Overview

In the Philippines, a highway right-of-way (ROW) is generally property devoted to public use—the land and space reserved for roads, sidewalks, shoulders, drainage, and related facilities. When a building, fence, canopy, sign, ramp, parking layout, or business extension encroaches into that ROW, it is typically an unauthorized occupation of property for public use.

That public-law reality drives the core answer:

A landlord cannot validly “rent out” or charge rent specifically for a portion of a highway right-of-way that the landlord does not own or control as private property. Any attempt to increase rent because the tenant is using ROW space is legally risky and often unenforceable for the ROW portion—even if the tenant is in fact benefiting from it.

However, there are important nuances. A landlord may increase rent for the lawful leased premises (the private property) subject to the contract, rent-control rules (if applicable), and general law on leases. The illegal ROW use is a separate problem that can trigger demolition/clearing and liability—usually regardless of what the landlord and tenant agree to.

This article explains the “why,” the relevant legal frameworks, common scenarios, and practical steps.

1) What exactly is a “Highway Right-of-Way”?

A. ROW as property for public use

Under Philippine property concepts (particularly the Civil Code’s classification of property), roads, streets, and similar public works are treated as property of public dominion—intended for public use and generally outside ordinary private commerce. This matters because:

Private parties cannot acquire ownership of public roads/streets by occupation.
Public-use property is typically inalienable (cannot be sold/leased like private property) unless the government has legally withdrawn it from public use and disposed of it following law.

B. The ROW “strip” is often wider than what you see

Even if the paved road looks narrow, the legal ROW may include:

shoulders and sidewalks,
drainage easements,
utility corridors,
future road-widening reserves.

So what looks like “extra space” in front of a building may still be ROW.

C. Key Philippine laws and rules that commonly intersect with ROW

While details vary by locality and road type, these frequently come up:

Civil Code (property of public dominion; obligations; unjust enrichment; lease principles)
R.A. 10752 (Right-of-Way Act) and its implementing rules (for acquisition and management of ROW for national government infrastructure)
Local Government Code (R.A. 7160) (LGU authority over local roads, regulation, permits, and enforcement)
National Building Code (P.D. 1096) and local zoning/ordinances (setbacks, projections, building lines, encroachments)
Road-clearing and anti-obstruction enforcement by LGUs/DPWH and related administrative issuances

2) The key legal principle: you cannot lease what you do not own (or have authority to lease)

A. Lease basics

A lease is a contract where one party (lessor/landlord) binds themselves to give another (lessee/tenant) the enjoyment or use of a thing for a price and a period.

But the landlord must be able to lawfully confer that enjoyment.

B. Why ROW is different

If a portion of “space” is actually part of a highway ROW:

It is typically not privately owned by the landlord (even if it is adjacent to the landlord’s titled lot).
The landlord usually has no legal authority to give a tenant the right to occupy it.
A “lease” or rent increase specifically charging for ROW use can be treated as void or unenforceable for that portion, because the object/cause is legally defective (it involves unauthorized private use of public property).

C. Contract language does not magically legalize an encroachment

Even if a lease contract says:

“Tenant may use the frontage/sidewalk,” or
“Tenant shall pay additional rent for extended area,”

that does not bind the government and does not legalize occupation of public ROW. At best, it allocates risk/cost between landlord and tenant—but it can still be struck down to the extent it attempts to monetize an illegal occupation.

3) So can the landlord increase rent because of the encroaching space?

The clean rule

If the “additional space” is on a highway right-of-way, the landlord generally cannot lawfully increase rent for that ROW portion because the landlord has no private right to lease it.

What the landlord can do legally

A landlord may still:

Increase rent for the private premises (the titled/legally possessed property), if allowed by:
- the lease contract (escalation clauses, renewal terms),
- general law on leases and obligations, and
- rent-control rules, if applicable.
Demand that the tenant stop the encroachment (especially if it exposes the landlord/property to enforcement action or liability).
Require compliance with permits (business permits, building permits, occupancy permits, sign permits) as a condition in the lease.

What the landlord cannot safely rely on

A landlord should not assume they can:

“Charge extra rent for the sidewalk/ROW,”
“Authorize” the tenant to occupy ROW,
Treat ROW as a negotiable add-on like a storeroom or extra lot space.

4) Rent Control: additional constraints (when applicable)

If the unit falls under rent-control coverage (commonly for certain residential units under R.A. 9653 and extensions/amendments), rent increases may be capped or regulated for covered units and periods.

Important cautions:

Coverage depends on factors like type (typically residential), location, and monthly rent threshold, which have changed over time through amendments/extensions.
If rent control applies, even a legitimate rent increase for the private premises may be limited.

ROW-related “extra rent” does not become lawful just because it’s labeled a “fee”—especially if it’s effectively rent for space the landlord cannot lease.

5) Liability and enforcement: who gets in trouble for the encroachment?

A. Government enforcement can be direct and swift

Encroachments on ROW may be subject to:

notices to remove,
demolition/clearing operations,
penalties or permit cancellations,
disallowance of occupancy or business operations in severe cases.

The enforcing authority may be:

the LGU (city/municipality) for local roads and general anti-obstruction enforcement, and/or
DPWH for national roads and highways, depending on classification and local arrangements.

B. Landlord vs tenant: who is responsible?

It depends on facts:

If the encroaching structure is part of the building itself (e.g., building footprint, permanent stairs/ramp, fence line, fixed canopy built by owner):

The owner/landlord is commonly a primary target.

