G.R. No. L‑2395
December 29, 1906

FACTS
– On 25 Sept 1901 the plaintiff, Doroteo Cortes, leased a Manila tract to lessees Dy‑Jia and Dy‑Guico for five years (1 Oct 1901 30 Sept 1906).
– Clause E of the lease prohibited sub‑leasing or mortgage and provided that any breach would rescind the lease “as if the five‑year term had expired,” the landlord then becoming owner of all buildings erected.
– The lessees possessed the land and erected a building costing about ₱11,000.
– Defendant Li Tsung Ling (appearing under the name Dy‑Chuanding) claimed that Dy‑Jia and Dy‑Guico were merely his agents and that he, Ling, was the true lessee/owner of the building.
– On 31 Dec 1902 Dy‑Guico executed a written declaration that the building belonged to Ling and that Ling would pay the lease rent to Cortes. On 18 May 1903 Dy‑Jia made a similar declaration and assigned his lease interest to Ling.
– Ling paid rent to Cortes from Nov 1902 to Jan 1904; receipts were made out in the names of Dy‑Jia and Dy‑Guico.
– On 8 Jan 1904 Ling’s lawyer informed Cortes that the lessees were Ling’s agents. Cortes, after investigation, acknowledged the transfer and accepted Ling’s rent for Jan 1904, issuing a receipt in Ling’s favor.
– On 16 Jan 1904 Cortes sued to rescind the lease as of 12 Nov 1902 and to claim ownership of the building. The trial court ruled for Cortes; Ling appealed and sought a new trial, which was denied, leading to a bill of exceptions.

ISSUE
Whether a lessor may, by acceptance of rent from an assignee, be deemed to have consented to the lessees’ assignment of their leasehold interest despite a contractual prohibition (Clause E) and, consequently, whether the lease may be forfeited for that alleged violation.

RULING
– The Supreme Court held that an assignment of a leasehold by lessees is valid if the lessor consents, and such consent need not be expressed in writing; any conduct indicating recognition of the new landlord‑tenant relationship suffices.
– By receiving Ling’s rent in January 1904 and issuing a receipt that identified the payor as the assignee, Cortes manifested knowledge of and acceptance of the assignment, thereby giving implied consent.
– Once consent is established, the lessor cannot later invoke Clause E to forfeit the lease for the same act.
– The defendants’ counter‑claim seeking to strike Clause D (removal of buildings at lease termination) and replace it with a provision for compensation or lease extension was dismissed as meritless.
– The judgment of the lower court was reversed; the complaint was dismissed, and Ling was absolved of liability. Costs of the first instance were awarded to Ling; no costs were awarded in the Supreme Court.

Key Principle
Implied consent of a lessordemonstrated by acceptance of rent from an assigneevalidates the assignment of leasehold rights and bars the lessor from later enforcing a forfeiture clause that the assignment breaches.