I once entered a lease contract to rent a commercial unit for my business in poultry feeds. When my venture turned unprofitable, I decided to lease the unit I am renting to my friend for his bake shop, so that I can still get some profits. When my lessor found out that I am leasing the commercial unit that I originally rented from him, he got mad and demanded that I stop leasing it to other people. I argued that I can rent it to others, since we have a valid lease contract, and also, to help me out in paying my rental fees to him. Despite this, my lessor insists that what I am doing is illegal. Please advise me if my lessor can legally stop me from renting the leased unit to others.
Your agreement with your lessor to rent his commercial unit is a form of lease contract wherein you, as a lessee, agreed to lease a property of another person who is called the lessor. With this, it is important that we establish that your subsequent act of leasing the commercial unit you are renting is called as sub-leasing. The legality of your act of sub-leasing depends on your initial lease contract with your lessor.
According to the Civil Code of the Philippines:
“Article 1650. When in the contract of lease of things there is no express prohibition, the lessee may sublet the thing leased, in whole or in part, without prejudice to his responsibility for the performance of the contract toward the lessor.”
As clearly stated in this cited provision, a sub-lease is legal if it is not expressly prohibited in the original lease contract. The sub-lessee, however, has to respect and follow the lessee’s responsibilities and obligations to the lessor based on the original lease agreement.
Considering this, you have to check your lease contract to verify if there is a provision prohibiting sublease by your lessee. Should there be a prohibition on sub-leasing, then you as the original lessee cannot sub-lease the property you are renting. By sub-leasing a property despite a contractual prohibition, you can be held liable for breach of contract and your lease contract can be rescinded because of this.
On the other hand, if there is no prohibition for sub-leasing, then you as a lessee can continue to sub-lease your rented unit subject to the observance of the sub-lessee on your original agreement with your lessee.
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 firstname.lastname@example.org