If the encroachment is a tenant’s operational extension (e.g., tables, display racks, temporary awnings, parking cones, signage placed on sidewalk):

The tenant/business operator is commonly a primary target.

But both can be implicated:

The landlord for allowing/benefiting from illegal configuration,
The tenant for actual use/occupation.

A lease clause shifting responsibility to the tenant may help the landlord recover costs from the tenant—but it does not prevent government enforcement.

6) Common real-world scenarios (and how the rent issue plays out)

Scenario 1: Tenant “extends” business to sidewalk/ROW (tables, displays, parking)

Landlord increases rent “because you’re using extra space.”
Legal risk: landlord is charging for something they can’t legally lease.
Likely outcome if disputed: landlord may enforce rent increase only if tied to the private premises or if it’s part of a broader renegotiation—not as rent for ROW.
Best practice: landlord should require tenant to stop ROW use and comply with permits.

Scenario 2: The building itself encroaches (fence/building line overlaps ROW)

Tenant is leasing a space that is partially illegal or exposed to clearing.
If the tenant loses usable area due to enforcement, tenant may claim:
- reduction of rent,
- rescission/termination,
- damages, depending on representations, warranties, and fault.
Landlord increasing rent in this situation is especially problematic because the premises are already impaired.

Scenario 3: Boundary uncertainty (no survey; “everyone uses the frontage”)

Parties assume the frontage is private, but it’s actually ROW.
If confirmed as ROW, any “rent for frontage” becomes legally shaky.
This is where geodetic survey and road-right-of-way verification matter most.

Scenario 4: A “permit” exists for limited use of frontage

Sometimes LGUs issue temporary permissions related to sidewalk use, loading bays, or other regulated activities (highly dependent on local ordinances and road classification). Even then:

The permission is regulatory, not a private property lease.
The landlord still generally cannot convert it into private rent, unless the legal instrument clearly grants a transferable private right (uncommon for true highway ROW).

7) Contract law angles: what happens if the landlord already collected “ROW rent”?

A. Possible unenforceability / void stipulation (ROW portion)

A tenant disputing “ROW rent” may argue that the landlord had no right to lease that area, so the stipulation has no effect.

B. Unjust enrichment risk

If the landlord collects money for space the landlord cannot legally confer, the tenant may invoke principles against unjust enrichment—especially if the tenant is later penalized/cleared and the “benefit” disappears.

C. Practical litigation reality

Even when legal theory favors the tenant, outcomes depend on:

what the contract says,
proof of what space was actually included,
whether the tenant knowingly insisted on/benefited from the encroachment,
local enforcement history,
equity and good faith.

8) Tenant remedies if enforcement removes the encroaching area

If government action removes the encroaching portion and the tenant’s usable area materially shrinks, potential remedies (fact-dependent) include:

rent reduction (if the leased premises is effectively smaller than what was contracted or represented),
termination/rescission if the purpose of the lease is substantially frustrated,
damages if there was misrepresentation (e.g., landlord represented the space as legally usable),
recovery of certain costs, depending on fault and contract allocation.

If the tenant created the encroachment without landlord permission, the landlord may have remedies against the tenant for:

breach of lease,
indemnity for fines/costs,
restoration obligations.

9) Landlord remedies if the tenant is encroaching

If the tenant’s encroachment threatens enforcement action, the landlord can:

issue notice to comply / cure period,
demand removal of obstructions,
treat it as a lease violation (illegal activity, nuisance, violation of permits),
require indemnity for government penalties and attorney’s fees (if contract allows),
terminate the lease for cause (subject to lawful process).

10) Practical checklist (Philippine context)

Step 1: Verify whether it is truly ROW

Obtain title and lot plan (technical description).
Compare with road ROW plans (LGU engineering office and/or DPWH district office depending on road classification).
Consider a geodetic survey with monuments and building line verification.

Step 2: Identify what is encroaching

Permanent: building footprint, fence, ramp, canopy supports, signage structures.
Semi-permanent: planters, parking barriers, kiosks.
Operational: tables, displays, parked vehicles used as extension, loading practices.

Step 3: Assess legal exposure

Is there a pending road-widening project?
Are there active clearing operations in the area?
Are business permits/occupancy permits at risk?

Step 4: Fix the lease arrangement

Good lease drafting typically:

defines the leased premises by survey plan/area, not “including frontage,”
prohibits encroachment and requires compliance with laws/permits,
allocates responsibility for violations and removals,
clarifies what happens to rent if usable area is reduced by enforcement.

Step 5: Don’t price illegal space

If renegotiating rent:

base pricing on the lawful private area and lawful amenities,
treat any frontage “benefit” only as market context, not as a separately leased ROW.

11) Bottom line

Charging or increasing rent specifically for highway right-of-way space is generally not legally sound because ROW is typically public-use property that a private landlord cannot lease.
Rent increases for the lawful private premises may be allowed if consistent with the contract, general lease law, and rent-control rules (when applicable).
Encroachment is primarily a compliance/enforcement issue, and government clearing can override private arrangements at any time.
The safest path is to verify boundaries, stop encroachments, and structure rent around lawful private property, with clear lease clauses allocating risk and compliance duties.

Important note

This is general legal information for the Philippine context and not legal advice. If you want, paste your lease clause (or describe the property setup and what exactly “encroaches”—awning, sidewalk seating, fence line, parking, etc.), and I’ll rewrite the analysis to fit your specific fact pattern and suggest lease language that avoids invalid “ROW rent” while protecting the landlord or tenant (whichever side you’re on).