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  • Writer's pictureZiggurat Realestatecorp

Validity of an extra-judicial repossession clause in a lease contract

Can it be validly stipulated in a lease contract that upon failure of the lessee to comply with the terms and conditions of the same and/or the lessee's default with the obligation to pay the monthly rentals, the lessor shall have the right — upon written notice to the lessee — to extra-judicially enter and retake possession of the leased property?

Apart from such clause, is it also legal to stipulate that in the exercise of the lessor's right to retake possession, the latter may resort to the padlocking of the leased unit? Incipiently, it is well to remember that a contract is the law between the parties. Precisely, in Article 1159 of Republic Act (RA) 386, otherwise known as the "New Civil Code of the Philippines," it is stated that:

"Article 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith."

As such, parties to a contract are allowed by law to enter into stipulations, clauses, terms, and conditions they may deem convenient as long as they are not contrary to law, morals, good customs, public order or public policy. (See Article 1306 of RA 386)

The decision of the Supreme Court in the case of Viray and De Asis v. Intermediate Appellate Court (GR 81015 July 4, 1991) penned by Chief Justice Andres R. Narvasa is very enlightening where the Supreme Court held that it is not illegal, there being nothing in the law proscribing such kind of agreement allowing the extra-judicial right to repossession on the part of the lessor. Thus:

"This Court ruled that the 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;" and that such a contractual provision "is not illegal, there being nothing in the law prescribing such kind of agreement."

Pertinently, concerning the issue on the propriety of resorting to the use of padlock, the Supreme Court in the same case citing an American Jurisprudence dictates:

"[T]he better view seems to be, x x x, where a lease provides that if the tenants hold over after the expiration of his term, the landlord may enter and take possession of the premises, using all necessary force to obtain the actual possession thereof, and that such entry should not be regarded as a trespass, be sued for as such, or in any wise be considered unlawful, the landlord may forcibly expel the tenant upon the termination of the tenancy, using no more force than is necessary, and will not be liable to the tenant therefor, such a condition in a lease being valid. X x x where a lease expressly gives a landlord a right to use such reasonable force as is necessary in making re-entry and dispossessing a tenant, when the landlord becomes entitled to possession because of the termination of the term, the landlord can use force in making re-entry and dispossessing the tenant."

it is indubitable that stipulations permitting a lessor to retake possession of the leased property upon the lessee's breach or default to pay rentals are sanctioned by our laws and jurisprudence. Besides, as in the abovementioned case of Viray and De Asis, the facts in your query also provide for a prior written notice to the lessee before the actual repossession.

On the other hand, it is worth emphasizing that in the exercise of the lessor's right to retake possession, the latter may use reasonable amount of force and may resort to reasonable measures in the exercise of the same. Nonetheless, guided by the jurisprudential pronouncement, it would be best if aside from the use of reasonable force and the consequent padlocking of the premise — the lessor should likewise stipulate on the proper inventory and attendant witness or witnesses in the actual exercise of repossession.

In sum, the gist of our laws permitting the same is to avoid the absurd situation wherein a lessee ousted under the circumstances would be restored to possession, but only to be subjected to ejectment proceedings by the lessor to recover possession of the property. To prevent circuity of action, therefore, as in the words of the Supreme Court — we must recognize the affirmative right of action on the part of the lessor as complete and efficacious.

Source: Manila Times

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