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Briefer: R.A. No. 12252

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On September 3, 2025, President Ferdinand R. Marcos Jr. signed into law Republic Act No. 12252, which amends the Investors’ Lease Act (R.A. No. 7652). The new law’s primary goal is to encourage foreign investment by liberalizing the rules on long-term leases of private land.

 

The most significant change is the extension of the maximum aggregate lease period for foreign investors to 99 years. The law also introduces stricter registration requirements to ensure the stability of lease contracts, sets specific investment thresholds for certain sectors, and increases penalties for violations.

 

Key Provisions of the Law:

Extended Lease Period and Conditions 

  • The law now allows foreign investors to lease private lands for an aggregate period not exceeding 99 years. 
    • However, the President may impose a shorter lease period for investments in critical infrastructure to protect national security. 
    • For tourism projects, a foreign investor must have an investment of at least $5 million USD, with 70% of that amount infused within three years of signing the lease.

 

 

Investor and Investment Requirements

To qualify for a long-term lease, a foreign investor must have an approved and registered investment under laws such as the Foreign Investments Act of 1991 (R.A. No. 7042), the CREATE Act (R.A. No. 11534), or the CREATE MORE Act (R.A. No. 12066). Alternatively, they must comply with requirements from the appropriate Investment Promotion Agency (IPA).

 

 

Registration and Stability of Contracts

    1. Mandatory Registration: All long-term lease contracts must be registered with the Registry of Deeds where the property is located.
    2. Operative Act: The act of registration makes the lease contract legally binding against third parties.
    3. Legal Protection: A registered lease contract cannot be subject to a collateral attack and can only be altered or canceled through a direct legal proceeding.

 

 

Subleasing Rules

A lessee may sublet the leased property with the lessor’s consent, unless it is expressly prohibited in the main lease contract. Any sublease is subject to the same conditions as the original lease and must also be registered with the Registry of Deeds.

 

 

Grounds for Termination

A lease can be terminated under specific circumstances:

    1. Failure to Invest: If an investment project does not start within three years of the lease signing, the relevant government agency can, after due process, revoke entitlements granted under the Act.
    2. Withdrawal of Investment: The contract is automatically terminated if the foreign investor withdraws their registered investment.
    3. Unauthorized Use: Using the leased area for a purpose other than the one authorized also warrants automatic termination.

 

 

Increased Penalties:

  • A fine between ₱1,000,000 and ₱10,000,000.
  • Imprisonment of six months to six years, at the discretion of the court.

 

 

 

Introduced Amendments:

RA 7652 RA 12252
Maximum Lease Period Allowed a lease period of 50 years, renewable once for a period of not more than 25 years, for a total of 75 years. Extends the aggregate lease period to a maximum of 99 years. The President, however, may impose a shorter lease period for investments in critical infrastructure to protect national security.
Investment Requirements Required foreign investors to be investing in the Philippines but did not specify the registration requirements as explicitly. Explicitly requires the foreign investor to have an approved and registered investment under specific laws, such as the Foreign Investments Act of 1991 (R.A. 7042) or the CREATE Act (R.A. 11534), as amended.
Registration of Lease Contracts While requiring investment approval, the emphasis on the registration of the lease contract itself as a central component of its validity was less pronounced. Mandates that the lease contract must be registered with the Registry of Deeds and annotated on the property’s certificate of title.
Legal Security of Contracts Did not contain a specific section on the “operative act” of registration or protection from collateral attack. Introduces Section 4-A, which establishes that the registration of the lease is the “operative act that renders the lease binding against third persons”. It also states that a registered contract cannot be subject to a collateral attack and can only be modified or canceled in a direct legal proceeding.
Subleasing Did not have explicit provisions detailing the rules for subleasing. Adds Sections 5-A and 5-B, which expressly allow the lessee to sublet the property with the lessor’s consent, provided it is not prohibited in the contract. It also mandates that all sublease contracts must be registered with the Registry of Deeds.
Failure to Commence Investment Section 6 allowed for termination if the investment was not initiated within three years. Amends Section 6 to create a more procedural approach. If an investor fails to start the project within three years, the relevant government agency will first order the lessee to explain the delay and commence the project within a reasonable period. Failure to comply with this order may then lead to the revocation of all entitlements under the Act.
Penalties for Violations Imposed a fine of not less than PHP 100,000 but not more than PHP 1 million. Amends Section 7 to significantly increase the penalties. The fine for entering into a contract that violates the law is now not less than ₱1,000,000 but not more than ₱10,000,000.

See the full law here

 


Photo Credit:

Ian Chen

Published on October 22, 2020

SONY, ILCE-7M3

Free to use under the Unsplash License

 

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