But
rescission allowed.

13. CA: affirmed RTC in toto.

14. Sime Darby insists that Goodyear has no right to rescind the Deed of Assignment as
Macgraphics impliedly consented to the assignment of the lease (Macgraphics
entertained Goodyears request for a quotation on the cost of a new design for the
Magallanes billboard.)

15. Sime Darby also asserts that Macgraphics, despite refusing to give its consent to the
assignment, still entertained Goodyears request to have its logo featured in the
Magallanes billboard.vFurther, Sime Darby argues that Macgraphics delay of 69
days before its July 11, 1996 letter declining to give its consent to the assignment is
unreasonably long.

Issue/s: WON lease rights was properly assigned to Goodyear- No.

 1. Lomises acquired from the Baguio City Gov’t the right to occupy 2
stalls in the Hangar Market in Baguio City
2. Later, Lomises entered into an agreement w/ Johnny for the transfer of
all improvements and rights over the 2 market stalls for ₱260k
a. Johnny gave a down payment of ₱45k
b. Johnny made a subsequent payment of ₱23k
c. hence, a total of ₱68k of the ₱260k purchase price had been
made
3. Before full payment could be made, however, Lomises backed out of
the agreement and returned the ₱68k to the parents of Johnny
a. Johnny protested this, and insisted on the continuation and
enforcement of their agreement
b. Lomises refused
4. Johnny filed a complaint against Lomises before the RTC for specific
performance w/ damages
a. RTC in favor of Johnny. CA affirmed.
WON the agreement is valid – 2 aspects
A. As to the assignment of the leasehold rights over the 2 market stalls –
void [relevant]
B. As to the sale of the sale of the improvements of the stall – valid
Ratio:
A. Both the RTC and the CA correctly declared that the assignment of the
leasehold rights over the 2 market stalls was void since it was made
w/o the consent of the lessor, the Baguio City Gov’t, as required under
Art. 1649 of the Civil Code
a. The lessee cannot assign the lease w/o the consent of the
lessor, unless there is a stipulation to the contrary
b. Neither party contested this ruling
B. Lomises, however, objects to the CA ruling upholding the validity of the
agreement insofar as it involved the sale of improvements on the
stalls. Lomises alleges that the sale of the improvements should
similarly be voided b/c it was made w/o the consent of the Baguio City
Gov’t, the owner of the improvements, pursuant to the lease contract.
Lomises further claims that the stalls themselves are the only
improvements on the property and a transfer of the stalls cannot be
made w/o transferring the leasehold rights. Hence, both the
assignment of leasehold rights and the sale of improvements should be
voided
a. But CA has already rejected the evidentiary value of the lease
contract b/w the Baguio City Gov’t and Lomises, as it was not
formally offered in evid before the RTC
b. Likewise unsupported by evid is Lomises’ claim that the stalls
themselves were the only improvements. Hence, the CA found
it proper to order the remand of the case for the RTC to
determine the value of the improvements on the market
stalls. SC agrees w/ the CA’s order of remand
c. Thus, upon determination by the RTC of the actual value of the
improvements on the market stalls, the heirs of Johnny should
05 Lomises Aludos vs. Johnny Suerte pay the ascertained value of these improvements to Lomises,
G.R. No. 165285. June 18, 2012. Brion J. Vargas who shall thereafter be required to execute the deed of sale
Rights and Obligationss of Lessor and Lessee over the improvements in favor of the heirs of Johnny.
06 VSD Realty v Uniwide
G.R. No. 170677, October 24, 2012 | J. Peralta | YUMUL | Rights and
Obligations of lessor and lessee

NOTE: VSD wants Baello (Uniwide’s lessor) to pay rentals to VSD for not
being the true owner of the disputed property and for Uniwide to return
possession to VSD. Since the case is remanded to CA, such cannot be
determined yet.
5. Hence this MR which prays for the allowance of additional evidence to
ascertain which of the conflicting claims of title should prevail.
ISSUE: W/N additional evidence may be allowed notwithstanding the fact
that the case has already been decided. YES

