How Foreign Investors Can Secure a 99-Year Land Lease: How and Why Republic Act No. 12252 Changes the Game for Industrial Projects
Introduction: why long-term land leases matter for foreign-led industrial build-outs
Foreign investors remain generally barred from owning private land in the Philippines, but long-term leasing is a legally recognized way to secure site control for factories, industrial estates, processing plants, logistics hubs, and similar projects. Republic Act No. 12252 (approved September 3, 2025) materially improves the investment climate by extending the allowable aggregate lease term for qualified foreign investors to up to ninety-nine (99) years, while also strengthening lease stability through registration rules and clearer enforceability against third parties.
Governing legal framework: constitutional policy, long-term leasing statutes, and land registration
Constitutional baseline. Philippine policy reserves ownership of private lands to Filipino citizens and to corporations/associations with at least 60% Filipino ownership. The Supreme Court has repeatedly treated arrangements that effectively transfer ownership rights to foreigners as void, even when packaged as long-term contracts.
Leasing remains permitted. The Supreme Court recognized that constitutional disqualification from land ownership does not automatically disqualify a foreigner from leasing, as leasehold does not transfer ownership. This principle is reflected in Smith, Bell & Co., Ltd. v. Registrador de Titulos de Davao (G.R. No. L-7084, March 24, 1954), which upheld that foreigners may lease private land, historically subject to limits (often discussed in relation to 99-year periods).
Investors’ Lease Act and the 2025 amendments. Republic Act No. 7652 (approved June 4, 1993) authorized qualified foreign investors to obtain long-term leases for enumerated investment purposes. Republic Act No. 12252 (approved September 3, 2025) amends Republic Act No. 7652 by (a) expanding the allowable lease duration to an aggregate of 99 years, (b) tightening registration requirements, and (c) clarifying stability rules that improve bankability and transferability of leasehold rights.
What changed under Republic Act No. 12252 (September 3, 2025): a side-by-side comparison
| Item | Before: Republic Act No. 7652 (June 4, 1993) | Now: Republic Act No. 12252 (September 3, 2025) |
|---|---|---|
| Maximum lease term | Up to 50 years, renewable once for up to 25 years (commonly discussed feature of RA 7652). | Aggregate period shall not exceed 99 years, subject to national security/critical infrastructure considerations allowing a shorter term upon recommendation and Presidential action. |
| Who qualifies | Foreign investors “investing in the Philippines” as defined and registered under applicable rules. | Foreign investor must have an approved and registered investment under the Foreign Investments Act / CREATE / CREATE MORE or applicable investment regimes, or have complied with IPA requirements. |
| Stability and effect against third parties | Lease registration is generally important, but stability against third persons is often litigated under general land registration principles. | Registration is the operative act making the long-term lease binding on third persons; a registered lease cannot be collaterally attacked and may only be altered/cancelled via direct proceeding in accordance with law. |
| Bankability / transferability | Assignment and financing were possible but often structured carefully to avoid control features that resemble ownership. | Leasehold right may be sold, transferred, assigned, or used as loan security, while statutory limits on use continue to apply when transferee/creditor is foreign. |
Who can obtain a 99-year lease: eligibility and project types covered
Republic Act No. 12252 expands and clarifies coverage: a foreign investor “investing in the Philippines” may lease private land for approved projects, subject to conditions. The law expressly references investment approvals and registrations under statutes and programs such as the Foreign Investments Act, CREATE, and CREATE MORE (among others), or compliance with Investment Promotion Agency requirements.
Republic Act No. 7652 and the amended policy cover projects such as:
- Industrial estates
- Factories, assembly, processing plants
- Agro-industrial enterprises
- Land development for industrial or commercial use
- Tourism and other priority productive undertakings
The statutory conditions for a valid long-term lease under Republic Act No. 12252
Republic Act No. 12252 (September 3, 2025), amending Republic Act No. 7652, provides that foreign investors may lease private lands subject to conditions, including the following:
- Maximum term: the aggregate period of the lease shall not exceed 99 years, with the possibility of a shorter term for investors in vital services or critical infrastructure for national security or national development priorities.
