Lease registration in the Philippines

In September 2025, Republic Act No. 12252 took effect, allowing qualified foreign investors to lease private land in the Philippines for a single, non-renewable term of up to 99 years. This replaced the previous structure of 50 years plus a 25-year renewal, a change that fundamentally alters the landscape for long-term business planning and project financing. For anyone considering a leasehold arrangement—whether as a foreign investor, a local business owner, or a Filipino buyer of a leasehold unit—the new law is only one piece of a much larger puzzle that includes ordinary lease rules, tax obligations, and the very real risk of reversion.

How Leasehold Works in the Philippine Context

Leasehold is a contractual right to use and occupy real property for a defined period, not a title to the land itself. When the term ends, unless the contract says otherwise, the property—and any structure standing on it—reverts to the lessor. This arrangement exists largely because Article XII, Section 7 of the 1987 Constitution reserves the right to own private land to Filipino citizens and to corporations that are at least 60% Filipino-owned. Leasehold provides a legal pathway for foreign nationals, foreign-owned enterprises, and even budget-conscious Filipino buyers to occupy prime real estate without owning the land underneath.

What the 99-Year Lease Law Actually Changes

RA 12252 amends the Investors’ Lease Act (RA 7652) and applies only to qualified foreign investors with approved investments under RA 7042 (Foreign Investments Act), RA 11534 (CREATE Act), or other IPA-approved investments. It is not available to foreign individuals or companies without qualifying investments. The key change is a single consolidated lease term of up to 99 years, replacing the old 50+25-year structure that required an automatic renewal. This eliminates renewal uncertainty and makes the leasehold interest more bankable—lenders and investors can now evaluate a single, fixed term rather than a term that depends on a future renewal application.

For tourism projects, a special minimum investment threshold of USD 5,000,000 applies, with 70% of that amount required to be infused within three years. Failure to commence the investment project within three years may result in revocation after notice and hearing by the FIRB, BOI, or relevant IPA. Contracts that violate RA 12252 are void from the start, with fines ranging from PHP 1 million to PHP 10 million and imprisonment of six months to six years for individuals.

Complications, Exceptions, and Fine Print

Registration Is Not Optional

Any lease exceeding one year must be executed in a public instrument (notarized) and should be registered and annotated on the property’s title with the Registry of Deeds to bind third parties. Without annotation, the lease binds only the parties to the contract. This means a new buyer of the underlying land may not be legally bound to honor your lease if it was never annotated. Registration also makes the leasehold rights enforceable through legal proceedings and allows them to be sold, transferred, assigned, or used as collateral.

Documentary Stamp Tax on Full-Term Rent

Lease contracts are subject to Documentary Stamp Tax (DST), computed once on the total rent payable over the entire lease term. The rate is roughly ₱6 for the first ₱2,000 of total rent, plus ₱2 for every ₱1,000 or fraction above that. This tax is payable before or at the time the contract is notarized. Always ask for the BIR-stamped DST return as proof—it is a common due-diligence item for lenders and buyers of leasehold rights.

The Camp John Hay Precedent: Reversion Risk Is Real

In 1996, BCDA leased roughly 247 hectares of Camp John Hay in Baguio to a private developer for 25 years. Disputes over lease payments and unmet development commitments escalated, culminating in a 2015 arbitral ruling that found both sides had breached the contract. The Supreme Court ordered the property—including all improvements built on it—returned to BCDA, which regained control on January 6, 2025. That single ruling put roughly 2,500 golf club members, 417 condotel owners, and 159 estate lot owners in an uncertain position overnight. The lesson: your sub-lease is only as secure as the head lease above it. A buyer who checks the sub-lease contract but never verifies who holds the master lease, and whether it’s current and undisputed, is checking the wrong document.

Tax Obligations for Lessors and Lessees

Lessors earning rental income are generally liable for income tax. Depending on gross receipts, they may also be subject to 12% VAT (if gross rent exceeds ₱3 million per year) or 3% percentage tax. Lessee-corporations must withhold 5% creditable tax on rent and file BIR Form 1601-EQ monthly. Real property tax is the lessor’s liability but may be passed on to the lessee contractually. These obligations are manageable with proper structuring, but failing to account for them can create unexpected costs.

What To Do With This Information

If You Are a Foreign Investor Qualifying Under RA 12252

Your first step is to register your investment with the relevant Investment Promotion Agency (IPA)—typically the BOI or PEZA—and obtain a Certificate of Registration before signing any lease. Conduct land due diligence: verify the title (TCT/OCT) with the Registry of Deeds, check for liens, adverse claims, agrarian reform notices, and ancestral domain claims. Secure an LGU zoning certificate, especially for tourist or agro-industrial projects that may need separate land reclassification or an Environmental Compliance Certificate. Negotiate lease terms up to 99 years, then register the lease contract with the Registry of Deeds. Await the forthcoming implementing rules and regulations from DTI-BOI and the Land Registration Authority (LRA), which will provide further procedural details.

If You Are Buying a Leasehold Unit in a Development

Ask three questions before you even view a listing. First, is the underlying land leasehold or freehold? Ask to see the TCT/OCT and check for a lease annotation. Second, who is the actual lessor of record—and is that master lease itself still within its term, undisputed, and in good standing? Third, what happens contractually when the lease ends: a renewal option, a right of first refusal, or a straight reversion with no further claim? Banks evaluate loan terms against the remaining lease period, not the original one—a unit with 20 years left on a 50-year lease may not qualify for a standard 20-year mortgage once underwriting buffers are applied. A leasehold interest is a diminishing asset by design; resale value tends to decay as the remaining term shortens.

If You Are a Filipino Lessor or Lessee Under an Ordinary Lease

For ordinary leases not tied to a registered investment, the maximum term for foreign lessees remains 25 years renewable once (50 years total) under PD 471. For Filipino lessees, no statute fixes a maximum term, but parties should avoid terms that could be interpreted as a de facto sale. Ensure the lease is in writing (oral contracts are unenforceable beyond one year under the Statute of Frauds), notarized, and registered with the Registry of Deeds. Include clear provisions on renewal mechanics, rental escalation, sub-leasing rules, and what happens at expiry. Assignment and subleasing are not automatic rights—under Civil Code Articles 1649 and 1650, a lessee generally cannot assign or sublease without the lessor’s express consent unless the original contract says otherwise.

Frequently Asked Questions

Final Thoughts

Lease registration in the Philippines is a process where formality determines enforceability. A lease that is not notarized, not registered, or not properly taxed is a lease that may not survive a dispute, a sale of the underlying land, or a financing application. The 99-year lease law opens new possibilities for qualified foreign investors, but it does not change the fundamentals: verify the title, check the head lease, understand what happens at expiry, and document everything. If this was useful, you might also want to read our guide to commercial leasing in the Philippines.

Sources

Commercial space leasing for resort and retail businesses — Practical advice on lease terms and location selection for tourism-related enterprises.

Transit hub lease tips for Philippine businesses — Key considerations for leasing near transport terminals and high-foot-traffic areas.

99-Year Lease Law RA 12252: Key Changes for Foreign Investors. TTFC Law, 2026.

Leasehold Properties in the Philippines: A Complete Guide. UPropertyPH, 2025.

Long-Term Lease for Foreigners in the Philippines. Respicio & Co., 2025.

Philippines 99-Year Lease Law RA 12252: Key Provisions. Emerhub, 2025.