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Marcos extends land lease cap to 99 years 
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Marcos extends land lease cap to 99 years 

President Marcos Jr. has signed into law Republic Act No. 12252, extending the maximum lease period of private lands to 99 years from 50 years, plus a one-time renewal of up to 25 years.

RA 12252 amended several provisions of RA 7652, or the Investors’ Lease Act, in a supposed bid to create a stable environment for foreign investors.

The law declared a “flexible and dynamic policy” on the granting of long-term leases on private lands to foreigners for industrial estates, factories, agro-industrial enterprises, tourism, agriculture, agro-forestry and ecological conservation.

The law also requires foreign investors to register their projects under Republic Act No. 7042, or the Foreign Investments Act of 1991, and Republic Act No. 11534, or the Corporate Recovery and Tax Incentives for Enterprises Act.

The law also requires that leases be registered with the local Registry of Deeds and recorded on the property’s title.

RA 12252 amended the Investors’ Lease Act on the termination of lease contracts and now allows the lessee to sublet the property with the consent of the lessor.

The law allows the Fiscal Incentives Review Board, Board of Investments, or the relevant Investment Promotion Agency or other investment agencies to require investors to explain project delays and to start their projects within a reasonable time if they fail to do so within three years of signing the lease.

The law also increased penalties for violations, raising fines from P100,000 to P1 million to P1 million to P10 million, along with possible imprisonment of six months to six years at the court’s discretion.

Since last year, when the law was under consideration by Congress, property developers and managers have been saying that the measure presents tremendous opportunities for the property sector, especially for industrial and leisure segments.

Property managers said the law would be important in attracting investors coming out of China and Taiwan, and to make the Philippines a major beneficiary of the “China plus one” strategy of global manufacturing companies.

No rules yet

RA 12252, however, did not specify which countries are allowed to benefit from the law and designated the Department of Trade and Industry and the Land Registration Authority to issue implementing rules and regulations within 90 days of the law’s effectivity.

Senate President Francis Escudero, who authored the law in the Senate during the 19th Congress, thanked the President for signing the measure into law.

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“With the entry of more investments into the country, not only will more jobs be created but we will also gain from technology transfer that can be utilized to grow local enterprises and make them more competitive in the global stage,” the senator said. “Foreign investors have long complained about the prohibitive provisions of our laws regarding the ownership of land by non-Filipinos. Businesses will never place their funds in destinations where there is uncertainty in laws and regulations. This law will go a long way in addressing these concerns,” he said.

Escudero says that ownership of land is always a crucial consideration of investors when choosing where to set up shop because no one will put in so much money only to be evicted after a short period of time.

“We may be strategically situated geographically, have a predominantly English-speaking workforce, and have among the hardest working people in the world, but unless there is stability in the investment environment, none of these advantages we have will help us in competing for investors,” he said.

Under the law, the leased property should be utilized only for the purpose of the approved and registered investment.

The registered lease cannot be subject to collateral attack and may only be altered, modified or canceled in a direct proceeding in accordance with law.

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