1. VSD sought the nullification of TCT in the name of Baello and the  Baello contends that she has additional evidence showing that the
recovery of possession of property that is being occupied by Uniwide copy of Felisa Bonifacio's TCT that was presented to the Register of
by virtue of a contract of lease with Baello: Deeds of Caloocan, for the purpose of the issuance of petitioner VSD's
a. VSD is the registered owner of a parcel of land. TCT was tampered with to fraudulently reflect that it was derived from
b. VSD bought the said property from Bonifacio, whose title was the legitimate and authentic OCT dated May 3, 1917.
registered by virtue of an order authorizing the segregation of  Baello cited Manotok Realty, Inc. v. CLT Realty Development
the same in LRC. Corporation, which allowed the presentation of evidence before CA to
c. VSD alleged that its title is the correct, valid and legal ascertain which of the conflicting claims of title should prevail, even
document that covers the subject property. though the case had already been decided; and the additional
d. Baello’s title, covering the same property, is spurious and can evidence was presented in connection with a motion for
only be the result of falsification and illegal machinations, and reconsideration of this Court's decision.
has no legal basis to establish any right over the subject  The Court recognizes the importance of protecting the country's
property. Torrens system from fake land titles and deeds. Considering that there
e. The technical description has no legal basis per the records of is an issue on the validity of the title of petitioner VSD, which title is
the LMB and the Bureau of Lands. Baello’s title described the alleged to be traceable to OCT registered on April 19, 1917, which
property to be Lot 3-A of subdivision plan Psd 706, but an mother title was held to be inexistent in Manotok Realty, Inc. v. CLT
examination of Psd 706 shows that there is no Lot 3-A in plan Realty Development Corporation, in the interest of justice, and to
Psd 706. safeguard the correct titling of properties, a remand is proper to
f. VSD sought recovery of possession of the subject determine which of the parties derived valid title from the legitimate
property and the payment of rent from Baello and OCT registered on May 3, 1917.
Uniwide.  Since this Court is not a trier of facts and not capacitated to appreciate
2. Baello filed an Answer, alleging that the subject property was evidence of the first instance, the Court may remand this case to the
bequeathed to her through a will by her adoptive mother Court of Appeals for further proceedings. Accordingly, the Court hereby
a. The subject property was originally surveyed on January 24-26, remands this case to the Court of Appeals.
1923 and, thereafter, on December 29, 1924.
b. After her mother died in 1952, her will was duly approved by
the probate court.
c. Baello stated that she registered the subject property in her
name, and TCT was issued in her favor.
d. She entered into a Contract of Lease with Uniwide, which
erected the building it presently occupies.
e. She has been religiously paying realty taxes for the subject
property.
f. She enjoys a superior right over the subject property because
the registration of her title predates the registration of VSD’s
title by at least 40 years.
3. RTC ruled for VSD. CA reversed RTC.
4. SC reversed CA holding that VSD was able to establish through
documentary and testimonial evidence that the technical description of
its Torrens title, embodying the identity of the land claimed, covers the
property that is being occupied by Uniwide by virtue of a lease contract
with Baello, and that a comparison of the technical description of the
land covered by the title of VSD and the technical description of the
land covered by the title of Baello shows that they are not the same.
07 ANALITA P. INOCENCIO, substituting for RAMON INOCENCIO
(Deceased) v. HOSPICIO DE SAN JOSE (HDSJ)
G.R. No. 201787, September 25, 2013
Topic: Rights and Oblig of Lessor/Lessee| Ponente: J. Carpio| Author:
Acido
Doctrine:
Cession/Assignment of Lease Sublease (Art. 1650)
Rights (Art. 1649)
Personality of lessee disappears The lessee becomes in turn a
lessor to a sublessee. The
sublessee then becomes liable to
