When the Rent is not Paid

1. Introduction

So the lessee (the person renting the property) has missed one rent payment, maybe even more, what can the landlord do?

Generally, landlords or lessors would give or send a payment reminder to the lessee to remind them to pay the rent. Most times the lessee may have missed their rental payments because they forgot to pay it or some other valid reason. However, if the rent remains unpaid and the landlord is ready to take a more serious course of action, they should first check the lease agreement (or the sublease agreement) to see what options are available in order to compel the lessee to pay the rent.

The lease agreement is the document signed by the landlord and the lessee which contains the terms and conditions of the lease.

2. The Lease Agreement

The lease agreement would sometimes contain provisions that spell out the consequences for non-payment of rent. Some examples are payment of interest and/or termination of the lease. Some lease agreements might even include authorization from the lessee for the landlord to lock the lessee out of the leased premises when rent is not paid. Since the lease agreement was voluntarily agreed upon by both the landlord and the lessee, the landlord can take any action allowed in the lease agreement for the non-payment of the lease.

3. Default Application of the Civil Code

If the lease agreement is silent on the consequences of the non-payment of rent, the Civil Code provides that the landlord can:

1. Rescind (or terminate) the lease and ask for payment of damages; or
2. Allow the lease to continue and ask for payment of damages.

Under the Civil Code, the lessee is obligated to pay the agreed rent on the leased property. If the lessee fails to comply with the obligation, then the landlord can choose between the two choices mentioned above.

4. Rescission of the lease

If the landlord chooses to rescind the lease, the landlord can demand that the lessee vacate the leased property by using a Landlord's letter to End lease with a Definite Term. This is because the rescission of the lease means that the periodor term of the lease has ended. If the lessee refuses to vacate the property, the landlord can begin ejectment proceedings, specifically for unlawful detainer, by sending a demand letter called a Demand Letter for Ejectment. The demand letter should contain a demand to pay the rent and vacate the leased property.

There is an unlawful detainer when the lessee refuses to leave the leased property despite the termination of the lease.

5. Application of Rent Control Act

If the lease agreement falls under Republic Act No. 9653 or the Rent Control Act, as as extended and amended by the National Human Settlements Board Resolution No. 2021-02., the lessee can only be ejected from the leased property if the lessee has missed rent payments for a total of three (3) months. This restriction applies even if the lease agreement provides for a shorter period. Lease agreements that fall under R.A. 9653 are residential units in:

the National Capital Region and other highly urbanized cities where the total monthly rent ranges from One Peso (P1.00) to Ten Thousand Pesos (P10,000.00);

all other areas where the total monthly rent ranges from One Peso (P1.00) to Five Thousand Pesos (P5,000.00).

6. Recovering the Unpaid Rent

6.1 Small Claims Court

If the landlord would want to recover rent from the lessee, the landlord can also file a claim with the Small Claims Court. The Small Claims Court handles civil claims exclusively for the payment of money not exceeding One Million Pesos (P1,000,000.00), exclusive of interests and costs. Money owed under a contract of lease, such as the rent, is one of the cases covered by the Small Claims Court.

6.2 Ordinary Collection Case

If the amount that will be claimed exceeds One Million Pesos (P1,000,000.00) then the landlord will have to file an ordinary collection case to recover the unpaid rent. Ordinary collection cases are covered by the Rules of Court.