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NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
Third Regular Session 
)
SENATE
24 JUL-2
s. No. 2717
Introduced by Senator FRANCIS G. ESCUDERO
AN ACT
LIBERALIZING THE LEASE OF LANDS BY FOREIGN INVESTORS, 
ESTABLISHING THE STABILITY OF LONG-TERM LEASE CONTRACTS, 
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7652, OTHERWISE 
KNOWN AS THE "INVESTORS' LEASE ACT"
EXPLANATORY NOTE
Attracting foreign investors has been a long-standing priority of the 
government, spanning several administrations. Foreign direct investment, as a source 
of financing, is critical in realizing socio-economic objectives such as increasing 
empioyment levels, creating decent work, infusing technology into domestic 
businesses, and improving the integration of local enterprises with the global market.
Recently, the Philippine Government has embarked on efforts to ease the 
economic stumbling blocks for attracting private sector investments, which includes 
the passage of laws such as the amendments to the Foreign Investments Act of 1991 
(Republic Act No. 11467), Retail Trade Liberalization Act of 2000 (Republic Act No. 
11595), and Public Service Act (Republic Act No. 11659), as well as the Corporate 
Recovery and Tax Incentives for Enterprises Act (Republic Act No. 11534).
The efforts of the government and the private sector, however, are stymied by 
a number of factors - among them is the unsecured property and ieasehold rights 
that may not legally bind third parties due to lack of registrability and indefeasibility.


No less than the Constitution provides that save in cases of hereditary succession, no 
private lands shall be transferred or conveyed except to individuals, corporations, or 
associations qualified to acquire or hold lands of the public domain, allowing private 
corporations or associations to holding alienable lands of the public domain only 
through lease. This tenuous property and leasehold rights adversely affect investor 
confidence, increase legal and financial risks, hinder market activity and access to 
financing, and scare away large-scale investments that rely heavily on stable use of 
real property.
This bill seeks to address this economic roadblock by strengthening the legal 
framework for long-term leases provided under Republic Act No. 7652. It expands the 
allowable lease period to ninety-nine (99) years, subject to certain conditions and 
requirements.
The proposed measure also ensures that the operative act of registration of 
lease contracts renders the same binding against third persons and protects the lease 
contract from collateral attack, or from alteration, modification or cancellation unless 
otherwise performed through a direct proceeding in accordance with the law. It also 
allows investors to sublease a leasehold interest, subject to the provisions of the 
original contract, express consent of the lessor, and subsequent registration of 
qualified sublease contracts.
Finally, the bill imposes penalties in the form of fines and/or imprisonment to 
deter unscrupulous leasing of properties. These interventions will ensure the stability, 
integrity and security of lease contracts; promote ease of doing business; enhance 
investor confidence; and contribute to the development of the Philippine economy.
In the light of the foregoing, I humbly present this bill for Congress' immediate 
consideration and approval.
FRANCIS G. ESCUDERO


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Third Regular Session
SENATE
S.B. Nn. 2717
ot V,i! t- '
24 JUL-2 P12 3'
fti:CEiAD 6'
Introduced by Senator FRANCIS "CHIZ" G. ESCUDERO
AN ACT
LIBERALIZING THE LEASE OF LANDS BY FOREIGN INVESTORS, 
ESTABLISHING THE STABILITY OF LONG-TERM LEASE CONTRACTS, 
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7652, OTHERWISE 
KNOWN AS THE "INVESTORS' LEASE ACT"
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
1 
Section 1. Section 2 of Republic Act No. 7652, otherwise known as the
2 
"Investors' Lease Act", is hereby amended to read as follows:
3 
"SEC. 2. Declaration of Policy. - It is hereby declared the policy
4 
of the State to encourage foreign investments consistent with the
5 
constitutional mandate to conserve and develop our own patrimony.
6 
Towards this end, the State hereby adopts a flexible and dynamic policy
7 
on the granting of long-term lease on private lands to foreign investors
8 
for the establishment of industrial estates, factories, assembly or
9 
processing plants, agro-industrial enterprises, land development for
10 
industrial[7] or commercial use, tourism, AGRICULTURE, and other
11 
similar priority productive endeavors.
12 
IT IS THE POLICY OF THE STATE TO ENSURE THE
13 
RELIABILITY OF INVESTORS' LEASE CONTRACTS TO
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GUARANTEE STABILITY AND RETURN OF INVESTMENT."
15 
Sec. 2. Section 4 of Republic Act No. 7652 is hereby amended to read as follows:
16 
"SEC. 4. Coverage. - Any foreign investor investing in the
17 
Philippines shall be allowed to lease private lands in accordance with the