pay rentals to the original lessee.
However, the juridical relation
between the lessor and lessee is
not dissolved.
Only two persons remain in the There are at least three parties
juridical relation — the lessor and and two distinct juridical relations.
the assignee who is converted into
the new lessee.
ER: German Inocencio leased land from HDSJ. Sec. 6 of the lease contract
provided that it was nontransferable unless prior consent of the lessor is
obtained in writing. German constructed 2 buildings, subleased them, and
made his son Ramon administrator. Letters from 1990 indicated HDSJ’s
knowledge of the sublease. Eventually German died and HDSJ refused to
renew the lease contract, citing violation of Sec. 6. HDSJ filed for unlawful
detainer; MeTC, RTC, and CA all ruled in its favor. SC partially granted
Ramon’s petition, holding that Sec. 6 refers to transfers inter vivos, not
mortis causa. Further, Ramon had a right to sublease the premises since
the lease contract did not contain any stipulation forbidding subleasing.
Facts:
1. On 1 March 1946, HDSJ leased a parcel of land located in Pasay
City to German Inocencio, effective for one year and renewed for
one-year periods several times. Sec. 6 of the lease contract
provides (translated from Spanish): This contract is nontransferable
unless prior consent of the lessor is obtained in writing.
2. In 1946, German constructed two buildings on the parcel of land
which he subleased. He also designated his son Ramon Inocencio
to administer the said property.
3. On 21 September 1990, German received a letter from HDSJ
informing him that the increased rentals shall take effect in
November 1990 instead of August 1990, "to give him ample time
to make the necessary rental adjustments with his sublessees."
4. German passed away in 1997. Ramon did not notify HDSJ of this.
After German’s passing, Ramon collected the rentals from the
sublessees, and paid the rentals to HDSJ, and the taxes on the
property. On 1 March 2001, HDSJ’s property administrator, Five Star
Multi-Services, Inc., notified Ramon that HDSJ is terminating the
lease contract effective 31 March 2001.
5. Ramon then sent a letter to HDSJ dated 12 March 2001, suggesting
that the lease contract be renegotiated for the welfare of the
sublessees occupying the parcel of land. This was rejected by HDSJ,
because Ramon has "continually subleased the subject premises to
about 20 families (in addition to a commercial establishment) x x x
without the knowledge and consent of the lessor, [HDSJ]."
Thereafter, HDSJ refused to accept Ramon’s tender of payment of
rentals.
6. On 28 June 2005, HDSJ filed a Complaint before the MeTC-Pasay for
unlawful detainer against Ramon and his sublessees. The
complaint alleged that Ramon and his sublessees have been
illegally occupying the leased premises since 31 March 2001. In his
Answer, Ramon claimed, among others, that there is no prohibition
against subleasing in the lease contract. Thus, under Article 1650
of the Civil Code, Ramon is permitted to sublease the premises.
Further, the letters sent by HDSJ to the Inocencios sometime in
1990 revealed that the former already knew that the premises
were being subleased.
7. MeTC, RTC, and CA all ruled in favor of HDSJ, holding that the lease
contract could not be transmitted to Ramon as German’s heir in
view of the express stipulation found therein. Since there was no
lease contract between Ramon and HDSJ, Ramon cannot sublease
the property.
Issue: Whether the sublease contracts were invalid.
Held/Ratio: No. Petition partially granted
 A lease contract is not essentially personal in character. Thus, the
rights and obligations therein are transmissible to the heirs. The
general rule, therefore, is that heirs are bound by contracts entered
into by their predecessors-in-interest except when the rights and
obligations arising therefrom are not transmissible.
 In the subject Contract of Lease, not only were there no
stipulations prohibiting any transmission of rights, but its very
terms and conditions explicitly provided for the transmission of the
rights of the lessor and of the lessee to their respective heirs and
successors.
 Section 6 of the lease contract provides that "this contract
is nontransferable unless prior consent of the lessor is
