The Philippines has enacted a significant change to its foreign investment landscape with Republic Act No. 12252, a new law liberalizing private land leasing for foreign nationals. Signed into law on September 3, 2025, and taking effect 15 days after its full publication, the legislation aims to attract long-term investments by allowing lease terms of up to 99 years. This represents a substantial shift from previous regulations and is expected to impact sectors like tourism, manufacturing, and agriculture.
What is Republic Act No. 12252 and Why Does it Matter?
Republic Act No. 12252 fundamentally alters the rules governing how foreign investors can lease private land in the Philippines. Previously, restrictions on lease duration hindered large-scale, long-term projects. The new law addresses this by providing greater security of tenure, making the Philippines a more attractive destination for foreign capital. This is particularly important given recent economic data showing a need to boost foreign direct investment (FDI).
Key Changes Under the New Law
The most significant change introduced by RA 12252 is the extension of permissible lease terms. Foreign investors can now lease private land for a period of up to 99 years, a considerable increase from the previous limitations. However, it’s crucial to understand that this law pertains to leasing, not outright ownership, as the Philippine Constitution restricts foreign ownership of land.
Eligibility and Requirements
Not all foreign investors will automatically qualify for these extended lease terms. RA 12252 stipulates that eligibility is tied to having approved and registered investments through channels like the Foreign Investments Act of 1991 (RA 7042), the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act (RA 11534) and its amendment, CREATE MORE (RA 12066), or through relevant Investment Promotion Agencies (IPAs). This ensures that land leasing is directly linked to productive economic activity.
Furthermore, any lease agreement must be registered with the Registry of Deeds and annotated on the land title to be legally binding and enforceable against third parties. This registration process adds a layer of transparency and security to the transactions.
Permitted Land Use and Restrictions
While the law expands leasing opportunities, it doesn’t remove all restrictions. The use of leased land must align with the approved investment project. According to the law, potential projects include industrial parks, tourism estates, agro-industrial ventures, and sustainability initiatives. Subleasing is permitted, but only with the explicit consent of the landowner and adherence to the same registration and annotation requirements.
Safeguards and Oversight
RA 12252 incorporates several safeguards to prevent abuse and ensure responsible land use. Lease rights are contingent upon maintaining registered investments, and the law establishes clear penalties for violations. Contracts exceeding the 99-year limit or involving prohibited land uses are considered void from the outset. Responsible officers could face fines ranging from ₱1 million to ₱10 million, and/or imprisonment of six months to six years.
Oversight is shared among several agencies. IPAs and the Board of Investments (BOI) will monitor project compliance, while the Foreign Investment Review Board (FIRB) will review incentives and may recommend limitations on lease duration for national security concerns. Disputes will ultimately be resolved through the Philippine court system, with registered leases receiving strong legal protection.
Impact on Existing Leases
The new law does not retroactively affect existing land lease contracts registered under the previous regulations (RA 7652). These leases will continue to be valid under their original terms. However, any renewal or extension of an existing lease will be subject to the provisions of RA 12252. Landowners and lessees seeking longer terms will need to comply with the new requirements.
Targeted Sectors and Investment Size
The law specifically targets sectors deemed crucial for economic growth. Foreign investors can lease land for a wide range of projects, including industrial estates, factories, and agro-industrial ventures. Tourism projects are also included, with a minimum investment requirement of $5 million for certain developments. The maximum land area that can be leased for agribusiness purposes is 1,000 hectares (approximately 2,471 acres).
Looking Ahead
The implementing rules and regulations (IRR) for RA 12252, jointly issued by the Philippine Board of Investments, the Department of Trade and Industry, and the Land Registration Authority, will be critical in clarifying the practical application of the law. The effectiveness of RA 12252 in attracting significant foreign direct investment remains to be seen, and will likely be influenced by broader economic conditions and the continued implementation of other investment-related reforms. Monitoring FDI inflows in the coming quarters and observing the number of new long-term lease agreements will be key indicators of the law’s success.
