1. General Provisions

General Provisions on Lease

Concept

A lease may be a lease of things or a lease of work or service. In a lease of things, one party grants another the enjoyment or use of a thing for a certain price and a period that may be definite or indefinite. A lease of work or service instead involves the execution of work or the rendering of a service for a certain price. (Art. 1642, Civil Code)¹ (Art. 1643, Civil Code)² (Art. 1644, Civil Code)³

Governing provisions

Articles 1642 to 1644 classify these forms of lease and define their basic undertakings. Article 1643 also fixes an outer limit: a lease for more than 99 years is not valid. Where a lease is to be recorded in the Registry of Property, Article 1647 imposes an authority requirement on specified persons who would constitute it. (Art. 1642, Civil Code)¹ (Art. 1643, Civil Code)² (Art. 1644, Civil Code)³ (Art. 1647, Civil Code)⁴

Requisites / Rules

• For a lease of things, identify the thing whose enjoyment or use is granted, the certain price, and the period. The period may be definite or indefinite, but it cannot validly exceed 99 years. (Art. 1643, Civil Code)²
• For a lease of work or service, identify the work to be executed or service to be rendered and the certain price. The relationship described by Article 1644 is not one of principal and agent. (Art. 1644, Civil Code)³
• If the lease is to be recorded, the husband as to the wife’s paraphernal real estate, the father or guardian as to a minor’s or ward’s property, and a manager without special power cannot constitute it without proper authority. (Art. 1647, Civil Code)⁴

Distinctions

Use of a thing, rather than the performance of work or service, marks the lease governed by Article 1643. For that lease relationship, the lessor’s title is not decisive so long as the lessee’s possession under the agreement remains undisturbed. This does not convert a lease of work or service into an agency: Article 1644 expressly excludes a principal-agent relationship. (Art. 1643, Civil Code)² (Art. 1644, Civil Code)³ (Samelo v. Manotok Services, Inc., G.R. No. 170509, 27 June 2012)⁵

Key doctrines

A lease is reciprocal. Unless its terms show that the period benefits only one party, the period is treated as agreed upon for both; the lease’s continuance cannot depend exclusively on the lessee’s free and uncontrolled choice. In a possession dispute for unlawful detainer, the existence of the lease and expiration of its term are decisive, rather than proof of the lessor’s ownership. (Hilltop Market Fish Vendors' Association, Inc. v. Yaranon, G.R. No. 188057, 12 July 2017)⁶ (Samelo v. Manotok Services, Inc.)⁵

Exceptions

An option to renew granted solely to the lessee is not, for that reason alone, void for lack of mutuality: the lessor may freely grant the option, and mutual obligations arise upon its exercise and acceptance. This differs from leaving the life of an existing lease entirely to the lessee’s uncontrolled choice. (Manila International Airport Authority v. Ding Velayo Sports Center, Inc., G.R. No. 161718, 4 February 2013)⁷ (Hilltop Market Fish Vendors' Association, Inc. v. Yaranon)⁶

Bar tip

Classify the lease first, then check its price, period, and—in a lease of things—the 99-year ceiling. Do not assume that a lessor must prove ownership to establish the lease relationship. (Art. 1643, Civil Code)² (Samelo v. Manotok Services, Inc.)⁵