Guide to the New 99-Year Lease Law (Republic Act No. 12252)

The Philippine government has taken a significant step toward increasing foreign direct investment with the enactment of Republic Act No. 12252. While the constitutional restriction on foreign ownership of private land remains unchanged, this new law amends the “Investors’ Lease Act” (Republic Act No. 7652). It focuses on liberalizing the lease of private lands by foreign investors and establishing the stability of long-term lease contracts.

For foreign entities looking to establish operations in the Philippines, this legislation provides a more flexible and secure environment for land tenure.

In this article, we will outline the key provisions of RA No. 12252. We will cover who is eligible to lease property under this new regulation, what are the requirements, and restrictions for property ownership in the Philippines.  

Understanding Property Ownership in the Philippines for Foreigners

For decades, foreign investors faced limitations that often created uncertainty for long-term, capital-intensive projects. Before RA 12252, the governing law for foreign land leases in the Philippines was Republic Act No. 7652. Otherwise known as the Investors’ Lease Act, foreign investors could lease private land for an initial term of up to 50 years, renewable for an additional 25 years upon approval. 

However, this structure presented two main challenges for significant, multi-decade projects:

1. Limited Term: A 75-year cap was often insufficient to guarantee a full return on investment for major infrastructure, manufacturing, or tourism projects.
2. Renewal Uncertainty: The need for a formal renewal process after 50 years introduced a point of administrative and legal uncertainty that could deter investors requiring absolute long-term stability. Foreigners not covered by this Act were bound by even stricter limitations under Presidential Decree No. 471 and other existing laws.

Republic Act No. 12252 was enacted to address these limitations by liberalizing lease terms, simplifying renewal requirements, and expanding permissible uses of leased land. This aligns with the Philippine government’s policy to attract foreign investments while protecting national patrimony and security.

Key Provisions of Republic Act No. 12252

The cornerstone of RA 12252 is the extension of the maximum lease term for private lands. Instead of a 50 year (plus a 25-year renewal), you can enter a leasehold contract to a single  to a single, non-renewable term of up to 99 years. This change removes the administrative burden and uncertainty tied to lease renewals, providing you with a stable, long-term tenure.

RA No. 12252 also covers the following to support longer lease terms for foreigners:

• Eligible lessees: As a foreign investor, you must have investments approved and registered under the Foreign Investments Act or recognized Investment Promotion Agencies. Non-investor foreigners remain subject to existing laws like PD No. 471.
• Purpose and scope: Leased lands must be used exclusively for the approved and registered investment, which can include sectors such as industry, commerce, tourism, and agriculture.
• Lease registration: All lease contracts must be registered with the Registry of Deeds and annotated on the land title to ensure transparency and enforcement.
• Subleasing: RA 12252 permits subleasing provided it is part of the original lease agreement and duly registered with the Registry of Deeds.
• Termination: Lease termination can occur ipso facto (as a direct result of) if the foreign investor withdraws the investment or uses the land for unauthorized purposes, with lessors entitled to damages.
• Penal provisions: Violations of the act, including lease term overruns or illegal land use, carry severe penalties ranging from fines of PHP 1 million to PHP 10 million and imprisonment of six months to six years.

Who is Eligible?

To be eligible, you must have investments approved and registered under the Foreign Investments Act or recognized Investment Promotion Agencies such as BOI (Board of Investment) or PEZA (Philippine Economic Zone Authority). Companies under Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act (RA 11534) and the CREATE MORE Act (RA 12066) can also benefit from RA No. 12252. 

The purpose of the lease must also be directly aligned with promoting productive economic endeavors. The law allows for long-term leases in the following sectors:

• Industrial estates, factories, and assembly or processing plants.
• Agro-industrial enterprises and land development for commercial use.
• Tourism (hotels, resorts, destination infrastructure).
• Agriculture, agro-forestry, and ecological conservation.

Lease Termination and Penalties

To ensure compliance and protect national interest, RA No. 12252 contains clear grounds for termination and severe penalties for non-compliance. The lease contract shall be automatically terminated (ipso facto) in the event of:

1. Withdrawal of Approved Investment: If the foreign investor withdraws their approved and registered investment in the Philippines within the lease period.
2. Unauthorized Use: If the leased area is used for a purpose other than the one authorized for the registered project.

The relevant government agencies, such as the Fiscal Incentives Review Board (FIRB) or BOI, can require you to explain delays and commence the project if it has not started within three (3) years from the signing of the lease contract. Failure to comply with a commencement order and subsequent non-initiation of the project may lead to the revocation of all entitlements granted under the Act.

Any contract executed in violation of the prohibited acts (e.g., exceeding the 99-year limit, illegal land use) will be considered null and void ab initio (from the beginning). Both parties face substantial penalties:

• Fine: Not less than PHP 1,000,000.00 but not more than PHP 10,000,000.00.
• Imprisonment: Six 6 months to six 6 years, at the court’s discretion.

What Does this Mean for Foreign Investors?

The 99-year lease term granted by RA 12252 offers security for foreign investors. It enables long-term project planning, and financial commitments without fear of abrupt lease expiration or complex renewal process. By clearly defining eligibility and permissible uses, it encourages investment in priority sectors with government incentives. The ability to sublease, subject to registration and consent, also gives you flexibility to manage large or multiple holdings.

However, the law emphasizes compliance with investment registration, mandated land use restrictions, and strict enforcement of penalties to preserve Filipino landownership and guard national interests. As a foreign investor you must undertake thorough due diligence, ensure registration of leases and investments, and adhere strictly to the stated terms to avoid legal issues.

How to Secure a 99-year lease under RA No. 12252

To help you secure a 99-year lease under RA No. 12252, Emerhub can guide you through the multi-step process:

1. Project Registration: We can help you register your investment under the Foreign Investments Act (or other relevant laws) with the appropriate IPA (e.g., BOI, PEZA).
2. Lease Contract Drafting: Together with our network of legal professionals, we can assist in executing a lease contract that clearly specifies the technical description of the property, the exact date of commencement, and the maximum 99-year duration. The leased area must be reasonably required for the project’s purpose.
3. Required Documentation: We will prepare all the necessary proof of the approved and registered investment, along with evidence of preparatory acts for the project.
4. Registration and Annotation: Our local experts can liaise with the Registry of Deeds to register and annotate the Certificate of Title. This is the step that provides the full legal protection against third-party claims.

Our end-to-end support can help from property due diligence, lease negotiation, and structuring lease agreements under Republic Act No. 12252. We can help you manage lease registration with the Registry of Deeds to ensure legal enforceability and help you meet requirements and investment promotion criteria.

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