Since the passage of Republic Act (R.A.) No. 7652 or the Investors' Lease Act of 1993, foreign investors have been cautious about the strict limits on land ownership by non-Filipinos. Uncertainty in the rules often made long-term projects difficult to pursue. The enactment of R.A. No. 12252, which amends the Investors' Lease Act, marks a decisive shift—sending a strong signal of stability and openness. 

 

Under this new law, foreign investors can now lease private land for an aggregate period of 99 years, a significant increase from the previous 75-year cap. While the Constitution still prohibits foreign land ownership, long-term leasing now provides nearly a century of stability, giving investors the confidence to pursue larger projects and sustained growth in the Philippines.

 

What does the new law offer?

 

R.A. 12252 offers our investors both security and flexibility. Unlike R.A. 7652, Lease Agreements are now required to be registered with the Registry of Deeds to be considered valid and enforceable. Once registered, these contracts are protected by law and cannot be arbitrarily challenged or canceled, giving investors much-needed confidence that their rights will be respected and protected. 

 

Another significant feature of this new law is that it allows subleasing. Moreover, it also allows the leasehold rights under the long-term contract to be sold, transferred, assigned, or even used as security for loans. Such significant change in the new law gives foreign investors far greater freedom and flexibility in turning and using these leases into valuable and tradable assets. 

 

Foreign investors can maximize such feature of the new law by mortgaging their leasehold rights and using the funds they get to raise capital for new ventures or expand existing business operations. At the same time, they can take advantage of the flexibility offered by R.A. 12252 allowing them to close projects without forfeiting their investments, turning this long term lease agreements into both an instrument for growth and safeguard. This enables investors to seize opportunities with confidence while retaining the ability to recover the value if plans change.  

 

This significant change gives our investors the best of both worlds: security and liquidity.

 

Other Key Changes that Foreign Investors Should Know

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1. Registration: Other than registering with the Registry of Deeds, the foreign investor must have been approved and registered under the following applicable laws:

 

• R.A. No. 7042, or the Foreign Investment Act of 1991; and

• R.A. No. 11534, or CREATE, as amended by R.A. 12066, otherwise known as the CREATE MORE Act; 

 

The foreign investor should have also complied with the investment requirements prescribed by the appropriate Investment Promotion Agency (“IPA”).

 

2. Project Compliance: The leased area shall be used solely for the purpose of the approved and registered investment upon the mutual agreement of the parties. 

  

3. . Project Oversight: Agencies such as the Fiscal Incentives Review Board, Board of Investments, or the relevant IPA can require foreign investors to explain any delays and ensure that the project will commence within a reasonable period of time.

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4. Penalties: Contracts executed in violation of R.A. No. 12252 shall be considered null and void, and both contracting parties shall be punished by a fine of not less than P1,000,000.00 but not more than P10,000,000.00 or an imprisonment of six (6) months to six (6) years, at the discretion of the Court.

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Lasting Opportunities for Generations 

 

The enactment of R.A. No. 12252 can finally unlock the Philippines’ full potential as an investment destination. The country is sending a clear message to the world: we are open for business—not just for the short term, but for generations to come. R.A. No. 12252 demonstrates the Philippines’ commitment to attracting foreign capital while carefully safeguarding national interests, including the sovereignty of its land.

 

While R.A. No. 12252 indeed opens up exciting opportunities, navigating the legal and regulatory landscape requires careful planning. Lease agreements must be prepared accurately, registered properly, and structured in full compliance with Philippine laws. Investors should also consider the specific industries they are entering, as the President retains the discretion to impose shorter lease terms in sensitive areas.

 

To protect and maximize your investment, seek expert legal guidance. Contact us to learn how R.A, No. 12252 can support your long-term plans and ensure that your business is secured with properly executed lease agreements.