• Lessee who improves leased property should be reimbursed

    Persida Acosta

    Persida Acosta

    Dear PAO,
    I entered into a contract of lease of a land for five years, which is to expire in 2018. Since the land was not fenced, I asked permission from the lessor to construct a concrete fence around the land. Given the go signal as this was not stipulated in the contract, I managed to build the fence in no time. I just want to know what my rights are over the fence that I have built, after the termination of the lease contract.

    Dear Kiko,
    Under the law, a lessee who introduces useful improvements on the thing leased shall be reimbursed to at least half of the value of the improvements made, provided that they were done in good faith. If the lessor refuses to pay, the lessee may remove the said improvements even if in the process the same will cause damage to the leased thing. This is clearly provided by Article 1768 of the New Civil Code of the Philippines, which provides:

    “ART. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.

    With regard to the ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.”

    Applying the foregoing provision to your situation, the improvements you put up on the land you are currently leasing were done in good faith, considering that you were permitted by no less than the lessor to build the same. As such, upon the termination of the contract of lease, you are entitled to receive from the lessor half of the value of what you have introduced in the leased land, should the latter opts to appropriate the improvements and reimburse you. Otherwise, you may remove the improvements you have built notwithstanding any damage the same may cause to the leased thing.

    Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

    We hope that we were able to enlighten you on the matter.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net


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