obtained in writing." Section 6 refers to transfers inter
vivos and not transmissions mortis causa. What Section 6
seeks to avoid is for the lessee to substitute a third party
in place of the lessee without the lessor’s consent. This
merely reiterates what Article 1649 of the Civil Code provides.
 [SEE DOCTRINE] Ramon had a right to sublease the premises since
the lease contract did not contain any stipulation forbidding
subleasing, following Article 1650 of the Civil Code. Therefore, we
hold that the sublease contracts executed by Ramon were valid.
 [JUST IN CASE] However, we find that the CA erred in not applying
Article 1678 of the Civil Code. The buildings were constructed
before German’s demise, during the subsistence of a valid contract
of lease. It does not appear that HDSJ prohibited German from
constructing the buildings. Thus, HDSJ should have reimbursed
German (or his estate) half of the value of the improvements as of
2001. If HDSJ is not willing to reimburse the Inocencios, then the
latter should be allowed to demolish the buildings.
08 Locsin II v. Mekeni Food Corporation
G.R. No. 192105 | December 9, 2013|Del Castillo
1. Locsin was employed by Mekeni as a Regional Sales Director for NCR in
2004.
2. As part of the compensation package, he was given a car plan.
3. A honda civic car was given to him worth PhP280,000 for which ½
would be paid by Mekeni and the other ½ would be deducted from his
salary.
4. However, Locsin resigned in 2006 and he offered to purchase the car
from Mekeni.
5. Mekeni replied that the car plan benefit only applies to employees who
have completed at least 5 yrs of employment. It offered the car
therefore to Locsin for PhP116,000 notwithstanding that PhP112,500
was already deducted from his monthly salary.
6. Locsin filed an action with the LA which ruled in his favor.
7. NLRC ordered Mekeni to return or reimburse PhP112,500 to Locsin on
the ground of unjust enrichment for they retained possession of the
car.
8. CA reversed NLRC and held that Mekeni had the right to forfeit the
PhP112,500 deductions from the salary of Locsin since in the absence
of express stipulations in the car plan agreement, the deductions
should be treated as rentals for the use of the car during his
employment with Mekeni.
9. CA applied Elisco Tool Manufacturing v. CA where it was held that
“There are also stipulations in car plan agreements to the effect that
should the employment of the employee concerned be terminated
before all installments are fully paid, the vehicle will be taken by
the employer and all installments paid shall be considered
rentals per agreement.”
ISSUE: Whether the PhP112,500 salary deductions from Locsin should be
treated as rentals for the use of the car. NO, HENCE IT SHOULD BE
REFUNDED TO LOCSIN.
 Mekeni has not shown, by documentary evidence or otherwise, that
there are other terms and conditions governing its car plan agreement
with Locsin. There is no evidence to suggest that if Locsin failed to
completely cover one-half of the cost of the vehicle, then all the
deductions from his salary going to the cost of the vehicle will be
treated as rentals for his use thereof while working with Mekeni, and
shall not be refunded. Indeed, there is no such stipulation or
arrangement between them.
 Thus, the CA’s reliance on Elisco Tool is without basis, and its
conclusions arrived at in the questioned decision are manifestly
mistaken.
 It was made clear in Elisco Tool that installments made on the car plan
may be treated as rentals only when there is an express stipulation in
the car plan agreement to such effect. It was therefore patent error for
the appellate court to assume that, even in the absence of express
 stipulation, petitioner’s payments on the car plan may be considered
as rentals which need not be returned.
 Moreover, it may not be said that the car plan arrangement between
the parties was a benefit that the Locsin enjoyed; on the contrary, it
was an absolute necessity in Mekeni’s business operations, which
benefited it to the fullest extent: without the service vehicle, petitioner
would have been unable to rapidly cover the vast sales territory
assigned to him, and sales or marketing of Mekeni’s products could not
have been booked or made fast enough to move Mekeni’s inventory.

