Eviction of a Commercial Tenant for Unpaid Rent in the Philippines

Evicting a commercial tenant for non-payment is a common—but legally sensitive—situation. This article walks through the governing law, the proper process, timelines, evidence, strategic considerations, and practical do’s and don’ts in the Philippine setting. It’s written for landlords and property managers of office, retail, warehouse, and other non-residential spaces.

1) Legal framework at a glance

Civil Code (Lease of Things): Establishes the parties’ basic obligations—landlord (lessor) must maintain the lessee’s peaceful possession; the lessee must pay rent as agreed and use the premises with diligence. Persistent non-payment is a breach that can justify rescission/cancellation and damages.
Rules of Court, Rule 70 (Forcible Entry and Unlawful Detainer): Creates the summary eviction suit (commonly called an “ejectment case”) to recover possession when a tenant with prior lawful possession continues in possession after breach (e.g., unpaid rent) or after the lease ends, despite demand to vacate.
Katarungang Pambarangay Law: Many disputes between natural persons in the same city/municipality must first undergo barangay conciliation before going to court. When any party is a corporation or juridical person, the conciliation requirement does not apply.
Rent Control laws (e.g., the Rent Control Act): Apply to certain residential units only, not to commercial leases.
Local ordinances & permits: May affect business operations but do not replace the judicial process required for eviction.

2) Lawful grounds to evict for unpaid rent

Unlawful detainer (Rule 70)
- The tenant initially had lawful possession (a lease).
- The tenant defaulted in rent (per contract).
- The landlord made a demand to pay and vacate (or to comply with the lease) and the tenant refused.
- The suit is filed within one (1) year from the last demand to vacate (or from the date of unlawful withholding of possession, depending on facts).
Expiration or cancellation of lease
- Even apart from non-payment, if the term expired or the lease was validly rescinded/cancelled under the contract due to default, continued stay becomes unlawful after demand.

Tip: For commercial leases, non-payment + contractual cancellation + demand to vacate is a clean basis for an unlawful detainer case.

3) Pre-litigation checklist

Review the contract
- Confirm rent due dates, grace periods, default clauses, notice requirements, cancellation/re-entry language, application of security deposit and advance rent, interest/penalty rates, and attorney’s fees.
Compute arrears precisely
- Prepare a rent ledger: due dates, amounts, receipts, penalties. This becomes core evidence.
Serve a proper written demand
- Demand to pay and vacate (or to comply) by personal service or registered mail with proof of service (registry receipts + return cards).
- Give the period required in the lease; if none, give a reasonable period (commercial practice varies—often 5 to 15 days).
- State the amount due, the contractual basis for default, and that failure to comply will lead to cancellation and court action.
Barangay conciliation?
- Required only when both parties are natural persons residing in the same city/municipality (with limited exceptions).
- Not required if any party is a corporation or if the properties/parties fall outside the system’s coverage. If required, secure a Certificate to File Action.

4) Choosing the correct case

Unlawful detainer (summary ejectment)
- Fast-track to recover possession and collect unpaid and accruing rent as “reasonable compensation for use and occupation.”
- Filed in the Metropolitan/Municipal Trial Court (MeTC/MTC/MCTC) where the property is located.
- Summary Procedure applies: no motions that cause delay (with narrow exceptions), shortened timelines, documentary focus.
If >1 year has elapsed from the last demand, or issues are beyond mere possession (e.g., complex ownership questions), file a plenary action for recovery of possession (accion publiciana) in the proper court. This is slower and more evidence-heavy.

5) Filing the unlawful detainer case

What to file

Verified Complaint (facts, breach, compliance with demand/conciliation).
Attachments: lease contract and amendments, demand letters with proof of service or barangay Certificate, rent ledger, SOAs, receipts, photos (if relevant).
Reliefs: (a) ejectment; (b) arrears and penalties interest per contract; (c) reasonable compensation for use and occupation from filing until turnover; (d) application of security deposit; (e) attorney’s fees and costs.

Venue and fees

File in the MTC/MeTC where the property is located. Pay filing and sheriff’s fees (recoverable as costs if you win).

Defendant’s answer

Due within a short period (per summons). No dilatory motions allowed except for limited grounds (e.g., lack of jurisdiction).

Mediation/JDR & trial

Courts will usually send parties to mediation and, if needed, Judicial Dispute Resolution. If unsettled, the court holds a summary trial and decides based on documents and concise testimonies.

6) Judgment, appeal, and staying execution

Judgment for the landlord typically awards:
- Restitution of possession (eviction);
- Back rentals/arrears and accruals;
- Contractual penalties/interest (if valid and not unconscionable);
- Attorney’s fees (if prayed for and justified).
Immediate execution vs. supersedeas bond
- Ejectment judgments are immediately executory; however, the tenant can stay (halt) execution by:
  1. Perfecting an appeal (to the RTC) within 15 days;
  2. Filing a supersedeas bond approved by the MTC to cover rents/damages adjudged; and
  3. Depositing with the appellate court the current rentals monthly during the appeal.
- Failure to do any of these allows immediate execution (writ of execution; sheriff implements eviction).
Appeals path
- MTC → RTC (appeal) → Court of Appeals (petition for review) → possibly the Supreme Court on pure questions of law.
- During appeal, monthly deposits of rent are crucial for the tenant to maintain the stay of execution.

