The lessor’s rights | Inquirer Business
Property rules

The lessor’s rights

Ani owned The Ranch Cafe, which then stood on the land owned by John’s Camp Development (JCD). JCD allowed her to use a junkyard within the vicinity, on which she built her restaurant.

On Dec. 1, 2003, Ani and JCD formally entered into a lease contract effective until Nov. 30, 2004. When the lease expired, it was renewed on a monthly basis. On Nov. 18, 2005, Ani and JCD entered into another lease contract that would last until Nov. 17, 2006.

Pertinently, the lease contract provides that all permanent improvements made by Ani shall form an integral part of the premises and become JCD property upon the termination of the lease. It further stipulated that when the contract is terminated, Ani must promptly deliver the premises to JCD devoid of occupants, furniture, articles, and effects of any kind. Otherwise, JCD can enter the premises and take inventories of Ani’s merchandise. The merchandise will then be placed in the bodega for Ani’s retrieval.


In 2008, JCD wrote Ani, informing her to vacate the premises as it would undergo land development. Ani was given until Mar. 1, 2008 to remove all furniture, equipment, and furnishing within the premises. Her requests for extension were all denied.


Ani was thus constrained to file a complaint seeking to enjoin the closure and demolition of The Ranch. Her prayer for the issuance of a writ of preliminary injunction was denied. The Ranch was soon demolished by JCD.

Consequently, the case itself became a complaint for damages. Ani sought actual damages for the demolition of the structure and the personal properties taken from The Ranch.

In its answer, JCD argued that Ani had no cause of action because the lease had long expired. The monthly extension, it said, was only allowed pursuant to the hold-over provision of the lease contract. It also maintained that the demolition was legal and within its rights as owner of The Ranch’s structure, citing the provisions of the contract.

Q: Can the lessor without court intervention eject the lessee?

A: When parties enter into contracts, they are free to stipulate on the terms and conditions of their agreement as they may deem convenient. Contracts have the force of law between the contracting parties.

Thus, whatever stipulations agreed upon in them must be complied with in good faith. However, the freedom to stipulate is not absolute. Under Art. 1306 of the Civil Code, parties cannot agree on stipulations that are “contrary to law, morals, good customs, public order, or public policy.”

Under Art. 1673 of the Civil Code, “[t]he lessor may judicially eject the lessee” in the following instances: (1) if the period agreed upon has expired; (2) if the lessee fails to pay the price stipulated; (3) if the lessee violates any of the conditions of the contract; and (4) if the thing leased suffered deterioration due to use or service not stipulated.


However, judicial action is not always required to eject the lessee.

Guided by the above, a stipulation in a lease contract, which authorized the sub-lessor to take possession of the premises without judicial action, is valid and binding because the stipulation is in the nature of a resolutory condition. It held:

“This stipulation is in the nature of a resolutory condition, for upon the exercise by the Sub-lessor of his right to take possession of the leased property, the contract is deemed terminated. This kind of contractual stipulation is not illegal, there being nothing in the law proscribing such kind of agreement. There is also nothing in the law that prohibits the parties from entering into an agreement that violation of the terms of the contract would cause cancellation thereof, even without court intervention. In other words, it is not always necessary for the injured party to resort to court for rescission of the contract. As already held, judicial action is needed where there is the absence of a special provision in the contract granting to a party the right of rescission.”

Judicial permission to cancel the agreement was not, therefore, necessary because of the express stipulation in the contract of sub-lease that the sub-lessor, in case of failure of the sub-lessee to comply with the terms and conditions thereof, can take over the possession of the leased premises, thereby cancelling the contract of sub-lease.

Resort to judicial action is necessary only in the absence of a special provision granting the power of cancellation. While Art. 1673 provides for judicial action to eject the lessee, it is only required if the lease contract has no special provision granting the cancellation of the lease.

When Ani refused to surrender the premises, JCD was, under the contract, authorized to enter the premises and extrajudicially regain possession if Ani failed to promptly deliver the premises upon the termination of the lease contract.

The contractual provision is neither unconstitutional nor illegal. The lessee may be ejected from the leased premises without any court action as long as there is a stipulation to this effect.

Due process was not violated here, considering that the lessor owns the property and merely allowed the lessee to occupy and possess it for a certain period. There is no deprivation of property without due process when the law and the provision of the lease contract allow the lessor to immediately repossess the property when the lease is terminated.

More so, in an implied lease, the lessee cannot unreasonably insist on continuing it. Nor can the lessee keep on badgering the lessor into renewing the lease when the contract has already expired. Even if the lease was repeatedly renewed, it does not give the lessee a better right over the property. The lessor, as the property owner, may decide not to renew the implied lease and devote the property to other use. (Source: CJH Development Corp vs. Aniceto, GR 224006, July 6, 2020)

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The author is Dean of Lyceum of the Philippines University; Chairman of Philippine Association of Law Schools; and founder of Mawis Law Office

TAGS: Business, Property Rules

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