09 MANUEL JUSAYAN, ALFREDO JUSAYAN, AND MICHAEL JUSAYAN vs.

JORGE SOMBILLA
Topic: Obligations of lessor and lessee
G.R. No. 163928 January 21, 2015 Bersamin Bigalbal
Doctrine: In both civil law lease of an agricultural land and agricultural
lease, the lessor gives to the lessee the use and possession of the land for
a price certain. Although the purpose of the civil law lease and the
agricultural lease may be agricultural cultivation and production, the
distinctive attribute that sets a civil law lease apart from an agricultural
lease is the personal cultivation by the lessee. An agricultural lessee
cultivates by himself and with the aid of those of his immediate farm
household. Conversely, even when the lessee is in possession of the leased
agricultural land and paying a consideration for it but is not personally
cultivating the land, he or she is a civil law lessee.
Facts:
1. Wilson Jesena owns 4 parcels of land in Iloilo. He entered into an
agreement with Sombilla where Wilson designated Jorge Sombilla to
supervise the tilling of his Riceland for years 1970-1971.
2. However, before the agreement expired, Wilson Jesena sold the 4
parcels to Timoteo Jusayan. Sombilla and Jusayan agreed that Sombilla
VERBALLY agreed that Sombilla would retain possession of the land and
would deliver 110 cavans of palay annually without need for accounting
provided that Sombilla would pay for the irrigation fees.
3. In 1975, parcels of land were transferred in the name of Timoteo
Jusayan’s sons, Manuel, Alfredo, and Michael (the petitioners). In 1984,
Jusayan sent letters to Jorge demanding the return of the land and
terminating Sombilla’s administration over it.
4. Jusayan filed a case upon failure of Sombilla to return the land.
Jusayan was substituted by his sons when he died.
5. Jorge Sombilla’s argument- he enjoyed security of tenure as the
agricultural lessee of Timoteo; and that he could not be dispossessed of his
landholding without valid cause. RTC-upheld contractual relationship and
ordered SOmbilla to return the land. CA- reversed the RTC decision since it
is under the jurisdiction of Department of Agriculture.
Issue:
WON a lease of agricultural land between the respondent Sombilla and the
predecessor of the petitioners Jusayan was a civil law lease or an
agricultural lease? Lease tenancy. SC upheld the tenancy relationship of
the parties.
Ruling:
1. In agency, the agent binds himself to render some service or to do
something in representation or on behalf of the principal, with the consent
or authority of the latter. Elements of agency are:
(a) the relationship is established by the parties’ consent, express or
implied; (b) the object is the execution of a juridical act in relation to a third
person; (c) the agent acts as representative and not for himself; and (d)
the agent acts within the scope of his authority
2. Claim of Jusayan that Sombilla is his agent contradicts the verbal
agreement he had with Sombilla.
3. The verbal agreement between Timoteo and Jorge left all matters
of agricultural production to the sole discretion of Jorge and practically
divested Timoteo of the right to exercise his authority over the acts to be
performed by Jorge. While in possession of the land, therefore, Jorge was
acting for himself instead of for Timoteo.
4. Sombilla, to prove the tenancy relationship, presented handwritten
receipts, that the sacks were delivered and received by Corazon Jusayan,
which represents the payment of rental.
5. However, lease of an agricultural land may be civil or agricultural
lease. Civil law lease- 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 that
may be definite or indefinite. Agricultural lease/lease hold tenancy- the
physical possession of the land devoted to agriculture is given by its owner
or legal possessor (landholder) to another (tenant) for the purpose of
production through labor of the latter and of the members of his immediate
farm household, in consideration of which the latter agrees to share the
harvest with the landholder, or to pay a price certain or ascertainable,
either in produce or in money, or in both.
6. Elements of agricultural tenancy: elements of agricultural tenancy
to wit: (1) the object of the contract or the relationship is an agricultural
land that is leased or rented for the purpose of agricultural production; (2)
the size of the landholding is such that it is susceptible of personal
cultivation by a single person with the assistance of the members of his
immediate farm household; (3) the tenant-lessee must actually and
personally till, cultivate or operate the land, solely or with the aid of labor
from his immediate farm household; and (4) the landlord-lessor, who is
either the lawful owner or the legal possessor of the land, leases the same
to the tenant-lessee for a price certain or ascertainable either in an amount
of money or produce.
7. In both civil law lease of an agricultural land and
agricultural lease, the lessor gives to the lessee the use and
possession of the land for a price certain. Although the purpose of
the civil law lease and the agricultural lease may be agricultural
cultivation and production, the distinctive attribute that sets a
civil law lease apart from an agricultural lease is the personal
cultivation by the lessee. An agricultural lessee cultivates by
himself and with the aid of those of his immediate farm
household. Conversely, even when the lessee is in possession of
the leased agricultural land and paying a consideration for it but is
not personally cultivating the land, he or she is a civil law lessee.
8. Did Sombilla personally cultivated the land? SC held that the
parcels of agricultural land with a total area of 7.9 hectares involved herein
were susceptible of cultivation by a single person with the help of the
members of his immediate farm household. As the Court has already
observed, an agricultural land of an area of four hectares, or even of an
area as large as 17 hectares,could be personally cultivated by a tenant by
himself or with help of the members of his farm household. Petitioner’s
claim that Sombilla could not personally cultivate the land because of his
employment as Agricultural Technician lacked factual or legal basis.
9. Section 7 of Republic Act No. 3844 provides that once there is an
agricultural tenancy, the agricultural tenant’s right to security of tenure is
recognized and protected. The landowner cannot eject the agricultural
tenant from the land unless authorized by the proper court for causes
provided by law. Section 36 of Republic Act No. 3844, as amended by
Republic Act No. 6389, enumerates the several grounds for the valid CASE #10 SPOUSES CRISPIN AQUINO and TERESA V. AQUINO vs.
dispossession of the tenant. It is underscored, however, that none of such SPOUSES EUSEBIO AGUILAR and JOSEFINA V. AGUILAR
grounds for valid dispossession of landholding was attendant in Jorge’s G.R. No. 182754 | June 29, 2015 | Sereno |Castillo
case. TOPIC: Rights and Obligations of Lessor and Lessee

DOCTRINE: The analogy between a tenant whose term of lease has

expired and a person who occupies the land of another at the latter's
tolerance lies in their implied obligation to vacate the premises upon
demand of the owner.

