Understanding the nature of sublease

(First of two parts)

“Any blockhead can arrange a sublet. All I ever wanted was to support myself on art,” said frustrated visual artist Walter Keane, who claimed to have painted the images of wide-eyed children actually painted by his then-wife, Margaret Keane.

Despite (or because of) this oversimplified view of a sublet or sublease agreement, it can be the source of conflict between the contracting parties, as shown in the cases decided by the Supreme Court below. Understanding the nature and legalities concerning this agreement is thus key.

In Mallarte v. Court of Appeals, for instance, Spouses Nicolas and Ramona Gopiao leased to Vicente Mallarte a certain apartment on a monthly basis. In this regard, the parties stipulated in their corresponding agreement that Mallarate was prohibited from subleasing or otherwise transferring to another the leased premises, or any portion thereof, without Spouses Gopiao’s prior written consent. Failure to comply with this provision shall be ground for Mallarte’s ejectment therefrom.

During one of their routine inspections, Spouses Gopiao discovered that Mallarte had converted certain areas of the apartment into bed spaces for eight boarders. Thinking that Mallarte had violated the pertinent provision of their agreement, Spouses Gopiao demanded him to vacate the leased premises. He refused to do so, constraining Spouses Gopiao to file an ejectment suit against him before the then City Court.

Meanwhile, Mallarte argued that the boarders were his nephew, nieces, grandchildren and other relatives who had been studying at a nearby university. Moreover, he accused Spouses Gopiao of filing the instant suit because he had refused to pay the increased rent.

This case was eventually appealed to the Supreme Court, which ruled in favor of Mallarte. It held that accepting boarders was not tantamount to a sublease agreement, which necessitated the lessee to surrender his control and possession of the leased premises or any part thereof.

Meanwhile, the sublessee rents from the lessee the same premises for a term less than that stated in the lease agreement.

While a lessee may be expressly restricted from subleasing the premises in the lease agreement, the Supreme Court held that it effectively restrains alienation and is, thus, looked with disfavor by the courts.

In this case, Mallarte remained the actual occupant and possessor of the leased apartment. He merely accepted his relatives as boarders therein and assigned them their rooms or bed spaces, while agreeing to provide them with meals and/or lodging for a price.

Meanwhile, Blas v. Court of Appeals concerned the Premier Theater Building, whose owner, Alfonso Bichara, leased to Emilia Blas. In their lease agreement, Bichara authorized Blas to sublease the premises for a five-year period. Thus, Blas orally agreed to sublease to Arthur Yao a portion of the leased premises for a monthly sublease rental fee.

Afterwards, however, Bichara demanded Yao to pay to him the sublease rental fee since his lease agreement with Blas had already expired. Yao complied with Bichara’s demand, upon which the latter filed against Blas an ejectment suit before the Metropolitan Trial Court (MeTC).

The MeTC and upon appeal, the Regional Trial Court ruled to extend Blas and Bichara’s lease contract for another five years. This development compelled Blas to demand Yao to pay the accrued sublease rentals. Nevertheless, Yao continued to remit his payments to Bichara and refused to vacate the subleased premise when Blas demanded to do so.

This time, Blas filed against Yao an ejectment suit before the MeTC. The MeTC ruled in favor of Blas and directed Yao to vacate the subleased premises. Upon appeal, however, the RTC and Court of Appeals effectively reversed the MeTC’s findings. In this regard, the Court of Appeals particularly held that Blas was not entitled to eject Yao since the period of the sublease agreement had not yet expired and was effectively renewed upon the renewal of the lease contract. Moreover, Yao had not defaulted on his payment of the sublease rentals since he had done so with Bichara, who in turn was crediting the same to Blas.

(To be continued)