Contract of lease in violation of PH Constitution is void


Persida Acosta

Dear PAO,
Eddard is a foreigner and my live-in partner for 10 years. During our cohabitation, he constructed a house using his funds on a lot that he also bought but the deed of sale and the transfer certificate of title are all in my name. After the house was built, he drafted a contract that we both signed that I will be leasing to him the property for 25 years and renewable for another 25 years. The contract also provides that I cannot sell the property without his consent and, if in case the property will be sold, the proceeds shall be delivered to him. Further, in case a law will be passed authorizing foreigners to own land in the Philippines, I will execute a contract ceding the property to him. After our separation, he is now demanding that I vacate the property, or he will file a case against me. Do I have any right to the house and lot?

Dear Aila,
The general rule is foreigners are prohibited from owning private lands in the Philippines. This finds support under Section 7, Article XII of the 1987 Philippine Constitution, which states, “Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations or associations qualified to acquire or hold lands of the public domain.”

Relative thereto, Article 5 of the New Civil Code of the Philippines also provides that “acts executed against the provisions of mandatory or prohibitory laws shall be void, except when the law itself authorizes their validity.” In Article 1306 of this law, “the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy.” These provisions of law clearly provide the limitations to the freedom of the contracting parties to stipulate.

The contract of lease is a void contract because it is in circumvention of the prohibition under the Philippine Constitution. Please be guided by the decision of the Supreme Court in the case entitled Fullido vs. Grilli (G. R. No. 215014, February 29, 2016), where Associate Justice Jose Mendoza said:

“Xxx xxx xxx Grilli had been empowered to deprive Fullido of her land’s possession, control, disposition and even its ownership. The jus possidendi, jus utendi, jus fruendi, jus abutendi and, more important, the jus disponendi—the sum of rights which composes ownership—of the property were effectively transferred to Grilli who would safely enjoy the same for over a century. The title of Fullido over the land became an empty and useless vessel, visible only in paper, and was only meant as a dummy to fulfill a foreigner’s desire to own land within our soils. It is disturbing how these documents were methodically formulated to circumvent the constitutional prohibition against land ownership by foreigners. The said contracts attempted to guise themselves as a lease, but a closer scrutiny of the same revealed that they were intended to transfer the dominion of a land to a foreigner in violation of Section 7, Article XII of the 1987 Constitution. Even if Fullido voluntary executed the same, no amount of consent from the parties could legalize an unconstitutional agreement. The lease contract and the MOA [memorandum of agreement]do not deserve an iota of validity and must be rightfully struck down as null and void for being repugnant to the fundamental law. These void documents cannot be the source of rights and must be treated as mere scraps of paper.”

Applying this decision to your case, the terms of the contract limiting your right to exercise the acts of ownership over the property are void, because it is in contravention of the prohibition in the Constitution. Eddard, therefore, cannot enforce the same against you, because a void contract can never be a source of any right.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to


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