Selling Property with Unauthorized Long‐Term Tenants: Legal Considerations in the Philippines

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific legal concerns, it is recommended to consult a qualified attorney.

I. Introduction

In the Philippines, property transactions often become complicated when there are unauthorized long-term occupants or tenants living in the property. Questions arise about the seller’s obligations, the buyer’s expectations, and the rights of these occupants. This article discusses the legal considerations surrounding such scenarios, focusing on Philippine statutes, judicial precedents, and practical steps for both sellers and buyers.

II. Legal Framework

Civil Code of the Philippines (Republic Act No. 386)
- Articles 428–430: Define the concept of ownership and the bundle of rights that property owners enjoy.
- Articles 441–442: Lay out the doctrine that ownership includes the right to exclude others from one’s property.
- Articles 1547–1549: Establish the warranties of a seller in a contract of sale, including the warranty against eviction.
Rules of Court
- Rule 70 (Forcible Entry and Unlawful Detainer): Outlines remedies for property owners who want to recover possession. This is a summary procedure meant to resolve possession issues quickly.
Rent Control Laws
- Republic Act No. 9653 (Rent Control Act of 2009): Provides the rights and obligations of lessors and lessees. However, this typically applies to formal lease relationships; unauthorized occupants often are not considered lessees under this law unless they have evidence of a landlord-tenant contract.
Urban Development and Housing Act of 1992 (Republic Act No. 7279)
- Covers policies on eviction and demolition of informal settlers. In some cases, unauthorized occupants may be considered “informal settlers,” triggering specific guidelines related to relocation or demolition.
Barangay Justice System (Katarungang Pambarangay)
- Certain disputes, including those arising from unlawful detainer or ejectment, may require referral to the Lupon Tagapamayapa for amicable settlement before these are filed in court.

III. Defining Unauthorized Long-Term Tenants

Unauthorized Occupants vs. Legitimate Tenants
- A legitimate tenant is one who has a valid lease agreement—oral or written—that clearly stipulates the terms and conditions of occupancy.
- An unauthorized occupant (sometimes referred to as a “squatter,” “informal settler,” or “illegal occupant”) occupies the property without a valid lease contract or permission from the rightful owner.
Long-Term Occupancy
- Some unauthorized occupants have resided in a property for an extended period (often years), making the ejection process more complex.
- Length of stay does not automatically bestow legal possession, but it may affect the outcome of an ejectment case or settlement negotiations.

IV. Rights and Obligations of Property Owners

Right to Exclude
- Under the Civil Code, an owner has the right to exclude or remove any person who occupies the property without permission.
Obligation to Deliver Possession (Contract of Sale)
- When selling property, the seller is typically obligated to deliver peaceful and lawful possession to the buyer.
- Article 1547 of the Civil Code establishes the seller’s warranty against eviction, meaning that if the buyer is dispossessed of the property (or a substantial part thereof) by a third party with a better right, the seller could be liable.
Risk of Litigation
- A property owner who sells a parcel of land or a building occupied by unauthorized tenants might face legal challenges if the new owner or prospective buyer insists on vacant possession prior to or after the sale.
Duty to Disclose
- Sellers should disclose known occupants or potential claims on the property. Failure to do so could result in the buyer seeking legal remedies (e.g., rescission of contract, indemnification) if unauthorized occupants impede full enjoyment of the property.

V. Rights of Unauthorized Long‐Term Tenants

Possessory Rights
- While unauthorized occupants do not have lawful possession, Philippine courts generally frown upon self-help measures to evict them forcibly without legal process.
- The occupant may file an injunction or other action if the landlord or owner uses threats or violence to evict them.
Right to Due Process
- Even unauthorized occupants must be given due process, which includes notices and appropriate legal proceedings.
- Courts prefer parties to undergo barangay conciliation (if applicable) before proceeding to judicial actions.
Relocation or Demolition Procedures (For Informal Settlers)
- If deemed “informal settlers,” they might be covered under R.A. 7279 (UDHA), which has specific guidelines on relocation and demolition.
- However, UDHA typically applies to urban poor and genuine informal settler families, not all unauthorized occupants.

