Case Study

Case 5-3

TRIUMPH TOURS

On December 15, 1989, Triumph Tours participated in the bidding of Hotel Continental and it won. Triumph Tours proposed the following terms.

1. Lease rental per month of P200,000.

2. Construction of an additional wing with 100 rooms and a banquet hall, subject to the availability of funds.

The following day, Mr. Oscar Mendoza, the owner-manager, signed the lease contract which included, among others, the following conditions:

1. The LESSEE shall pay the LESSOR the monthly rental of the leased premises and facilities within the first ten (10) days of the month and the equivalent of three months’ rental as deposit.

2. The LESSEE shall issue monthly post-dated checks in favor of the LESSOR equal to one-year rental every January 1st during the lease period.

3. The LESSEE shall respect the existing contracts between the LESSOR and the concessionaires who leased a portion of the premises until December 31, 1989. The concessionaires shall continue to pay their rentals to the LESSOR. After December 31, 1989, the LESSEE shall assume the responsibility for the renewal of the contract/negotiation of contract with concessionaires and shall be entitled to receive the rentals thereof. All these concessionaires shall be subject to the prior approval of the LESSOR.

4. The LESSEE cannot alter the present structure of the leased premises nor introduce permanent improvement without prior approval of the LESSOR.

5. Upon signing of the contract, the LESSEE shall purchase all consumables owned by the LESSOR in the premises such as glassware, flatware, linen, etc. which should be paid in cash in the amount of P800,000.

6. The LESSEE shall rehabilitate, repair, and maintain the cooling tower as well as install back=up chiller to ensure continued air conditioning of hotel facilities.

7. The LESSEE shall refrain from using the premises for purposes that will be considered bad influence to students in the nearby State University...