Yes, the Philippines now has a 99-year private-land lease framework: What to know

There’s been a very important change in the Philippines. As of today, the Philippines already has a statutory 99-year “leasehold” rule.

This is a specific route, legally mandated in 2025, for qualified foreign investors to be able to lease private land legally for up to 99 years.

The key new law: Republic Act No. 12252, formally known as “An Act Liberalizing the Lease of Private Lands by Foreign Investors, Establishing the Stability of Long-Term Lease Contracts, approved on September 3, 2025, amended the 1993 Investors' Lease Act (RA 7652).

It raised the maximum aggregate lease period for qualifying foreign investors from 50 years + 25-year renewal to up to 99 years.

Very. It represents the biggest change in the foreign-investor private-land lease framework in decades:

Old: 50 + 25 = 75 years

New: up to 99 years

And it adds stronger rules on registration, third-party enforceability, transferability and security of long-term leasehold interests.

Under the law's legal framework, registration with the Philippine Board of Investments (BOI) or other investment promotion agencies is mandatory. If an investor changes the land's purpose without authorisation or withdraws the investment, the lease agreement is automatically terminated.

Does the Philippines have a freehold system?

No, the Asian nation does not have a “freehold” system. 

Freehold means ownership; leasehold means a time-limited right to use and enjoy property owned by someone else.  

The easiest way to understand Philippine land law is to start with two different legal concepts.

Ownership gives the owner the legal bundle of rights associated with property.

Article 428 of the Civil Code provides:

"The owner has the right to enjoy and dispose of a thing..."

That is essentially the concept commonly called freehold ownership in jurisdictions that use the freehold/leasehold terminology.

The owner can generally:

A leasehold is from different freehold under Philippine law.

Article 1643 of the Civil Code defines a lease as a deal that gives another person the use or enjoyment of a thing for a price and for a definite or indefinite period.

The Civil Code itself says that an ordinary lease cannot exceed 99 years.

So “ownership” means the land is yours.

Under a leasehold agreement, you have contractual/legal rights to use the land, but someone else owns the land.

That distinction remains true even if the lease lasts 99 years.

This is where things become interesting.

The Supreme Court has long recognised that foreigners may lease land.

In Philippine Banking Corporation v. Lui She, G.R. No. L-17587, September 12, 1967, 21 SCRA 52, the Court stated the basic principle that a lease to an alien for a reasonable period can be valid.

But the Court drew a very important line.

A lease cannot be structured as a “disguised sale”.

In Lui She, the arrangements included a lease that was eventually extended to 99 years, together with an option to purchase and restrictions preventing the Filipino owner from disposing of the land. 

The Supreme Court concluded that the arrangement effectively transferred the rights of ownership to the foreigner and invalidated the scheme.

This case is extraordinarily important today because it explains why: 99 years is not the same as ownership.

Important note: A “lease” can be unconstitutional if the entire arrangement is really an attempt to transfer ownership to an alien.

The irony is that Lui She itself involved a 99-year lease. The original lease was 50 years. It was subsequently extended to 99 years.

But the Supreme Court did not simply say: “99 years is automatically illegal.”

Instead, it examined the entire arrangement. Significantly, the lease was accompanied by an option to purchase and restrictions that effectively prevented the Filipino owner from exercising the essential rights of ownership.

The Court described this as a "virtual transfer" of ownership.

A genuine long-term lease means the Filipino owner  retains ownership, while the foreign investor receives leasehold rights.

A disguised sale, on the other hand, is where a Filipino owner technically retains title, but the foreign party obtains “virtually all meaningful incidents of ownership”. The latter is constitutionally problematic.

Congress subsequently enacted Republic Act No. 7652, the Investors’ Lease Act. This was specifically designed to attract foreign investment while respecting the Constitutional restriction on foreign land ownership.

Under the original RA 7652, a qualified foreign investor could lease private land for 50 years + one renewal of up to 25 years.

That means the maximum potential duration is 75 years under RA 7652.

The law covered productive investment such as:

So even before the recent (2025) reform, the Philippines had a legal mechanism for long-term foreign land leasehold of up to 75 yeares.

This is the major recent development. Republic Act No. 12252, approved September 3, 2025, amended RA 7652.

Its most visible change is: from 75 years to up to 99 years.

The amended Section 4 says the aggregate period of the lease contract “shall not exceed 99 years”.

This therefore shows: Yes, the Philippines now has a 99-year private-land lease framework for qualified foreign investors.