FACTS:
1. Spouses Aquino are the registered owners of a house and lot in
Guadalupe. Teresa and Josefina are sisters so Spouses Aquino allowed them
to occupy the property without paying rent for 20 years since they are
residing in the US.
2. The previous house was demolished and a 3-storey building was
erected. Spouses Aguilar occupied ½ of the 3 rd floor since 1981. In 2003,
Spouses Aquino sent a letter to Spouses Aguilar asking them to vacate
within 10 days because an immediate family member would be using the
premises.
3. Respondents refused so Petitioners filed ejectment case with the
barangay, then to MeTC after failed settlement. Respondent spouses
argued that they contributed to the improvement of the property and the
construction of the building, in money and management or supervision
services, with the consent of Petitioners, in exchange for the exclusive use
of the portion they occupied.
4. Respondents alleged that P2M came from Petitioners while they
contributed P1M so there was an implied co-ownership or partnership. They
are builders in good faith so entitled for reimbursement of the necessary
and useful expenses.
5. MeTC: Respondents’ occupation was merely due to tolerance so
Petitioners are entitled to enjoy their property. Respondents are also
builders in bad faith, as evidenced by the letter to them of the Petitioners
in 1983, prohibiting them from constructing improvements because they
will sell it. Thus, they are not entitled to recover their purported expenses.
6. RTC: MeTC affirmed.
7. CA: RTC affirmed, but entitled to reimbursement of necessary and useful
expenses so remanded to MeTC. Based on Calubayan v. Pascual,
Respondents’ status is analogous to that of a lessee or a tenant whose
term of lease has expired but whose occupancy continued by tolerance of
the owner so unlawful deprivation of possession is from the date of the
demand to vacate. 8. Respondents did not appeal, so now bound.
Petitioners appealed because CA remanded to MeTC for the reimbursement
of expenses to Respondents.

ISSUE/S: 1.) WON Respondents are builders in good faith. NO

2.) WON Respondents are entitled to reimbursement of necessary and
useful expenses. YES, but necessary expenses only for the
preservation of the property.
RULING: CA AFFIRMED except for payment of useful expenses. demand. Failure to comply with this demand renders the
REMANDED for payment of necessary expenses only without right possession unlawful and actual damages may be awarded to the
of retention. owner from the date of the demand to vacate until the actual
1.) RESPONDENTS ARE BUILDERS IN BAD FAITH surrender of the property.
- Court agrees with such findings of the lower courts and since Spouses
Aguilar did not appeal, they are now bound by it. They also cannot be
considered as builders in good faith because they admitted that the lot
belonged to Petitioners when they constructed the building so they were
aware of a flaw in their title and a limit to their right to possess the
property. Furthermore, the letter of Petitioners to them in 1983, which was
never revoked nor modified, prohibited them from further construction, but
they ignored it.
2.) RESPONDENTS ARE ENTITLED TO NECESSARY EXPENSES ONLY
WITHOUT RIGHT OF RETENTION
- CA ruled that Respondents’ status is analogous to that of a lessee or a
tenant whose term of lease has expired but whose occupancy continued by
tolerance of owner" pursuant to Calubayan v. Pascual. Thus, CA concluded
that Articles 1678 and 546 of the Civil Code must be applied to allow
reimbursement of necessary and useful expenses.
- Court disagrees and ruled that by its express provision, Article 1678 of
the Civil Code applies only to lessees who build useful
improvements on the leased property. It does not apply to those
who possess property by mere tolerance of the owners, without a
contractual right.
- There is absolutely no evidence of any lease contract between
the parties herein, and Respondents themselves never alleged
that they were lessees of the lot or the building in question. They
were actually insisting co-ownership and that they builders in
good faith under Article 448 of the Civil Code.
- Since it is ruled that Respondents are builders in bad faith, they
are
not entitled to reimbursement of useful expenses. Even assuming
that their situation is "analogous to that of a lessee or tenant
whose term of lease has expired but whose occupancy continued
by tolerance," the absence of good faith on their part prevents
them from invoking the provisions of Article 1678.
- The occupation was by mere tolerance because Respondents never paid
rentals to Petitioners and were even informed to get housing project so
that when the property is sold, they would have a place to stay. Thus, as
owners of the land, Petitioners have the right to appropriate what has been
built on the property, without any obligation to pay indemnity and
Respondents have no right to a refund of any improvement built
therein, pursuant to Articles 449 and 450 of the Civil Code as builders in
bad faith.
- However, they can recover necessary expenses for the preservation of
the property but without the right of retention because they are in bad
faith. Hence, remand was proper.
- Court has consistently held that those who occupy the land of
another at the latter's tolerance or permission, even without any
contract between them, are necessarily bound by an implied
promise that the occupants would vacate the property upon
11 Comglasco Corporation vs. Santos Car Check Center the deteriorating conditions of the country. The Court rules now, as
Corporation, 754 SCRA 481, G.R. No. 202989 March 25, 2015 | in PNCC, that there are no “absolutely exceptional changes of
Reyes J| Dador circumstances that equity demands assistance for the debtor.”
Topic: Rights and Obligations of Lessor and Lessee

Doctrine: The 1997 Asian Financial currency crisis cannot be considered

an event which Art 1267 envisages. It does not render an impossibility to
comply with the obligation of a lessee to pay that would excuse the latter
from being liable for non-compliance.

