doctrine:
In the
construction of an instrument where there are several provisions or particulars,
such a construction is, if possible, to be adopted as will give effect to all. The act
of sub-leasing in the first sentence may be done by the lessee without the
consent of the lessor but the act of assignment or transfer of rights in the
second sentence cannot be done by the lessee without the consent of the lessor.
contested provision:
Assignment and Sublease – The lessee has the
right to sublease the premises or any portion thereof to a third party. The
lessee may not, however, assign or transfer its right or interest under this
lease without the written consent of the lessor.
Facts:
·
Contracts
Involved:
1)
The
original lease agreement between Julian Cruz and BPI-FSB;
2)
The first sublease
contract between BPI-FSB and Villa;
3)
The
sale of goodwill of the Carousel Food House, and the assignment and transfer of
all of Villa's rights and interests to the premises and improvements thereon,
between Villa and the Domingos;
4)
The second sublease
contract between BPI-FSB and the Domingos; and
5)
The
Deed of Rescission of the first sublease contract between Villa and
BPI-FSB.
·
Julian
Cruz is the owner of a commercial lot and building in Novaliches, which he
leased out to the Family Savings Bank. After BPI acquired FSB but before the
expiration of the original lease, a new lease was executed between BPI-FSB and
Cruz.
·
The
contracts contained a stipulation that: the lessee has the right to sublease
the premises or any portion thereof to a third party. The lessee may not,
however, assign or transfer its right or interest under this lease without the
written consent of the lessor.
·
While
the original lease was still subsisting, BPI-FSB subleased the premises to
Benjamin Villa (now deceased), a former VP of BPI-FSB. BPI-FSB did not secure
the consent of Cruz, but the latter was aware of the sublease and acceded to it
because he made neither an objection nor a protest thereto.
·
The
sublease contract contained a stipulation that: the sublessee shall not assign
this contract of sublease or sublease any part of the premises to any person or
entity.
·
Villa
operated in the premises a restaurant business, which failed to prosper. After
about a year of operation, Villa closed it down. While still operating the
business, Villa learned that Zenaida Domingo was interested in taking over his
restaurant. The price of P650K was agreed upon.
·
BPI-FSB
executed a sublease contract in favor of the Domingos. Then a deed of
rescission of the sublease agreement between BPI-FSB and Villa was executed.
·
The
Domingos went to clean the premises but the door was padlocked. There was
posted a sign that the place was not for lease or sublease. The Domingos
demanded of Villa either compliance with their contract of sublease or the
return of their payment.
·
With
Villa unable to return the money, the Domingos filed suit in the RTC of Quezon
City for a sum of money with damages against both Villa and BPI-FSB. In turn,
Villa and BPI-FSB filed their respective third-party complaints against Cruz.
·
Cruz claimed that he had every right to close down
the premises and to refuse the entry thereto of the Domingos because under his
lease agreement with BPI-FSB, the latter cannot sublease the premises without
his written consent.
·
RTC
found for the Domingos, ordering defendants to pay damages solidarily and for
Cruz to reimburse the amounts to BPI and Villa. The CA affirmed in toto. Only
BPI-FSB elevated the case to the SC.
ISSUE #1: WON BPI-FSB and
villa should be solidarily liable. yes.
·
BPI-FSB:
It cannot be found solidarily liable with Villa for the latter’s breach of his
sublease with the Domingos because it was not privy to the agreement.
·
Villa
: not being a party to the second sublease contract between BPI-FSB and
the Domingos, he cannot be held responsible for the Domingos' failure to occupy
the premises
·
Neither
BPI-FSB nor Villa can escape liability by disclaiming privity to an agreement
with the Domingos.
·
Both
assured the Domingos that they would eventually be placed in possession of the
premises as sublessee.
·
Each
had their own respective agreements with the Domingos, albeit for a single
purpose. The two contracts are intertwined.
·
BPI-FSBs
failure to put the Domingos in possession of the premises as its sublessees, in
breach of its own contract with them, makes the Peaches solidarily liable with
Villa for the amount the Domingos had paid to enjoy the premises.
·
Villa,
on the other hand, though not a privy to the second sublease contract, had his
own contract with the Domingos which he had breached.
Issue #2: won cruz should
reimburse bpi-fsb and villa. yes.
·
Cruz
himself was guilty of breach wrt his basic lease agreement with BPI-FSB. The
sublease stipulation seemingly insulates Cruz from any liability in this case.
·
In
the construction of an instrument where there are several provisions or
particulars, such a construction is, if possible, to be adopted as will give
effect to all. The first sentence speaks of what the lessee can do, while the
second sentence refers to what it cannot do without the consent of the lessor.
·
The
act of sub-leasing in the first sentence may be done by the lessee without the
consent of the lessor but the act of assignment or transfer of rights in the
second sentence cannot be done by the lessee without the consent of the lessor.
Clearly, the parties intended a distinction between a sublease and an
assignment of rights.
·
The
subject agreement was not an assignment. Had it been one, then a written
consent of Cruz would have been required; but it was a mere sublease.
|
SUBLEASE
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ASSIGNMENT
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lessee continues to be liable to the lessor for
the payment of rent
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the assignee
steps into the shoes of the lessee who is thereupon freed from his
obligations under the lease
|
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the lessee retains an interest in the lease; he
remains a party to the contract;
|
lessee
makes an absolute transfer of his interest as lessee; thus, he disassociates himself
from the original contract of lease;
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the sublessee does not
have any direct action against the lessor;
|
the assignee has a direct action against the
lessor;
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can be done without the permission of the lessor
(unless there be an express prohibition).
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