There are conditions attached to this change and this is where headlines can become misleading.

RA 12252 does not say: “Any foreigner can lease any Philippine land for 99 years.”

The law applies to foreign investors meeting its investment requirements.

Among the requirements:

The law specifically covers productive endeavours including:

So the 99-year regime is primarily an investment facilitation mechanism, not a general foreign-homeownership law.

This distinction is extremely important. RA 12252 specifically preserves the older rules for:

They remain subject to Presidential Decree No. 471 and other applicable laws.

The Supreme Court summarised PD 471 in Fullido v. Grilli, G.R. No. 215014, February 10, 2016:

25 years, renewable for another 25 years by mutual agreement.

So there are effectively two very different situations:

For a qualified foreign investor: Up to 99 years under RA 12252.

Foreign person/entity not covered as a qualifying investor: Generally subject to PD 471's 25 + 25 framework, depending on the circumstances and other applicable laws.

This is one of the most important things a foreign investor should understand.

Economically, it can sometimes feel similar. Legally, it is not. 

The Philippine Supreme Court's warning: don't turn leasehold into disguised ownership

Philippine Banking Corporation v. Lui She 21 SCRA 52 (1967)

This is the classic case. The Court invalidated an arrangement where the lease and option-to-buy structure effectively transferred ownership rights to an alien.

Llantino v. Co Liang Chong 266 Phil. 645 (1990)

The Court reiterated that a lease to an alien for a reasonable period can be valid. 

But a lease becomes problematic when circumstances reveal a scheme to circumvent the constitutional prohibition.

The Court specifically discussed a situation where the Filipino owner is prevented from disposing of the land while the alien receives an option to buy.

Fullido v. Grilli

G.R. No. 215014, February 10, 2016

This case is especially relevant because the Court examined a foreigner's purported long-term lease. 

The agreement involved: 50 years + automatic 50-year extension = 100 years, with additional restrictions preventing the Filipino owner from selling, donating or encumbering the land without the foreigner’s consent.

The Court held that the arrangement effectively transferred the property rights to the foreigner and was void.

It also explained the relevance of PD 471's 25 + 25 limitation for aliens who were not qualified foreign investors under RA 7652.

G.R. No. 202050, July 26, 2016

This is the Keppel/Lusteveco case and is particularly useful for modern investment analysis. 

The Court upheld the constitutionality of an investment arrangement but carefully examined the lease and purchase-option provisions because the foreign corporation originally lacked the constitutional qualification to own the land. 

The Court reaffirmed the policy of keeping land ownership in Filipino hands while distinguishing legitimate investment arrangements from virtual transfers of ownership.

Frenzel v. Catito 453 Phil. 885 (2003)

This is another important warning against using Filipino nominees or spouses to circumvent the constitutional prohibition.

The Court rejected a foreigner's attempt to claim ownership of land acquired in a Filipino partner’s name. Later cases continue to cite Frenzel for the proposition that courts will not enforce arrangements designed to circumvent the constitutional prohibition.

This is an important point in Philippine legal-development. The old cases did not arise under today’s RA 12252 framework.

When the Supreme Court decided Lui She in 1967, there was no RA 7652.

When Fullido v. Grilli was decided in 2016, the applicable Investors' Lease Act allowed, which was up to 75 years (50 years + 25 years).

Today, Congress has expressly created a statutory framework allowing qualified foreign investors to obtain a 99-year aggregate lease.

Therefore, the more accurate proposition is: A 99-year lease is now expressly authorised for qualifying foreign investors under RA 12252, but it remains a lease — not ownership — and it cannot be structured as a disguised transfer of land ownership or otherwise violate the law. That is the modern legal position.

So, it would be incorrect to argue: “The Supreme Court once invalidated a 99-year lease, therefore every 99-year lease in the Philippines is illegal.” 

RA 12252 does more than increase the number from 75 to 99.

More fundamentally, it attempts to provide greater investment certainty. For example, the law requires registration of the long-term lease with the Registry of Deeds and annotation on the certificate of title.

It also creates a new Section 4-A providing that registration is the operative act making the long-term lease binding against third parties. 

A registered lease cannot simply be attacked collaterally; alteration, modification or cancellation must occur through a direct proceeding in accordance with law.

This is important for an investor putting hundreds of millions or billions of pesos into:

An investor needs to know: “Will my land-use right still be secure decades from now?” RA 12252 is designed to provide substantially more legal certainty.

