Dear Atty. Gab,

Musta Atty! I hope you can shed some light on my situation. My name is Gregorio Panganiban, and I rented a small commercial space in Malolos, Bulacan for my bakery business. The 3-year lease contract ended last March 31, 2024. Due to some delays in renovating my new location, I stayed an extra month until April 30, 2024.

My landlord, Mr. Santos, seemed okay with it initially. Back in early April, he sent me a letter demanding payment for the last month’s rent (March) which was P15,000, plus P15,000 for the extra month (April), and some interest he calculated, totaling around P32,000. I admit I haven’t paid that yet because funds were tight with the move.

Now, just last week, I received a formal demand from his lawyer asking for P60,000! They claim I owe not just the March rent but also double rent (P30,000) for April because I was ‘trespassing’, plus higher interest and attorney’s fees. This feels incredibly unfair. My contract didn’t say anything about penalties for overstaying, just the monthly rent.

Can he really charge me double rent just like that? And can I use his first letter, where he only asked for P32,000, to argue that the new P60,000 demand is excessive? I’m confused about my obligations for the extra month and the interest. I want to pay what’s fair, but P60,000 seems wrong. What are my rights here?

Thank you po for your time and guidance.

Respectfully,
Gregorio Panganiban

Dear Gregorio,

Thank you for reaching out. I understand your concern regarding the significantly increased demand from your landlord after you had already received an initial calculation of your dues. It’s stressful to face such discrepancies, especially when dealing with business and moving expenses.

Your situation touches upon key aspects of Philippine lease law, particularly regarding obligations after lease expiration, the concept of an implied new lease, and how previous communications, like the first demand letter you received, can impact subsequent claims. Let’s explore the legal principles involved.

Navigating Obligations When You Overstay Your Lease

When a lease contract expires and the tenant continues to occupy the property with the landlord’s tolerance, the law doesn’t simply leave the situation unregulated. Philippine law addresses this through the concept of an implied new lease or tacita reconduccion. This means that even without a formal renewal, certain terms of the original lease might continue, specifically regarding the payment of rent for the period of continued stay.

The Civil Code provides guidance here. Article 1670 states:

“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.” (Article 1670, New Civil Code of the Philippines)

This means that by staying beyond March 31st with Mr. Santos’s apparent initial consent (or lack of immediate objection), an implied lease was likely created, typically on a month-to-month basis if your rent was paid monthly. This establishes your obligation to pay rent for the extra month (April) you occupied the space. The rate would generally be based on the previous rent (P15,000), unless a different agreement was made or specific penalties were clearly stipulated in the original contract for holding over.

Regarding the first demand letter you received asking for approximately P32,000, this document could be significant. Presenting evidence, such as a demand letter from the opposing party that states a lower amount owed, can sometimes be interpreted as an admission by that party, or at least strong evidence regarding the amount due at that specific time. As established in jurisprudence:

“A demand letter presented in evidence by a lessee to prove a lesser liability for unpaid rentals than that awarded by the trial court constitutes an admission of liability to the extent of such lesser amount.”

By presenting the first letter where Mr. Santos calculated your dues at P32,000 (covering March rent, April rent, and some interest), you are effectively acknowledging liability up to that amount based on his own computation at that time. It weakens his later claim for a much higher sum unless he can provide a solid justification for the increase, such as additional damages proven or contractual penalties you might have overlooked.

Interest on unpaid rent is also a factor. If the contract doesn’t specify an interest rate for delays, the legal interest rate applies. Article 2209 of the Civil Code states:

“If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent per annum.” (Article 2209, New Civil Code of the Philippines)

Currently, the legal interest rate under Bangko Sentral ng Pilipinas Circular No. 799, series of 2013, is 6% per annum, calculated from the time of demand (either extrajudicial, like the demand letter, or judicial, upon filing a case). Your landlord’s claim for interest is valid in principle, but the rate and calculation must be correct.

The claim for double rent or ‘trespassing’ fees, and substantial attorney’s fees, usually requires a basis either in the lease contract itself (as stipulated penalties or liquidated damages) or proof of bad faith in breaching the contract. If your contract doesn’t mention such penalties for overstaying, and you vacated reasonably promptly after the extra month, claiming excessive amounts might be unwarranted. Acting in bad faith involves a conscious disregard of duty or known rights.

“Bad faith ‘means breach of a known duty through some motive or interest or ill will.’ x x x Moral damages may be awarded when the breach of contract is attended with bad faith.”

While your overstay was a breach, whether it constitutes bad faith justifying significantly higher damages depends on the circumstances. If the landlord seeks excessive damages without clear contractual or legal basis, it might be challenged.

Practical Advice for Your Situation

• Review Your Lease Contract Carefully: Check for any clauses regarding penalties, interest rates for delayed payments, or procedures for overstaying (holdover clause). This is crucial to determine if the P60,000 demand has any contractual basis.
• Preserve the First Demand Letter: Keep the original P32,000 demand letter safe. This is your strongest piece of evidence to argue against the inflated P60,000 claim.
• Communicate Formally: Respond to the lawyer’s demand letter in writing. Acknowledge the unpaid March rent and the rent for the April overstay (P15,000 each). State your willingness to pay this base amount plus the legally applicable interest (6% p.a. from the date of the first demand).
• Question the Excessive Charges: Clearly state that you dispute the claim for double rent and excessive fees, referencing the absence of such penalties in your contract and the landlord’s initial lower demand.
• Use the First Letter Strategically: Mention the landlord’s initial calculation of P32,000 as evidence of the understood liability at that time. Argue that the subsequent increase is arbitrary and lacks basis.
• Consider Negotiation: Propose a settlement based on the undisputed amounts (March rent + April rent + calculated 6% interest). This shows good faith on your part.
• Seek Legal Counsel for Negotiation/Response: Given that a lawyer is now involved on the landlord’s side, it would be wise to have your written response reviewed or drafted by your own counsel to ensure it is legally sound and protects your interests.

Dealing with lease disputes can be challenging, Gregorio. By understanding your rights regarding implied leases and using the initial demand letter effectively, you can build a strong position to contest the excessive charges. Focus on paying what is clearly owed based on the contract and the law, while firmly questioning the unsubstantiated increases.

Hope this helps!

Sincerely,
Atty. Gabriel Ablola

For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.