RA 12252: What Foreign Investors Need to Know About the New 99-Year Land Lease Law

On September 3, 2025, President Ferdinand R. Marcos Jr. signed into law Republic Act No. 12252, which amends the Investors’ Lease Act (RA 7652). This new law is a game-changer for foreign investors, as it extends and strengthens the framework for long-term leases of private land in the Philippines.

As a CPA and law firm, we believe this development is crucial for our clients—foreign companies, local partners, landowners, and investors looking for stable, long-term opportunities in the country.

Key Provisions of RA 12252

1. Lease Period Extended to 99 Years

Foreign investors may now enter into land lease agreements for up to 99 years (from the previous maximum of 75 years). However, the President, upon recommendation of the Fiscal Incentives Review Board (FIRB) or other agencies, may impose a shorter term for projects involving critical infrastructure or national security concerns.

2. Investment Project Requirement

The leased land must be tied to an approved and registered investment project under Philippine investment laws such as the Foreign Investments Act (RA 7042), CREATE Law (RA 11534), or CREATE MORE Act (RA 12066). This ensures land use is aligned with national priorities.

3. Mandatory Registration of Lease Contracts

Lease contracts must be registered with the Registry of Deeds and annotated on the property’s title. Registration is the “operative act” that makes the lease enforceable against third parties. Once registered, leases cannot be altered or cancelled except through a proper court proceeding.

4. Project Commencement Deadline

Investors must commence their approved project within three (3) years of signing the lease. Failure to do so may lead to termination of the lease and revocation of incentives granted under the law.

5. Subleasing and Transferability

• Sublease: Allowed with the lessor’s consent unless expressly prohibited in the contract. Sublease agreements must also be registered with the Registry of Deeds.

• Transfer/Assignment: Leasehold rights can be sold, transferred, assigned, or used as collateral, but conditions and restrictions continue to apply when the buyer or creditor is also a foreign entity.

6. Penalties for Violations

Contracts that exceed the 99-year limit, misuse land for unauthorized purposes, or involve areas larger than permitted will be null and void ab initio. Both parties may face ₱1M–₱10M fines and/or 6 months to 6 years imprisonment. Corporate officers responsible for violations may also be held personally liable.

Why This Law Matters to Clients

For Foreign Investors

• Provides longer investment horizons and greater certainty for industries such as tourism, manufacturing, agriculture, energy, and real estate.

• Ensures stronger legal protection for lease contracts, reducing investment risk.

For Local Landowners

• Creates opportunities to lease land for high-value, long-term projects, while maintaining ownership of the property.

• Protects landowners through contract registration and termination safeguards.

For Businesses and Professionals

• Law firms must ensure airtight contracts that comply with RA 12252’s requirements to avoid penalties.

• CPAs must advise clients on the tax and reporting implications of long-term leases, subleasing, and use of leased land as loan collateral.

Strategic Considerations

• Due Diligence: Investors must carefully assess land use restrictions under the Comprehensive Agrarian Reform Law and the Local Government Code.

• Regulatory Compliance: Contracts should explicitly state project purpose, duration, and remedies for failure to commence projects.

• Project Viability: Tourism projects require at least USD 5 million investment, with 70% of funds infused within three years.

• Risk Management: Companies should plan for contingencies, as violations can result in nullity of contracts and criminal penalties.

What’s Next

The Department of Trade and Industry (DTI), through the Board of Investments (BOI) and the Land Registration Authority (LRA), will issue the Implementing Rules and Regulations (IRR) within 90 days of the law’s effectivity. These IRRs will clarify technical procedures for registration and compliance.

Final Thoughts

RA 12252 represents a major step toward making the Philippines more attractive to long-term foreign investments while protecting national interests. For foreign companies, this opens doors to sustainable projects backed by stronger legal safeguards. For landowners, it creates new opportunities to participate in economic growth.

As your trusted CPA and legal advisors, we can help you:

• Structure compliant land lease agreements

• Navigate investment registration and BOI/IPA approvals

• Manage tax and financial reporting obligations

• Protect your interests in subleasing, assignments, and financing arrangements

ra 12252.pdf

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