Facts:
1. Santos Car Check Center Corporation (Santos), owner of a
showroom, leased out the said space to petitioner Comglasco
Corporation (Comglasco).
2. Comglasco advised Santos through a letter that it was pre-
terminating their lease contract. Santos refused to accede to the
pretermination, reminding Comglasco that their contract was for
five years.
3. Unheeded to Santos’ refusal, Comglasco vacated the leased
premises and stopped paying any further rentals.
4. Santos sent several demand letters, which Comglasco completely
ignored. This promted Santos to file a suit for a breach of contract.

Issue: Whether Article 1267 of the Civil Code, in light of the 1997 Asian
currency crisis, can be invoked to to justify its decision to pre-terminate its
lease with Santos- NO. (see doctrine)

Held:

1. Article 1267 speaks of a prestation involving service which has

been rendered so difficult by unforeseen subsequent events as to
be manifestly beyond the contemplation of the parties.
a. To be sure, the Asian currency crisis befell the region from
July 1997 and for sometime thereafter, but Comglasco
cannot be permitted to blame its difficulties on the said
regional economic phenomenon because it entered into the
subject lease only on August 16, 2000, more than three
years after it began, and by then Comglasco had known
what business risks it assumed when it opened a new shop
in Iloilo City.
2. This situation is no different from the Court’s finding in PNCC
wherein PNCC cited the assassination of Senator Benigno Aquino,
Jr. (Senator Aquino) on August 21, 1983 and the ensuing national
political and economic crises as putting it in such a difficult
business climate that it should be deemed released from its lease
contract. The Court held that the political upheavals, turmoils,
almost daily mass demonstrations, unprecedented inflation, and
peace and order deterioration which followed Senator Aquino’s
death were a matter of judicial notice, yet despite this business
climate, PNCC knowingly entered into a lease with therein
respondents on November 18, 1985, doing so with open eyes of
12 PERALTA V. RAVAL
G.R. No. 188467| 29 March 2017 | J. Reyes |
TOPIC: Rights and Obligations of Lessors and Lessees
DOCTRINE:
Article 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.
Article 1654 referred to in Article 1659 pertains to the obligations of a
lessor in a lease agreement. Article 1657, on the other hand, enumerates
the obligations of a lessee, as it provides:
Article 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.
ER:
Sps. Arzaga and Peralta entered into a contract of Lease. Flaviano Jr. (heir
of sps. Arzaga) in a deed of assignment, assigned all his interests, rights
and participation in the subject properties to Raval. Despite Raval’s
demand, Spouses Arzaga refused to acknowledge his rights. Whether or
not the lease can be rescinded. NO. already moot and academic. But with
regard to other matters that are intertwined with the filing of rescission
(like prescription -related to the topic), the Court ruled that the filing for
rescission has not yet prescribed. Raval's complaint specified the violations
that were allegedly committed by Peralta as a lessee, Specifically,
rescission was sought because of Peralta's alleged refusal to render an
accounting of unpaid monthly rentals, to vacate the second storey of the
house, to remove the improvements constructed on the areas not covered
by the lease, to operate and provide a water system and to refund the
taxes paid by Flaviano Jr. These violations happened either immediately
prior to Raval's repeated extrajudicial demands that began in August 1995;
or after Peralta's refusal to heed to the demands. There was no indication
that the violations dated back from the first few years of the lease
agreement's effectivity in the 1970s. Clearly, the filing of the action for
rescission in 1998 was within the 10-year prescriptive period that applies
to the suit
FACTS:
1. Spouses Arzaga, as lessors, entered into a Contract of Lease with
Peralta, as lessee, over the subject lots and the improvements
thereon. (1974 - For 40 years)
2. Flaviano Jr., being an adopted son and heir of the Spouses Arzaga,
filed with the RTC a complaint for anullment of lease contract
against Peralta, who allegedly breached in his obligations under
the contract of lease.
3. RTC dismissed the case and was later affirmed by the CA.
4. Raval came into the picture after Flaviano Jr. assigned to him via a
Deed of Assignment all his interests, rights and participation in the
subject properties for a consideration of ₱500,000.00.
5. Peralta refused to recognize the validity of the assignment to
Raval, prompting him to still deposit his rental payments for the
account of Flaviano Jr.,more specifically to bank accounts that were
opened by Peralta's wife, Gloria Peralta, under the name "Gloria F.
Peralta [in-trust-for] (ITF): Flaviano Arzaga, Jr."
6. Raval eventually filed a complaint for recission of the lease (1998).
7. RTC dismissed the case. CA granted in part Raval’s appeal. It
granted in his favor an award of unpaid rental payments but
denied the plea for rescission.
ISSUE/S:
 W/N Raval has rights and interests over the disputed properties (in
llight of Flaviano Jr.’s assignment). YES
 W/N the filing of the action for rescission has already prescribed. NO
 W/N Raval was entitled to Damages. NO
 W/N Peralta’s counterclaim should be granted. NO.
HELD/RULING:
Rights and Interests of Raval
The issue raised by Peralta that the Deed of Assignment is simulated and
void ab initio, would necessarily also raise the issue of the validity of TCT
Nos. T-30107 and T-30108. This issue cannot be collaterally attacked.
There is no question that the titles of the properties covered by the Deed of
Assignment had already been issued in favor of Raval. Well-settled is the
rule that a certificate of title cannot be altered, modified cancelled except
in a direct proceeding in accordance with law. In the instant case, it is
obvious that any attack on the Deed of Assignment is also an attack upon
Raval's title. In this case, it is being made collaterally as a defense to the
action for rescission. This cannot be done. It is only when the object of the
action or proceeding is to nullify the title, and thus challenge the judgment
pursuant to which the title was decreed, that such an action can be
considered a direct attack and, therefore, allowable x x x. Otherwise, a
collateral attack would not prosper as it is improper in this action.
Rescission of Lease Contract
The Agreement had already terminated in 2014 – Already Moot and
Academic
Article 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.
Article 1654 referred to in Article 1659 pertains to the obligations of a
lessor in a lease agreement. Article 1657, on the other hand, enumerates
the obligations of a lessee, as it provides:
Article 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.
Given the rules that exclusively apply to leases, the other provisions of the
NCC that deal with the issue of rescission may not be applicable to
contracts of lease. To illustrate, Peralta's reference to Article 1389, when he
argued that Raval's action had already prescribed for having been filed
more than four years. after the execution of the lease contract in 1974, is
misplaced. For the same reason, Peralta erred in arguing that Raval's
action should only be deemed a subsidiary remedy, such that it could not
have been validly instituted if there were other legal means for reparation.
Article 1389 applies to rescissions in Articles 1380 and 1381, which are
distinct from rescissions of lease under Article 1659.

