CIVIL LAW REVIEW 2 – Atty. M.C.

Rabanes

01-21-2020

SUBLEASE

 Sublease – the lessee (sub-lessor) will enter into a contract of lease with a third person
(sub-lessee). The third person pays the rent to the lessee.

 Rules:
1. If the contract of lease is silent, subleasing is allowed.
2. It may also be subject of a stipulation.
3. To prohibit a sublease, it must be EXPRESS.
- Remedy for violation: Rescission (Ground: Breach of Contract)

ASSIGNMENT

 Assignment – the rights of the lessee will be exercised by the assignee. This results in a
novation at the instance of the lessee.

 Rules:
1. If the contract of lease is silent, assignment is NOT allowed.
2. To allow it, there must be an EXPRESS (written) agreement by the lessor.
- Remedy for violation: Rescission (Ground: Breach of Contract)

FORM OF LEASE

1. If the duration is one (1) year and below, it may be oral or written. (The contract is
consensual – only the consent, object, and cause [COC] is required)

2. Under the Statute of Frauds (CCP, art. 1403, ¶2(e)), a contract of lease must be
WRITTEN, if the following requisites concur:
a. If the contract is FULLY EXECUTORY (NOT partially executed)
- OR -
b. If it is the lease of a real property; and
c. The lease is for more than one (1) year.
(The contract here is formal – COC and written form is required.)
* Effect if there it was not put into writing: UNENFORCEABLE.

3. To bind third persons, for the protection of the lessee, register the lease with the
Register of Deeds where the property is located, whether covered by a title or tax
declaration.
- The registration serves as a constructive notice to the whole world that a property
has been leased. The third person, if becomes a subsequent buyer of the leased
property, then such third person cannot eject the lessee.
- If it has not been registered, BUT the Deed of Sale indicates that the buyer shall
“respect the rights of the lessee”, then it has the same effect as registration.

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 CIVIL LAW REVIEW 2 – Atty. M.C. Rabanes

- If it can be established that the buyer has actual knowledge of the lease, it will
have the same effect as a registered lease.

4. To bind third persons in a lease of a personal property, it suffices that the lease
contract is NOTARIZED (converted into a public instrument, which becomes a public
document [see Rules of Evidence]).