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Lessors and lessees: Know your rights and obligations - Property Report
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Lessors and lessees: Know your rights and obligations

0ver 2.86 million families rent their residential units. Unfortunately, many of the leases are not covered by written agreements. Consequently, countless parties end up quarreling due to the lack of proper documentation that clearly spells out what they are entitled and or obligated to do.  

Short of any contract expressly agreed by both parties, leases are principally guided by the provisions on lease in Republic Act No. 386 or the Civil Code of the Philippines, and or Republic Act No. 9653 or the Rent Control Act of 2009, as in the case of monthly rents of Ten Thousand Pesos and below.   

Obligations of the parties  

Lessor. In general, the lessor is obligated to deliver the leased premises in a condition as to render it fit for use. The lessor is likewise required to undertake all necessary repairs to keep the premises suitable for use unless stipulated otherwise. 

The lessor shall also ensure that the lessee shall be accorded peaceful and adequate enjoyment of the leased premises for the whole duration of the lease period. He is prohibited from altering the leased premises in such a way as to impair the use of the premises during the lease term. 

Lessee.The lessee is obligated to pay the rent according to the terms agreed by the parties; use the leased premises under the concept of “a diligent father of a family”; and to pay the expenses for the deed of lease.

In case repairs are needed on the premises, or there is any untoward act that any third person may have committed or may be openly preparing to carry out upon the leased premises, the lessee is required to urgently advise the lessor within the shortest possible time. In both cases, the lessee shall be liable for the damages which, through his negligence, may be suffered by the lessor. 

Upon the termination of the lease, the lessee shall return the premises in such condition as he received it, except those that have been lost or impaired by the normal wear and tear, or from an inevitable cause.  

If there is no statement on the condition at the time the lease was constituted, it is assumed that the lessee received the premises in good condition unless he has proof to the contrary. The lessee is responsible for the deterioration or loss of the leased premises unless he can prove that it took place without his fault. It should be noted, however, that the lessee is liable for any deterioration caused by members of his household, by his guests and visitors. This burden of proof on the lessee does not apply when the destruction is due to an earthquake, flood, storm, or natural calamity.  

Lessees’ Rights 

If the lessor fails to make the necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased, the lessee may suspend the payment of the rent. Moreover, if the lessor fails to make such urgent repairs, the lessee, to avoid imminent danger, may order the repair at the lessor’s cost. 

However, should the lessor undertake such urgent repair, the lessee is obliged to tolerate the work despite any annoyance, although, during the period, he may be deprived of the use of a portion of the premises. Nevertheless, when the work makes their dwelling becomes uninhabitable, the lessee may rescind the contract. Should the repairs take more than forty days, the rent shall be reduced in proportion to the time required for the repair, including the first forty days, and the part of the property of which the lessee has been deprived. 

Meanwhile, if the place or any building is in such a condition that its use brings imminent/ danger to life or health, the lessee may terminate the lease at once by notifying the lessor, even if at the time the contract was agreed/perfected the former knew of the dangerous condition or waived the right to rescind the lease on account of this condition. 

Other provisions 

Damaged premises. If the leased premises is completely destroyed by a fortuitous event such as an earthquake, the lease is extinguished. However, if the damage is partial, the lessee may choose between a proportional rent reduction or lease rescission. 

Improvements made on the leased premises. If the lessee makes, in good faith, suitable improvements without altering the form/substance of the property, upon the lease termination, the lessor shall pay the lessee half of the improvement value. If the lessor refuses to reimburse such improvement, the lessee may remove it, even though it may suffer damage. 

On the other hand, if the improvement is ornamental in nature, the lessee shall not be entitled to reimbursement, but may remove such ornamental objects provided no damage is caused to the premises, and the lessor does not choose to retain them by paying for such improvement. 

End of lease period. Should the lessee continue using the leased premises for fifteen days with the consent of the lessor, and unless a contrary notice by either party has previously been given, it is understood that there is an implied new lease.   

If the period for the lease has not been fixed, it is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily unless otherwise determined by the court. 

On the contrary, if the lessee continues to stay or does not give up the leased premises after the expiration of the leased period, over the lessor’s objection, the lessee shall be considered a possessor in bad faith. 

Know your rights. 

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Henry L. Yap is an Architect and Fellow of both Environmental Planning and Real Estate Management. He is one of the Undersecretaries of the Department of Human Settlements and Urban Development. 

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