Dear PAO,
I am the owner of a three (3)-hectare parcel of land located in San Jose City, Nueva Ecija. Representatives of a foreign-owned corporation approached me and expressed their intention to lease my property for 99 years beginning January 2026 for the establishment of an eco-friendly resort. They further said that the contract will be notarized, registered, and annotated on my certificate of title. However, while I was conversing with one of the representatives, I overheard the others saying that if, after three or more years from the perfection of the contract, the project does not materialize, they intend to sublease the same property to another corporation even without my consent. They claimed that once registered, their lease would be “stable and irrevocable,” and that the government would be bound to protect their investment under its policy of liberalization. Should that happen, what rights do I have as the Filipino lessor, if any, against said foreign corporate lessee?
Accel
Dear Accel,
The answer to your question is found in Republic Act (RA) 7652, otherwise known as the Investors’ Lease Act, as amended by RA 12252. This law allows foreign investors to lease private lands subject to certain conditions, viz.:
“Section 4. Coverage. - Any foreign investor investing in the Philippines shall be allowed to lease private lands in accordance with the laws of the Republic of the Philippines subject to the following conditions:
“(1) The aggregate period of the lease contract shall not exceed ninety-nine (99) years: xxx;
“(2) The leased area shall be used solely for the purpose of the approved and registered investment upon the mutual agreement of the parties;
“xxx
“(5) The lease contract shall be registered with the Registry of Deeds of the province or city where the leased area is located and annotated on the certificate of title covering the leased area; and
“xxx.”
In addition thereto, there are limitations and other conditions that must be complied with, including the limit on the use of the leased property, sub-leasing, and period to commence activities, viz.:
“Section 5. Limitations. – xxx
“(3) Withdrawal of the approved and registered investment in the Philippines within the period of the lease contract entered into under this Act, or use of the leased area for the purpose other than that authorized, shall warrant the ipso facto termination of the lease contract without prejudice to the right of the lessor to be compensated for the damages the lessor may have suffered thereby; xxx
“Section 5-A. Sublease. - Unless there is an express publication in the lease contract, the lessee may subject the property with the consent of the lessor. The condition under Section 4 and 5 of this Act shall apply to the sublease contract.
“Section 6. Termination of Lease Contract. - In case of failure to commence the investment project within three (3) years from the signing of the lease contract, the FIRB, Board of Investments (BOI), or the relevant IPA, as applicable, shall order the lessee to explain the delay and if merited, require such lessee to commence the project within a reasonable period. Failure to comply with the order and to initiate the project within the period provided may, after due notice and hearing, cause the revocation of all entitlements granted under this Act.”
Applying the foregoing to your situation, Section 5 of the said Act clearly provides that the use of the leased area for the purpose other than that authorized shall warrant the ipso facto termination of the lease contract, without prejudice to your right, as lessor, to be compensated for any damages you may have suffered.
Your foreign-company lessee likewise may not sublease your property without your consent, unless such right to sublease is expressly stipulated in your contract. Finally, Section 6 of the said Act requires your lessee to commence its investment project within three (3) years from the signing of your lease contract. Otherwise, you may file a complaint before the Fiscal Incentives Review Board (FIRB) or the relevant investment promotion agency, which may result in the termination of your lease contract.
The State protects lawful investments only. Speculative holding, non-use, or use outside the declared purpose falls outside protected activity. A foreign entity’s violation of the lease contract may warrant the termination thereof.
We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.
