Introduction

In the Philippines, tenancy arrangements without a formal written lease are common, particularly in informal or verbal agreements. These setups often operate on a month-to-month basis under implied terms derived from the parties' conduct and applicable laws. When a landlord decides to sell the property occupied by such a tenant, questions arise regarding the tenant's rights to continued occupancy, notice requirements, and potential eviction. This article provides a comprehensive overview of the legal framework governing these scenarios, drawing from the Philippine Civil Code, relevant jurisprudence, and ancillary statutes. It explores the implications for tenants, the obligations of both the selling landlord and the buyer (new owner), procedural safeguards, and available remedies, ensuring tenants are informed of their protections under Philippine law.

Legal Basis for Tenancy Without a Formal Lease

Under Philippine law, a lease agreement does not need to be in writing to be valid, provided it meets the essential elements of consent, object, and cause as outlined in Article 1318 of the Civil Code (Republic Act No. 386). Verbal leases are enforceable, and in the absence of a specified term, they are presumed to be month-to-month (Article 1687, Civil Code). This presumption applies unless the parties' actions indicate otherwise, such as payment of rent on a yearly basis suggesting an annual lease.

The Rent Control Act of 2009 (Republic Act No. 9653), as amended and extended, primarily regulates residential units with monthly rents below PHP 10,000 in Metro Manila and other highly urbanized areas, or below PHP 5,000 elsewhere. However, its provisions on ejectment grounds and notice periods can influence even non-covered tenancies through analogous application in jurisprudence. For commercial or higher-rent properties, the Civil Code governs more directly, supplemented by the Rules of Court on ejectment proceedings.

Key Supreme Court decisions, such as in Pitargue v. Sorilla (G.R. No. L-47427, 1940) and more recent cases like Spouses Sy v. Court of Appeals (G.R. No. 127263, 2000), affirm that verbal tenancies enjoy the same protections as written ones, emphasizing good faith and equitable treatment.

Impact of Property Sale on Tenancy

When a landlord sells a leased property, the sale does not automatically terminate the tenancy. Article 1678 of the Civil Code stipulates that the buyer acquires the property subject to the existing lease, meaning the new owner steps into the position of the original lessor. This principle, known as "lease follows the property," ensures continuity for the tenant.

For tenancies without a formal lease:

Subrogation of Rights: The purchaser is bound by the terms of the verbal agreement, including the implied month-to-month period. The tenant cannot be evicted solely because of the sale; the new owner must respect the ongoing occupancy.
Registration and Notice: If the sale is registered with the Registry of Deeds, it may affect third-party rights, but for the tenant in possession, actual occupancy serves as constructive notice to the buyer (Article 1544, Civil Code, on double sales). Jurisprudence in Carbonell v. Court of Appeals (G.R. No. L-29966, 1976) holds that a buyer with knowledge of a tenant's possession buys subject to that tenancy.
No Automatic Eviction: The sale alone is not a ground for ejectment under Section 5 of the Rent Control Act or Article 1673 of the Civil Code. Valid grounds for termination include non-payment of rent, subleasing without consent, or the owner's need for personal use (for residential units under rent control).

Tenant Rights During and After the Sale

Tenants without a formal lease hold several rights when the property is sold, rooted in principles of security of tenure and due process:

