Foreign Investors' Long-Term Land Lease Act

Republic Act No. 7652 adopts a flexible and dynamic policy on granting long-term lease of private lands to foreign investors.
The State policy aims to encourage foreign investments while following the constitutional mandate to conserve and develop the State’s patrimony.
Long-term leases may be granted for productive endeavors such as industrial estates, factories, assembly or processing plants, agro-industrial enterprises, land development for industrial or commercial use, tourism, and other similar priority productive endeavors.

“Investing in the Philippines” means making an equity investment in the Philippines through actual remittance of foreign exchange or transfer of assets (including capital goods, patents, formulae, or other technological rights or processes) upon registration with the Securities and Exchange Commission.
“Withdrawal of approved investment” means either:
- failure to operate the investment project for three (3) consecutive years; or
- outright abandonment of the investment project at any time during the approved lease period.
Failure to pay lease rental for three (3) consecutive months coupled with failure to operate the investment project for the same period is deemed an outright abandonment.

Any foreign investor investing in the Philippines is allowed to lease private lands under the Act.
Long-term lease terms are subject to limitations under Section 4, including the permitted duration and renewal.
The leased area must be used solely for the purpose of the investment, based on mutual agreement of the parties.
The leased premises cover the area reasonably required for the investment, subject to the Comprehensive Agrarian Reform Law and the Local Government Code.

No lease contract under the Act may exceed fifty (50) years.
Any lease under the Act is renewable once for a period of not more than twenty-five (25) years.
The leasehold right acquired under long-term lease contracts entered into under the Act may be sold, transferred, or assigned.
If the buyer, transferee, or assignee is a foreigner or a foreign-owned enterprise, the use restrictions and limitations under the Act continue to apply.

Foreign individuals, corporations, associations, or partnerships that are not otherwise investing in the Philippines under the Act remain covered by Presidential Decree No. 471 and other existing laws on lease of lands to foreigners.
Withdrawal of the approved investment during the period of the lease agreement, or use of the leased area for a purpose other than that authorized, warrants ipso facto termination of the lease agreement.
ipso facto termination occurs without prejudice to the lessor’s right to be compensated for damages suffered.
A renewable lease agreement that is renewable at the option of the lessee subject to the same terms and conditions of the original contract is interpreted as renewable only upon mutual agreement of the parties.
After the fifty (50) years lease period, the foreign lessee must show social and economic contributions to the country as an additional condition for renewal.
For tourism projects, lease of private lands by foreign investors is limited to projects with:
- an investment of not less than Five million (US $5M); and
- seventy percent (70%) of the investment infused within three years from the signing of the lease contract.

The Secretary of Trade and Industry must terminate any lease contract under the Act if the investment project is not initiated within three (3) years from the signing of the lease contract.

Any contract or agreement made or executed in violation of the prohibited acts listed in Section 7 is null and void ab initio.
Both contracting parties are punished by:
- a fine of not less than PHP 100,000 nor more than PHP 1,000,000, or
- imprisonment of six (6) months to six (6) years, or
- both, at the discretion of the court.
Prohibited acts include:
- stipulating a lease period in excess of the fifty (50) years maximum under Section 4;
- using the leased premises for a purpose contrary to existing laws, public order, public policy, morals, or good customs;
- agreeing to lease land in excess of the area approved by the DTI.
If excess area results from the acts of the lessee, the lessee is held solely liable.
In the case of corporations, associations, or partnerships, the president, manager, director, trustee, or officers responsible for the violation bear the criminal liability.

Section 8 provides a separability clause: if any provision of the Act, or its application, is deemed unconstitutional, the remaining provisions and applications are not affected.
Section 9 repeals or modifies all acts, rules, and regulations contrary to or inconsistent with Republic Act No. 7652.