Subleasing legally: head lease, sublease, and what must match

The head lease must permit it

Under the Civil Code the lessee may sublet unless the contract prohibits it (Art. 1650) — but most Philippine leases do prohibit it without consent. Read the head lease. If it is silent, you may sublet; if it prohibits, you need written consent; if it permits, note the conditions (a share of sublease income, approval of subtenants, term limits). Get consent in writing and keep it with the head lease.

The sublease must fit inside

A sublease cannot give more than the head lease gives. Term: the sublease must end on or before the head lease ends (a sublease beyond the head term is void for the excess). Use: the same or narrower. Alterations: none the head lease forbids. If the head lease ends early — the owner terminates for your breach — the subleases end with it, and the subtenants' claims are against you. Build that risk into the sublease: a clause disclosing that the lessor holds under a head lease, and what happens if it ends.

Liability runs in two lines

The subtenant is liable to you; you are liable to the owner. The owner has no contract with the subtenant but, under Art. 1652, the subtenant is subsidiarily liable to the owner for rent you fail to pay, up to what the subtenant owes you. The owner may also act directly against a subtenant for misuse of the property. Say all this plainly in the sublease's recitals: who the lessor is, under what right, and that the owner is not a party.

Tax points

You are a lessor to your subtenants: income, receipts, the usual. You are a lessee to the owner: if you are a company or a designated withholding agent, you withhold 5% on the head-lease rent and give the owner a 2307. Your head-lease rent is your largest deductible expense. Two sets of books lines, one platform.

Recording it

The owner is a supplier; the head-lease rent is a repeating expense against the place, split across units as each unit's running cost. Your true margin per unit is then visible — rent in minus head-lease share minus the rest. The head lease and the consent are documents on the place. The default sublease template frames the lessor as one who "lawfully holds and administers" the premises, without naming the owner, and is subordinate to the head lease.