- Use restriction: the leased area must be used solely for the purpose of the approved and registered investment, as mutually agreed.
- Reasonable area: the leased area must be reasonably required for the approved investment; the law also flags interaction with agrarian reform and local government frameworks.
- Investment approval/registration: the investor must show an approved and registered investment under the stated investment regimes or comply with IPA requirements.
- Mandatory registration and annotation: the lease must be registered with the Registry of Deeds and annotated on the certificate of title.
Registration is not a formality: “operative act of registration” and why it matters
Republic Act No. 12252 introduces an express stability rule: registration of the long-term lease contract is the operative act that renders the lease binding against third persons, and registration is to be made consistent with the Property Registration Decree framework. It also states that a registered lease contract shall not be subject to collateral attack and may only be altered, modified, or cancelled in a direct proceeding in accordance with law (Republic Act No. 12252, September 3, 2025).
For industrial projects, this affects:
- Financing: lenders typically require proof that the leasehold is enforceable and properly annotated.
- Project continuity: successors, buyers, and later claimants are placed on notice through the title annotation.
- Dispute posture: registration rules reduce risks of third-party challenges that rely on side disputes rather than direct actions.
Step-by-step: how a foreign investor typically secures a 99-year lease for an industrial site
The exact sequence varies by project and incentives, but a common pathway consistent with Republic Act No. 12252 looks like this:
- Confirm eligibility and investment pathway. Identify whether the project will be registered/approved under the Foreign Investments Act / CREATE / CREATE MORE regime or through an Investment Promotion Agency process (as referenced in Republic Act No. 12252, September 3, 2025).
- Define the approved project use and site footprint. Ensure the intended use and the land area are defensible as “reasonably required” for the project, and aligned with zoning, LGU requirements, and applicable agrarian constraints (as contemplated in Republic Act No. 12252, September 3, 2025).
- Negotiate the lease with bankability in mind. Include clear commencement date, term, renewal mechanics (if any), permitted use, default and termination triggers, and assignment/security provisions consistent with the statute’s continuing limitations on foreign transferees/creditors (Republic Act No. 12252, September 3, 2025).
- Document preparatory acts. Republic Act No. 12252 lists “preparatory acts for the commencement of its investment project” among the conditions for registration by the Register of Deeds, so investors should keep organized proof (e.g., permits applied for, EPC planning, early works, board approvals, procurement steps) (Republic Act No. 12252, September 3, 2025).
- Register and annotate the lease. File the long-term lease for registration at the Registry of Deeds where the land is located and secure annotation on the title. Under Republic Act No. 12252, registration is what binds third persons (September 3, 2025).
- Align operational compliance to avoid termination risk. Maintain the approved investment and comply with the authorized use. Withdrawal of the approved investment or using the land for an unauthorized purpose can trigger termination under the limitations clause (Republic Act No. 12252, September 3, 2025).
What the Registry of Deeds will look for before registration
Republic Act No. 12252 specifies conditions for the Register of Deeds to register the lease, including:
- Proof of approved and registered investment
- Certain commencement date and maximum duration
- Clear technical description of the property
- Proof of preparatory acts for commencement
- A termination clause for change of purpose/project, or failure to commence within a reasonable period
These items are drafted as statutory guardrails to prevent long-term leases from being used as substitutes for landholding unrelated to genuine investment activity (Republic Act No. 12252, September 3, 2025).
What to avoid: lease structures that resemble prohibited land ownership
Philippine jurisprudence is cautious about arrangements that gradually shift ownership attributes to foreigners. In Philippine National Oil Company, et al. v. Keppel Philippines Holdings, Inc. (G.R. No. 202050, July 26, 2016), the Court reaffirmed the constitutional policy of keeping land ownership in Filipino hands and noted prior rulings voiding not only direct conveyances to foreigners but also arrangements where ownership rights were effectively transferred over time.