Right to Continued Occupancy: The tenant may remain in the property until the lease expires or is lawfully terminated. For month-to-month tenancies, this means at least until the end of the current rental period, plus any required notice.
Right to Notice: The selling landlord must provide reasonable notice of the sale, though not statutorily mandated for verbal leases. However, the new owner, to terminate the tenancy, must give a 15-day notice for non-payment or 30-day notice for other grounds (Rule 70, Rules of Court, on unlawful detainer). Under the Rent Control Act, for covered units, a 15-day notice is required for ejectment, but only on specified grounds.
Right of First Refusal: In certain cases, tenants may have a preferential right to purchase the property. Republic Act No. 9161 (Rental Reform Act of 2002, now lapsed but influential) and jurisprudence suggest this for long-term tenants, especially in urban land reform zones under Presidential Decree No. 1517. However, this is not absolute and requires the tenant to match the offer. In Torres v. Court of Appeals (G.R. No. 134559, 2000), the Court upheld this right for tenants in good standing.
Protection Against Harassment: Tenants are safeguarded from constructive eviction tactics, such as cutting utilities or intimidation, which violate Batas Pambansa Blg. 877 (anti-squatting law, though not directly applicable) and general tort provisions (Article 19-21, Civil Code). Such actions can lead to damages claims.
Security of Tenure: For agricultural tenancies, Republic Act No. 1199 (Agricultural Tenancy Act) and Republic Act No. 3844 (Agricultural Land Reform Code) provide stronger protections, including indefinite tenure unless just cause exists. However, for urban residential or commercial properties without leases, tenure is less secure but still requires judicial process.
Rent Payment Continuity: Post-sale, rent should be paid to the new owner upon proper notification. Failure to notify may allow payment to the old landlord without penalty (Article 1679, Civil Code).
Improvements and Reimbursements: If the tenant made necessary improvements with the landlord's knowledge, they may claim reimbursement or retention rights until paid (Article 1678, Civil Code). Useful improvements without consent may still be compensable if in good faith.

Obligations of the Landlord and Buyer

Selling Landlord: Must inform the tenant of the impending sale to avoid bad faith claims. They remain liable for obligations accruing before the sale, such as returning deposits (if any, though rare in verbal setups).
Buyer (New Owner): Assumes all lessor duties, including maintenance and compliance with habitability standards (implied under Article 1654, Civil Code). They cannot unilaterally change terms without agreement or court order.

Both parties must adhere to ejectment procedures: No self-help eviction is allowed; only courts can order removal (Rule 70, Rules of Court).

Ejectment and Termination Procedures

To end the tenancy post-sale:

Demand to Vacate: The new owner must issue a written demand, specifying grounds and allowing time to comply (e.g., 15-30 days).
Filing of Complaint: If unmet, file an unlawful detainer case in the Municipal Trial Court (MTC). Jurisdiction is based on the property's location.
Defenses Available to Tenant: Lack of valid ground, improper notice, retaliatory eviction, or discrimination. For rent-controlled units, only enumerated grounds apply.
Appeals and Execution: Decisions are appealable to the Regional Trial Court, but execution may proceed unless a supersedeas bond is posted.

Special considerations apply in disaster areas or under moratoriums, such as those imposed during the COVID-19 pandemic via Bayanihan Acts, which temporarily halted evictions.

Remedies for Tenants

If rights are violated:

Injunction: Seek a temporary restraining order against eviction (Rule 58, Rules of Court).
Damages: File for actual, moral, or exemplary damages in a separate civil action.
Criminal Complaints: For forcible entry or grave coercion (Revised Penal Code, Articles 282-286).
Administrative Relief: Report to the Housing and Land Use Regulatory Board (HLURB) for subdivided properties or the Department of Human Settlements and Urban Development (DHSUD) for policy guidance.

Tenants can also join forces in class actions if multiple units are affected.

Special Contexts and Exceptions

Commercial Properties: Less protections; ejectment can be faster if no rent control applies.
Informal Settlers: If the tenant is deemed a squatter, Batas Pambansa Blg. 877 applies, allowing summary eviction, but only after relocation offers under Republic Act No. 7279 (Urban Development and Housing Act).
Family-Owned Properties: Personal use by the owner or immediate family is a valid ejectment ground under rent control laws.
Foreclosure Sales: If the property is sold via foreclosure, Republic Act No. 8791 (General Banking Law) may alter timelines, but tenants retain basic rights.

Conclusion

Tenants without formal leases in the Philippines enjoy substantial protections when a landlord sells the property, ensuring that sales do not disrupt occupancy without due process. The Civil Code's principles of lease continuity, combined with procedural safeguards in the Rules of Court and specific statutes like the Rent Control Act, balance the interests of property owners and tenants. However, tenants should document payments and communications to strengthen their position. Consulting a lawyer or legal aid organizations, such as the Integrated Bar of the Philippines or Public Attorney's Office, is advisable for personalized advice. Understanding these rights empowers tenants to navigate property sales securely and equitably.