A New Era for Foreign Investors Leasing Private Land

Republic Act No. 12252 seeks to liberalize the lease of private lands by foreign investors. It amends the Investors’ Lease Act (RA No. 7652) to strengthen the stability and reliability of investors’ lease contracts, in line with the State’s policy of encouraging foreign investment. The law adopts a more flexible framework for granting long-term leases on private lands, particularly those supporting priority projects such as industrial estates, factories, tourism, and agriculture, with the aim of providing a stable and secure environment for investors.

Under RA 12252, foreign investors may lease private land for a period not exceeding ninety-nine (99) years. A shorter term may be prescribed for vital services or critical infrastructure projects upon recommendation of the Fiscal Incentives Review Board (FIRB). The leased property must be used exclusively for the approved and registered investment purpose, and the land area must be reasonable and commensurate with the scale of the investment. The investor must also have a duly approved and registered investment under applicable laws.

All lease contracts must be registered with the Registry of Deeds, as registration constitutes the operative act that renders the lease binding against third parties. A registered lease contract cannot be challenged collaterally and may only be modified through a direct legal proceeding.

The law further allows the transfer, assignment, or use of leasehold rights as loan security, provided that any succeeding foreign lessee remains bound by the original lease terms. Unauthorized land use or withdrawal of investment automatically terminates the contract.For tourism-related projects, a minimum investment of Five Million US Dollars (USD 5,000,000.00) is required. Failure to commence the project within three (3) years authorizes the FIRB or other concerned agencies to take appropriate action. Any violation—such as exceeding the allowable lease term—renders the contract null and void ab initio and may subject the parties to fines or imprisonment.