Common red flags in documentation (based on internal knowledge of Philippine law) include:
- Lease terms combined with restrictions that effectively prevent the Filipino owner from disposing of the property for an extended period in a manner resembling transfer of control
- Options to purchase that are structured to guarantee eventual foreign ownership notwithstanding constitutional limits
- Management/control covenants that grant the foreign party owner-like dominion beyond a leasehold
Options to purchase, right of first refusal, and other deal features: doctrine to remember
Industrial leases are sometimes paired with future acquisition concepts (e.g., an option to buy if the investor later qualifies as a Philippine national, or if a Filipino-controlled vehicle will acquire). If an option contract is used, it must be supported by consideration distinct from the purchase price; otherwise, it may be treated as a mere offer that can be withdrawn prior to acceptance. This doctrine is reiterated in Philippine National Oil Company, et al. v. Keppel Philippines Holdings, Inc. (G.R. No. 202050, July 26, 2016).
Drafting note (based on internal knowledge of Philippine law): even a valid option clause does not cure constitutional infirmities if it results in foreign ownership of land when the buyer is disqualified. Deal teams often structure “future ownership” elements around Filipino-qualified acquirers and ensure the lease remains compliant on its own terms.
Termination and continuity risks under Republic Act No. 12252
Republic Act No. 12252 strengthens lease stability via registration, but it also preserves meaningful termination triggers, including:
- Withdrawal of approved and registered investment within the lease period
- Use of the leased area for a purpose other than that authorized
These can warrant ipso facto termination, without prejudice to the lessor’s claim for damages (Republic Act No. 12252, September 3, 2025).
Another point is renewal drafting. Republic Act No. 12252 states that a lease “renewable at the option of the lessee” under the same terms is to be interpreted as renewable only upon mutual agreement (September 3, 2025). Investors should avoid assuming unilateral renewal rights will be enforced as written.
Industrial project scenarios: how the 99-year term changes risk allocation
Scenario 1: export manufacturing plant requiring long amortization
A foreign-owned manufacturer builds a capital-intensive facility with a 20–30 year equipment lifecycle and expects multiple retooling cycles. A 99-year lease improves long-horizon certainty for site control and supports financing where lenders prefer tenors aligned with asset life. The lease can also be used as loan security, subject to continuing statutory limits when the creditor is foreign (Republic Act No. 12252, September 3, 2025).
Scenario 2: industrial estate with phased locators
A foreign developer leases a large tract and subleases to locator companies. The statutory requirement that the leased area be reasonably required for the approved investment and used for the approved purpose encourages careful alignment between the registered project scope and the estate’s actual use (Republic Act No. 12252, September 3, 2025).
Scenario 3: critical infrastructure adjacency and national security review
If the industrial site relates to sectors treated as vital services or critical infrastructure, the law allows government to impose a shorter period in the interest of national security or national development priorities (Republic Act No. 12252, September 3, 2025). Investors should anticipate heightened review and build flexibility into deal timelines.
Compliance checklist for counsel and project teams
- Investment approval: secure and keep updated proof of approved/registered investment under the referenced regimes (Republic Act No. 12252, September 3, 2025).
- Use covenant: define permitted use tightly and align it with the registered project description (Republic Act No. 12252, September 3, 2025).
- Technical description: ensure survey/technical descriptions match the title and are registration-ready.
- Registration package: assemble evidence of preparatory acts, fixed dates, and termination provisions required by the Register of Deeds (Republic Act No. 12252, September 3, 2025).
- Finance terms: confirm assignment/security clauses are compatible with the statute’s continuing limitations on foreign transferees/creditors (Republic Act No. 12252, September 3, 2025).
Final observations and recommendations
Republic Act No. 12252 (September 3, 2025) materially improves the ability of qualified foreign investors to secure long-duration site control by allowing up to a 99-year aggregate lease and by clarifying that registration is the operative act binding third parties. For industrial projects, the benefits are strongest where lease documentation is drafted for registrability, the approved investment status is clear and continuously maintained, and deal terms avoid arrangements that courts may treat as disguised transfers of ownership contrary to constitutional policy reflected in cases such as PNOC v. Keppel (G.R. No. 202050, July 26, 2016).
For investors and counsel, the most reliable approach is to treat the long-term lease as a regulated instrument: align it with the approved investment, document commencement readiness, register and annotate promptly, and maintain compliance to avoid ipso facto termination triggers under the statute (Republic Act No. 12252, September 3, 2025).
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