Unpaid Rentals and Moral Damages

Peralta began depositing his rental payments in an account that was
maintained "in trust for" Flaviano Jr. The RTC provided the following factual
findings in its Decision dated May 17, 2005.

There is no question that the money for the rental was in the bank. So to
speak, 'it was there for the taking'. It was therefore, incumbent upon
Flaviano Jr. and Raval to arrange between them on how to withdraw the
money from the bank, to be paid to the rightfu1 payee or beneficiary. From
the standpoint of lessee, he has already complied with his obligation to pay
the monthly rentals due to the fact that his mode of payment was earlier
sustained as proper by the CA in the precursor case.

All payments made by Peralta through the bank accounts in trust for
Flaviano Jr. shall be deemed valid payments for the monthly
rentals.1âwphi1 Since the records confirmed that Peralta has been paying
his monthly rentals up to the time and even after the complaint for
rescission was filed in 1998, the prayer in the complaint for unpaid rentals
should have been denied. Accordingly, the CA's award of monthly rentals is
deleted.

The award of moral damages is likewise deleted. "Moral damages are not
recoverable simply because a contract has been breached. They are
recoverable only if the party from whom it is claimed acted fraudulently or
in, bad faith or in wanton disregard of his contractual obligations. The
breach must be wanton, reckless, malicious or in bad faitl1, and oppressive
or abusive.

Counterclaim
It is clear that the action for rescission: was not filed purposely to humiliate
or harass Peralta, but to seek redress for what Raval believed was a
violation of his rights as the new owner of the subject lots, and lessor to
Peralta.