VI. Legal Remedies to Remove Unauthorized Tenants

Forcible Entry (Rule 70, Rules of Court)
- Applicable when an occupant originally entered the property through force, intimidation, threat, strategy, or stealth.
- The action must be filed within one (1) year from the date of such unlawful entry.
Unlawful Detainer (Rule 70, Rules of Court)
- Applies when the occupant originally possessed the property lawfully (e.g., as a tenant or with the owner’s consent), but continues occupancy beyond the expiration of the right to possess.
- Must be filed within one (1) year from the date of last demand to vacate.
Acción Publiciana
- If more than one (1) year has elapsed since the unlawful withholding of possession, the property owner may file an Acción Publiciana in the Regional Trial Court (RTC).
- This is an ordinary civil action to recover the right of possession.
Acción Reivindicatoria
- If the issue extends to ownership rather than mere physical possession, the plaintiff may initiate an Acción Reivindicatoria, which involves both title and possession.
Negotiated Settlement
- In some instances, owners opt for an amicable or monetary settlement with unauthorized occupants to vacate.
- This can be done through a Kasunduan (agreement) executed before a notary public or barangay officials. The occupant agrees to leave upon receiving compensation or relocation assistance.

VII. Selling the Property While There are Unauthorized Tenants

Seller’s Liability
- Under Article 1548 of the Civil Code, there is a warranty against eviction. If unauthorized occupants have a superior right or claim that effectively dispossesses the buyer, the seller could be held liable for breach of warranty.
- However, if the occupants are clearly unauthorized without any color of title, the buyer’s remedy would be an ejectment suit; the seller’s liability may hinge on whether the existence of these occupants was disclosed.
Disclosure and “As Is, Where Is” Clause
- Some sellers use an “As Is, Where Is” clause in the Deed of Sale, explicitly stating that the buyer is aware of the property’s current condition (including occupants) and agrees to purchase with such knowledge.
- While such a clause can protect the seller from certain claims, it does not necessarily excuse the seller from potential liability if fraud or misrepresentation is proven.
Due Diligence by the Buyer
- Prospective buyers should inspect the property, interview neighbors, and confirm the status of occupants.
- They can also request proof of notice or demand letters served upon the occupants. This informs the buyer of the steps taken (or needed) to remove them.
Drafting Clear Contractual Provisions
- If both parties agree that the seller will handle eviction and deliver the property vacant, it should be explicitly stated in the contract, including timelines and penalties for non-compliance.
- Conversely, if the buyer agrees to take on eviction, the contract should detail that arrangement to avoid misunderstandings.

VIII. Practical Considerations

Timing
- Legal proceedings for ejectment—if resisted—can take months to years, depending on the complexity.
- Coordinate timelines with potential buyers, especially if vacant possession is a condition precedent to the sale.
Cost
- Eviction lawsuits entail legal fees, filing fees, and potential costs for law enforcement assistance.
- Settling with unauthorized occupants may sometimes be faster and cheaper, though it requires careful negotiation.
Litigation vs. Settlement
- While the law clearly supports an owner’s right to recover property, courts encourage amicable settlements to decongest dockets and foster social harmony.
- A negotiated settlement can provide a win-win scenario if both parties act in good faith.
Coordination with Local Government
- In cases involving large groups of occupants or informal settlers, owners may need to coordinate with LGUs and the local Housing and Urban Development Council.
- Conducting lawful demolition or eviction sometimes necessitates assistance from the Philippine National Police (PNP) and local officials.

IX. Conclusion

Selling property in the Philippines with unauthorized long-term tenants or occupants can be a challenging process. Understanding the legal remedies for ejectment, the warranties of a seller, and the due diligence obligations of a buyer is vital to avoid disputes and potential liabilities.

Sellers should disclose the status of occupancy, take timely legal action to remove unauthorized tenants (if necessary), or include specific provisions in the sale contract clarifying the transfer of the responsibility for eviction.
Buyers must conduct a thorough due diligence on the property, confirming any existing occupant’s legal status and discussing with the seller who will bear the responsibility and costs of eviction.
Both parties should consider a negotiated settlement as an alternative to lengthy litigation, while ensuring they comply with due process and the requirements under Philippine law.

Ultimately, navigating these matters with the guidance of a competent lawyer or real estate professional can help all parties achieve a more seamless transaction and protect their respective rights and interests.