The question of whether a tenant can unilaterally designate a “successor” (someone who will automatically take over the lease upon the tenant’s death or incapacity) is a recurring issue in Philippine rental practice. Despite its frequency in landlord–tenant disputes, there is no single provision in the Civil Code or in the Rent Control Act that expressly grants or prohibits such a right. The answer therefore depends on a combination of the Civil Code provisions on lease, jurisprudence of the Supreme Court, the express terms of the contract of lease, and, to a limited extent, the Estate Settlement Rules under the Rules of Court.

1. General Rule: Lease is Personal and Does Not Automatically Survive the Death of the Lessee

Under Philippine law, a contract of lease is intuitively personal (intuitu personae) in nature unless the contrary is stipulated.

Art. 1643, Civil Code
“In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite…”

Art. 1311, Civil Code (on relativity of contracts)
“Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law…”

The Supreme Court has repeatedly ruled that the contract of lease is, as a rule, extinguished upon the death of the lessee because the lessor chose the lessee based on trust and confidence (intuitu personae).

Leading cases:

Duellome v. Gotico (1957) – “Death of either the lessor or the lessee ordinarily terminates the lease.”
Santos v. Court of Appeals (G.R. No. 108579, 17 September 1993) – “The lease is generally a personal right and terminates upon the death of either party unless there is a stipulation to the contrary.”
Heirs of Dimacali v. IAC (G.R. No. 69668, 18 May 1990) – Reaffirmed the general rule.

Therefore, in the absence of any stipulation, the heirs or any “designated successor” of the tenant have no automatic right to continue occupying the premises after the tenant’s death.

2. Exception No. 1: Express Stipulation in the Contract of Lease

The parties are free to stipulate that the lease shall continue in favor of the lessee’s heirs or a specifically named successor.

Art. 1308, Civil Code
“The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.”

Art. 1315, Civil Code
“Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.”

Supreme Court recognition:

Philippine Banking Corporation v. Lui She (21 September 1987) – “A stipulation pour autrui in a lease contract making the lease binding upon the heirs of the lessee is valid.”
Integrated Realty Corp. v. PNB (1989) – A clause stating “this lease shall be binding upon the heirs, successors and assigns of the parties” was upheld.

Practical clauses commonly upheld by courts:

“This lease shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of the parties.”
“In case of death of the Lessee during the term, the lease shall automatically pass to [name of person] or to the lessee’s compulsory heirs.”

If such a clause exists, the landlord cannot eject the successor simply because the original tenant died.

3. Exception No. 2: Sublease or Assignment with Consent of the Lessor

Art. 1649, Civil Code
“The lessee cannot assign the lease without the consent of the lessor, unless there is a stipulation to the contrary.”

If the original tenant, during his lifetime, validly assigned the lease or created a sublease in favor of another person with the landlord’s written consent, the assignee/sublessee steps into the shoes of the original tenant and the lease continues.

4. Exception No. 3: Residential Leases Covered by the Rent Control Act (R.A. 9653 as amended)

Section 11 of R.A. 9653 (Rent Control Act of 2009, extended indefinitely by R.A. 11667 in 2022) lists the grounds for judicial ejectment. Death of the lessee is not one of them.

While the Rent Control Act does not expressly grant succession rights, Metropolitan Trial Courts and the Supreme Court have consistently ruled that, for as long as none of the legal grounds for ejectment exist, the family members who were living with the tenant at the time of death may continue occupying the premises and paying rent. This is not strictly a “succession to the lease” but a recognition of the public policy against mass eviction of families.

Key decisions:

Heirs of Jose Sy v. Nevalga (G.R. No. 211602, 12 July 2017) – Family members who were co-residents at the time of the lessee’s death were allowed to stay and pay rent directly to the lessor.
Spouses Yu v. Pelayo (G.R. No. 222581, 6 March 2019) – “The death of the lessee does not automatically terminate a residential lease when the premises continue to be used as the family home.”

Note: This protection is limited to residential units covered by rent control (currently rent not exceeding ₱10,000/month in NCR and highly urbanized cities as of 2025). Commercial leases are not covered.

5. What Happens to the Security Deposit and Advance Rents?

Upon the death of the lessee without a succession clause, the lessor is entitled to terminate the lease, but must return the unused portion of advance rents and the security deposit (minus lawful deductions) to the estate of the deceased tenant (Art. 1658 in relation to Art. 1311, Civil Code).

6. Can a Tenant Unilaterally Designate a Successor Without Landlord Consent?

No. A clause inserted by the tenant alone (e.g., in a letter or a separate document) stating “I designate my live-in partner / nephew / friend as my successor” has no binding effect on the landlord if the original contract is silent or contains a contrary stipulation.

The Supreme Court has struck down such unilateral designations in:

Go v. Intermediate Appellate Court (G.R. No. 73101, 31 July 1987)
Chua Tee Dee v. CA (G.R. No. 135721, 28 May 2004)

7. Practical Recommendations

For tenants who wish to protect a companion or family member:

Negotiate and insert an express succession clause in the written contract of lease before signing.
If the contract is already existing, execute a written Amendment or Addendum signed by both landlord and tenant containing the succession clause.
Have the amendment notarized (not strictly required, but adds evidentiary weight).
If the landlord refuses, the tenant may, during his lifetime, assign or sublease to the desired successor with the landlord’s written consent (Art. 1649).

For landlords who wish to prevent automatic succession:

Insert a clause: “This lease is personal to the Lessee and shall terminate upon the Lessee’s death or permanent incapacity. No succession, assignment or sublease is allowed without the prior written consent of the Lessor.”
Avoid boilerplate clauses that say the lease is binding on “heirs, successors and assigns.”

Conclusion

Philippine law does not grant tenants an automatic or inherent right to designate a successor in a lease agreement. The lease generally terminates upon the tenant’s death unless: (a) there is an express stipulation in the contract allowing succession or binding the heirs/successors,
(b) there was a valid assignment or sublease during the tenant’s lifetime, or
(c) in rent-controlled residential units, the co-resident family members continue paying rent and no ground for ejectment exists.

The safest and clearest way to create succession rights is through a written stipulation signed by both landlord and tenant. Absent such a stipulation, any unilateral designation by the tenant is legally ineffective against the landlord.