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  • Writer's pictureZiggurat Realestatecorp

Implied new lease

In the Philippines, an implied lease typically refers to a lease or tenancy that is created without a formal written agreement or contract. It arises through the actions and conduct of the parties involved, and it is often implied by law.


Under the Civil Code of the Philippines, specifically Article 1673, there is a provision that addresses implied leases. It states that:


"An implied lease shall be inferred from the mere fact that the owner tolerates the use by another of the thing in order to enjoy a right or utility of his own."


This means that if a property owner allows someone to use their property without a formal written lease agreement but for the benefit of both parties, an implied lease can be established. The terms and conditions of such an implied lease may be determined by the conduct and actions of the parties involved.


If one keeps on paying the monthly rent, can one keep on living in one's apartment after the lease term has passed without renewing the lease? Has the lessor the right to evict one at any time? The Supreme Court's ruling in the case of Samelo vs Monotok Services Inc. (G.R. 170509, 27 June 2012, Ponente: Honorable Associate Justice Arturo Brion), where it was held that:


"In the present case, it is undisputed that the petitioner and the respondent entered into a contract of lease. We note in this regard that in her answer with affirmative defenses and counterclaim before the MeTC, the petitioner did not deny that she signed the lease contract (although she maintained that her signature was obtained through the respondent's misrepresentations). Under the lease contract, the petitioner obligated herself to pay a monthly rental to the respondent in the amount of ₱3,960.00.


The lease period was for one year, commencing on January 1, 1997 and expiring on December 31, 1997. It bears emphasis that the respondent did not give the petitioner a notice to vacate upon the expiration of the lease contract in December 1997 (the notice to vacate was sent only on August 5, 1998), and the latter continued enjoying the subject premises for more than 15 days, without objection from the respondent. By the inaction of the respondent as lessor, there can be no inference that it intended to discontinue the lease contract. An implied new lease was therefore created pursuant to Article 1670 of the Civil Code, which expressly provides:


"Article 1670. If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in Articles 1682 and 1687. The other terms of the original contract shall be revived.


"An implied new lease or tacita reconduccion will set in when the following requisites are found to exist: a) the term of the original contract of lease has expired; b) the lessor has not given the lessee a notice to vacate; and c) the lessee continued enjoying the thing leased for fifteen days with the acquiescence of the lessor."


Article 1687 of the Civil Code on implied new lease provides:


Article 1687. 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.


Since the rent was paid on a monthly basis, the period of lease is considered to be from month to month, in accordance with Article 1687 of the Civil Code. "[A] lease from month to month is considered to be one with a definite period which expires at the end of each month upon a demand to vacate by the lessor."


As provided in the aforementioned jurisprudence, certain requisites should be met for there to be an implied new lease, such as:


a) the term of the original contract of lease has expired;

b) the lessor has not given the lessee a notice to vacate; and

c) the lessee continued enjoying the thing leased for fifteen days with the acquiescence of the lessor.


In the case of an implied new lease, the terms of the original contract remain, except for its duration, which should be determined in accordance with Article 1687 of the Civil Code, which provides that for the period of the lease when the same has not been fixed.


Accordingly, 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.


In the above case, an implied new lease has set in when, upon expiration of the contract, your lessor did not send you a notice to vacate and you continued to occupy the leased premises for fifteen days, as you are still occupying the same premises and paying your monthly rent to this date. However, it must be pointed out that the period of your implied new lease is from month to month since you have been paying your rent on a monthly basis. As such, at the end of each month, your lessor may terminate the lease by serving a notice to vacate.


It's important to note that while implied leases exist and can be legally recognized, it is generally advisable to have written lease agreements in place to avoid disputes and provide clarity regarding the rights and obligations of both the landlord and the tenant.


These written agreements help protect the interests of both parties and provide a clear understanding of the terms of the lease.


Source: Manila Times

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