7) Execution of the judgment

Writ of execution commands the sheriff to place the landlord in possession, collect money awards, and remove the tenant’s movable property (with proper inventory and storage).
Coordinate logistics: access, building security, movers, inventory, and turnover of keys.
Apply security deposit/advance rent against adjudged liabilities as allowed by the lease or judgment; return any excess.

8) Monetary remedies and computations

Back rent and penalties
- Follow the lease’s formula for late charges and default interest. Philippine jurisprudence allows penalty/interest if agreed and not unconscionable; courts may reduce excessive penalties.
Reasonable compensation for use and occupation
- Usually pegged to contract rent and continues to accrue until the tenant actually vacates/turns over the premises.
Legal interest
- If no contractual rate applies or after judgment, legal interest applies (courts currently apply 6% per annum from finality of judgment on the total award; different accrual rules may apply pre- and post-judgment depending on what’s liquidated/ascertained).
Attorney’s fees and costs
- Recoverable if stipulated or justified due to the tenant’s bad faith or necessity of litigation.

9) Evidence that wins (and avoids delays)

Clean paper trail:
- Signed lease (and amendments), rent ledger, official receipts, emails or letters acknowledging debt, demand letters with proof of service, and photos/inspection reports if there’s damage or abandonment.
Authority to sue:
- For corporate landlords, include Board/Secretary’s Certificate authorizing the signatory.
Valuation of improvements (if relevant):
- Many leases require tenants to remove trade fixtures and restore the premises; document condition with photos and a turnover checklist.

10) Practical do’s and don’ts (commercial context)

Write clear default and cancellation clauses in the lease (triggers, cure periods, interest, re-entry, application of deposits, attorney’s fees).
Invoice promptly and maintain a running ledger.
Serve formal demand as soon as the tenant crosses the contractual grace period.
Consider without-prejudice settlement (payment plan, partial condonation) before filing—often faster and cheaper.
If you will terminate utilities, ensure you have the contractual right and you are not violating utility regulations or committing coercive acts; when in doubt, route through court.

Don’t

Self-help eviction: Do not padlock, seize inventory, or forcibly remove the tenant without a court writ—this risks civil/criminal liability (e.g., damages, grave coercion).
Unilateral destruction/disposal of tenant’s movables. Follow sheriff-led inventory under a writ or obtain tenant’s written consent.
Sleep on your rights: The 1-year window for unlawful detainer is strict; act promptly after demand.

11) Common edge cases

Sublease/assignment: Verify if the tenant sublet or assigned rights. You may sue the original lessee (and sublessee, when appropriate) depending on contractual privity and the cause of action.
Abandonment: If the tenant disappears but leaves movables, still proceed with demand and ejectment; use the writ to lawfully clear the premises.
Holdover after expired term: If you accept rent after expiry, you might create a tacit new lease on a month-to-month basis—be intentional about acceptance.
Force majeure/business downturn: Unless the lease provides relief, economic hardship alone does not excuse rent; courts look for specific contractual clauses or legal impossibility, not mere reduced sales.
Co-tenancy in malls: Center rules and house regulations supplement the lease; ensure consistency and proper service of mall-required notices.

12) A model timeline (typical)

Day 0: Missed rent; landlord issues invoice/reminder.
Day 5–15 (per lease): Cure period lapses; landlord sends Demand to Pay and Vacate.
Day 20–40: No compliance → prepare complaint; check barangay conciliation applicability.
Filing to judgment: Several months under Summary Procedure, factoring in mediation and court calendars.
Post-judgment: Immediate execution unless the tenant perfects appeal and files supersedeas bond and makes monthly deposits.

13) Drafting pointers for future-proof leases

Payment mechanics: exact due dates, bank details, official receipts, and what constitutes payment.
Default & remedies: cure periods, late fees, default interest, right to cancel, and application of deposits.
Security deposit: purpose, interest (if any), conditions for application/return, and timelines.
Utilities & access: rights upon default consistent with law; inspection and emergency access clauses.
Surrender: restoration standards, handling of fixtures, abandoned property protocol, and liquidated damages if applicable.
Dispute resolution: venue clause (property’s location), attorney’s fees, and escalation to mediation before suit.

14) Quick FAQs

Is a demand letter required? Yes. For unlawful detainer, a prior demand to pay and vacate (or to comply) is essential to make continued possession unlawful.

What if the tenant pays after suit is filed? Payment of all arrears, costs, and fees may lead to settlement; some landlords still pursue turnover if relationship is untenable.

Can I lock out the tenant for non-payment if the contract says so? Even with a clause, courts disfavor self-help. The safer path is judicial ejectment; otherwise risk liability.

Can I garnish the tenant’s bank accounts or seize goods? Only through court processes (e.g., after judgment, or via provisional remedies where grounds exist and the court authorizes).

How are appeals handled? Appeal to the RTC within 15 days; to stay execution, the tenant must also post a supersedeas bond and deposit current rentals monthly during appeal.

Final word

Commercial evictions in the Philippines are fundamentally contract-driven but court-enforced. The fastest lawful route is a well-documented default, a proper demand to pay and vacate, and a Rule 70 ejectment case filed within one year from the last demand, supported by a clean ledger and proof of service.