Another significant provision is that the leasehold right acquired under qualifying long-term leases may be:

That potentially makes a 99-year leasehold much more “commercially valuable”.

Consider a foreign company building a ₱20-billion manufacturing facility.

The company doesn't own the land. But it has a registered, long-duration leasehold interest.

That interest can potentially become part of the project's financing structure.

This is one reason the new law matters to international investors.

RA 12252 isn't a blank check. For example, the leased property must be used for the approved and registered investment.

If the approved investment is withdrawn or the land is used for an unauthorised purpose, the law provides for termination.

The investor is also expected to commence the project within the prescribed framework.

For tourism projects, the law requires at least US$5 million of investment, with 70% to be infused within three years from signing the lease.

The President can also impose a shorter lease period for investors involved in vital services or industries considered critical infrastructure when justified by national security or national-development priorities.

This is another place where terminology can create confusion. “Freehold” is not the principal statutory category used in the Philippine Constitution in the same way it is in some common-law jurisdictions.

Philippine law principally speaks of ownership, private lands, lease, leasehold rights, etc.

So when someone says: “99-year freehold in the Philippines”, that phrase should immediately raise a red flag.

A better description would be: 99-year leasehold, if the investor does not own the underlying land.

“Freehold” implies an ownership interest that is not limited to a fixed lease term.

#There are some exceptions to foreign land ownership

The rule against foreign ownership isn’t absolute.

Article XII, Section 8 allows a natural-born Filipino who lost Philippine citizenship to become a transferee of private land subject to statutory limitations.

For residential purposes, BP 185 provides the statutory framework and limits acquisition to specified areas.

There are also statutory rules governing former natural-born Filipinos acquiring land for business purposes.

Article XII, Section 7 expressly recognizes an exception for hereditary succession.

Foreigners can also acquire condominium units, subject to the 40% foreign-ownership ceiling applicable to the condominium project under the Condominium Act.

RA 4726 provides that transfers cannot cause foreign ownership in the condominium corporation to exceed limits imposed by law.

That is why a foreigner can legally own a condominium unit in the Philippines even though he generally cannot buy a house-and-lot in his own name.

Imagine a foreign company investing US$500 million in a Philippine manufacturing facility.

It needs land.

It cannot simply buy the land.

Under the old system, the investor might have had:

50-year lease + 25-year renewal = maximum 75 years

Under RA 12252: up to 99 years

That extra period can fundamentally change the economics of the investment.

It affects:

A semiconductor plant, power-related facility, industrial park or large tourism development may have an economic life measured in decades.

A 99-year lease gives the investor a much longer period over which to recover capital and earn a return.

That is precisely why Congress changed the law.

The Board of Investments describes RA 12252 as a significant move intended to make the Philippines more competitive in attracting foreign investment.

This is where the political debate often becomes confused. A 99-year lease does not mean: “The foreigner owns Philippine land for 99 years.”

It means: “The foreign investor has a legally protected right to use specified private land for up to 99 years, subject to the conditions of the law and the lease.”

The underlying land remains owned by the Filipino-qualified owner. That distinction is precisely what the Supreme Court's rulings have emphasised for decades.

The danger is not simply long duration. The danger is a contractual structure that effectively transfers the substance of ownership to an alien.

This is perhaps the most important legal principle to carry forward from the older jurisprudence.

A lease can be long.

A lease can be valuable.

A lease can be registered.

A lease can give the foreign investor extensive rights.

But the arrangement cannot be a sham designed to accomplish indirectly what the Constitution prohibits directly.

The Supreme Court expressed that concern in Lui She and reaffirmed it in later cases including Llantino and Fullido.

RA 12252 therefore changes the permitted duration and legal security of legitimate investment leases.

It does not repeal Article XII, Section 7 of the Constitution.

Yes.

Since RA 12252, qualified foreign investors can lease private land for an aggregate period of up to 99 years, subject to investment, registration, land-use and other conditions.

No.

A 99-year lease is still leasehold. It does not turn the foreign investor into the landowner.

Generally no, except for constitutionally and statutorily recognised exceptions, such as hereditary succession and certain rights of former natural-born Filipinos.

The most accurate way to describe the reform under RA 12252 is therefore: The Philippines has opened a much longer, more secure form of private-land leasehold to qualifying foreign investors, and has not opened its land to foreign full, freehold ownership.

And that distinction — ownership versus long-term use — is the key to understanding both the Constitution and the new investment regime.