There is no forever

CJH allowed Ani to build her El Café on a portion of the former’s property. Ani and CJH Dev later formally entered into a lease contract. As stated in their lease contract, all permanent improvements made by Ani shall form an integral part of the premises and become CJH’s property upon the termination of the lease. Moreover, when the contract is terminated, Ani must promptly deliver the premises to CJH free of occupants, furniture, articles, and effects of any kind. Otherwise, CJH Dev can enter the premises and take inventories of Ani’s merchandise. The merchandise will then be placed in the bodega for Ani’s retrieval.

The lease contract was extended for six more months. Before the second lease expired, Ani asked for another extension from CJH. The request was denied. Nevertheless, El Café continued to operate on a monthly basis, with Ani paying advance rentals. A few months passed. Ani was served a letter informing her to vacate the premises as the premises would undergo land development. Ani was given so many days to remove all furniture, equipment, and furnishing within the premises.

Her repeated requests for an extension having been denied, Ani filed a complaint seeking to enjoin the closure and demolition of El Café. Eventually, in the absence of a court issued writ of preliminary injunction, El Café was demolished.

Meanwhile, the case itself became a complaint for damages. Ani sought actual damages for the demolition of the structure and the personal properties taken from El Café.

CJH Dev argued that Ani had no cause of action because the lease had long since 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 El Café’s structure, citing the provisions of the lease contract.

Q: Whether the provisions of the lease contract granting CJH authority to extrajudicially regain the possession of the premises, must be struck down for violating due process and being illegal?

A: No. There is also nothing in the law that prohibits the parties from entering into 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. When Ani refused to surrender the premises, the lease contract provided CJH recourse. Pursuant to the provisions of the lease contract , CJH was authorized to enter the premises and extrajudicially regain possession if Ani failed to promptly deliver the premises upon the termination of the lease contract. This provision is neither unconstitutional nor illegal, contrary to Ani’s assertions. 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.

Q: Whether the provisions of the lease contract granting CJH Dev ownership over the permanent improvements is illegal?

A: Yes. In the last sentence of the lease contract’s Article VI, Section 1 provides that CJH Dev does not have to reimburse Ani for her permanent improvements on the premises. This outright violates Article 1678, which mandates the lessor to choose whether or not to appropriate the improvement. If so, the lessee must be reimbursed half of its value; if not, the lessee has the right to remove the improvements. Either way, the lessor cannot own the improvement without paying the lessee. Hence, CJH cannot insist on a blanket provision that grants it ownership over the structure of the restaurant. For this, the last sentence of Article VI, Section 1 of the lease contract must be struck down.

In any case, it appears that CJH decided not to appropriate and use the permanent improvement introduced by Ani. Hence, it is not liable to reimburse Ani for the demolished structures.

Source: CJH Development vs. Aniceto, G.R. No. 224006, July 06, 2020

Ma. Soledad Deriquito-Mawis

Dean, Lyceum of the Philippines University

Chairman, Philippine Association of Law Schools

Mawis Law Office