2 Years or 24 Months

When drafting lease agreements, should you specify the lease term in years or months? Does it matter?

The distinction becomes important when it comes to renewals. If the landlord and tenant haven't negotiated a lease extension, Article 1670 of the Civil Code outlines the conditions for an implied renewal:

a. The original lease term has expired;

b. The lessor has not given the lessee a notice to vacate; and

c. The lessee continues to occupy the property 15 days after the lease expires.

So, if there's an IMPLIED lease extension, will it be on a monthly or annual basis?

According to Article 1687 of the Civil Code, if the lease period isn't explicitly renewed, it will default to the payment terms: a monthly lease will extend for one month, and an annual lease will extend for one year.

Given that full-year advance payments are common in the Philippines, the implied extension will hinge on whether you specify the lease in months or years.

In summary, specify:

24 months (with monthly rent) if you want implied extensions to be on a monthly basis.

2 years (with annual rent) if you want implied extensions to be on an annual basis.