In the Philippine real estate market, it is not uncommon to encounter lease agreements where the lessor is not the registered owner (the title holder) of the property. This occurs in various scenarios: a spouse leasing out conjugal property, an heir leasing out a deceased parent's estate before partition, or a buyer under a contract to sell leasing the unit before full payment.
Understanding the legal standing of such "non-owner" landlords and their subsequent liabilities is crucial for both lessors and lessees under Philippine law.
1. The Principle of Relativity and Capacity to Lease
Under the Civil Code of the Philippines, a contract of lease is a consensual, bilateral, onerous, and commutative contract. A critical misconception is that only the absolute owner of a property can validly lease it.
- Article 1643: Defines lease as a contract where one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite.
- Ownership is not a Requirement: The law does not require the lessor to be the owner of the thing leased. The essence of a lease is the transfer of possession and enjoyment, not the transfer of ownership (title). Consequently, a person who has a right to the possession of the property (such as a usufructuary or a sub-lessor) can validly lease it.
2. The Doctrine of Estoppel against the Tenant
A primary protection for landlords who are not the registered owners is found in the Rules of Court and the Civil Code:
Rule 131, Section 2(b) of the Rules of Court: "The tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation of landlord and tenant between them."
This means that once a tenant enters into a lease agreement and takes possession, they are legally barred (estopped) from questioning the landlord's title or claiming that the landlord has no right to lease the property as a defense for not paying rent or refusing to vacate.
3. Potential Liabilities of the "Non-Owner" Landlord
While the lease may be valid between the landlord and the tenant, the landlord who is not the registered owner faces significant legal exposure toward the actual owner and the tenant if complications arise.
A. Liability to the Tenant: Breach of Warranty
Under Article 1654 of the Civil Code, the lessor is obliged:
- To deliver the thing which is the object of the contract.
- To make all necessary repairs to keep it fit for the use intended.
- To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.
If the true owner of the property appears and evicts the tenant (via an accion reivindicatoria or accion publiciana), the landlord is liable for damages to the tenant. Since the landlord failed to provide "peaceful and adequate enjoyment," the tenant can sue for the rescission of the contract and indemnification for damages.
B. Liability to the Registered Owner: Accounting of Fruits
If the landlord acted in bad faith (knowing they had no right to the property), the registered owner can sue the landlord for:
- Restitution of Rents: Under the principle of accion in rem verso or unjust enrichment, the landlord may be required to turn over all rental income collected to the true owner.
- Damages: The owner may claim moral and exemplary damages for the unauthorized use and "usurpation" of the property's fruits (civil fruits).
C. Criminal Liability: Swindling (Estafa)
If the landlord explicitly misrepresented themselves as the absolute owner to induce the tenant to pay a large advance or deposit, they could be held liable for Estafa under Article 315 of the Revised Penal Code. The "deceit" or "fraudulent means" used to obtain the money from the tenant constitutes a criminal offense.
4. Special Scenarios
- Co-ownership: A co-owner may lease out the property, but under Article 491, the consent of all co-owners is generally required for acts of alteration, which jurisprudence often extends to long-term leases. A lease without the consent of others may be challenged by the other co-owners.
- Lease by an Agent: If the landlord is an agent, they must possess a Special Power of Attorney (SPA) from the registered owner specifically authorizing the lease of the property (Article 1878). Without this, the lease is unenforceable unless ratified by the owner.
5. Summary Table of Risks
| Stakeholder | Primary Risk/Liability |
|---|---|
| The Landlord | Suable by the tenant for breach of warranty; suable by the owner for recovery of rents; potential criminal charges for Estafa if deceit was present. |
| The Tenant | Risk of sudden eviction by the true owner; cannot use the "lack of title" as an excuse to stop paying rent to the landlord while still in possession. |
| The True Owner | Loss of rental income and potential physical deterioration of the property without their consent. |
Conclusion
In the Philippines, a lease entered into by a non-owner is legally binding between the contracting parties due to the principle of estoppel. However, the "non-owner" landlord operates in a high-risk zone. They are essentially guaranteeing the tenant's stay; should that stay be interrupted by the registered owner, the landlord becomes fully liable for the tenant's losses while remaining accountable to the owner for every peso collected.