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laws of the Republic of the Philippines subject to the following 
conditions:
"(1) [No] THE AGGREGATE PERIOD OF THE lease contract shall [be 
for a period] NOT exceed[ing fifty (50) years, renewable once for a 
period of not more than twenty-five (25) years] NINETY-NINE (99) 
YEARS;
"(2) The leased area shall be used solely for the purpose of the 
investment upon the mutual agreement of the parties;
"(3) The leased premises shall comprise such area as may reasonably 
be required for the purpose of the investment subject however to the 
Comprehensive Agrarian Reform Law and the Local Government 
Code[r];
"(4) THE FOREIGN INVESTOR HAS AN APPROVED OR 
REGISTERED INVESTMENT UNDER REPUBLIC ACT NO. 11534, 
OTHERWISE KNOWN AS THE "CORPORATE RECOVERY AND 
TAX INCENTIVES FOR ENTERPRISES ACT", REPUBLIC ACT NO. 
7042, OTHERWISE KNOWN AS THE "FOREIGN INVESTMENTS 
ACT OF 1991", AS AMENDED, AND UNDER OTHER RELEVANT 
LAWS, OR HAS COMPLIED WITH THE INVESTMENT 
REQUIREMENTS PRESCRIBED BY THE APPROPRIATE 
INVESTMENT PROMOTION AGENCY (IPA) OR GOVERNMENT 
AGENCY WHICH REGISTERS SPECIFIC INVESTMENT ENTITIES 
AND/OR CLASSES OF PERSONS PURSUANT TO EXISTING 
LAWS;
"(5) THE LEASE CONTRACTS SHALL BE REGISTERED WITH THE 
REGISTRY OF DEEDS OF THE PROVINCE OR CITY WHERE THE 
LEASED AREA IS LOCATED AND ANNOTATED ON THE TITLE TO 
THE LAND; AND
"(6) THE REGISTER OF DEEDS SHALL REGISTER A LONG-TERM 
LEASE CONTRACT UPON COMPLIANCE WITH THE FOLLOWING 
CONDITIONS;


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7652,
(A) THE INVESTOR PRESENTS PROOF OF AN APPROVED 
AND/OR REGISTERED INVESTMENT UNDER 
SUBPRARAGRAPH 4 HEREOF;
(B) THE DATE OF COMMENCEMENT AND MAXIMUM 
DURATION OF THE LEASE ARE CERTAIN;
(C) THE EXACT LOCATION, METES, AND BOUNDS OF THE 
PROPERTY SUBJECT OF THE LEASE ARE IDENTIFIED;
AND
(D) THERE IS A PROVISION IN THE LEASE CONTRACT 
PROVIDING FOR ITS TERMINATION FOR FAILURE TO 
COMMENCE THE INVESTMENT PROJECT WITHIN THREE 
(3) YEARS FROM SIGNING OF THE CONTRACT.
'The leasehold right acquired under long-term lease contracts entered 
into pursuant to this Act may be sold, transferred, or assigned, OR MAY 
SERVE AS SECURITY FOR A LOAN: Provided, That when the buyer, 
transferee, or assignee is a foreigner or a foreign-owned enterprise, the 
conditions and limitations in respect to the use of the leased property as 
provided for under this Act shall continue to apply."
Sec. 3. A new Section 4-A is hereby inserted after Section 4 of Republic Act No. 
to read as follows:
"SEC. 4-A. OPERATIVE ACT OF REGISTRATION. - THE 
REGISTRATION OF THE LONG-TERM LEASE CONTRACT SHALL 
BE THE OPERATIVE ACT THAT RENDERS THE LEASE BINDING 
AGAINST THIRD PERSONS. REGISTRATION SHALL BE MADE IN 
ACCORDANCE WITH THE PROVISIONS OF PRESIDENTIAL 
DECREE NO. 1529, AS AMENDED.
THE REGISTERED LEASE CONTRACT SHALL NOT BE 
SUBJECT TO COLLATERAL ATTACK. IT CANNOT BE ALTERED, 
MODIFIED, OR CANCELLED EXCEPT IN A DIRECT PROCEEDING 
IN ACCORDANCE WITH LAW."


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Sec. 4. Section 5 of Republic Act No. 7652 is hereby amended to read as
2 
follows:
3 
"SEC. 5. Limitations. - (1) Foreign individuals, corporations,
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associations, or partnerships not otherwise investing in the Philippines
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as defined herein shall continue to be covered by Presidential Decree
6 
No. 471 and other existing laws in lease of lands to foreigners[T];
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"(2) Withdrawal of the approved investment in the Philippines within the
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period of the lease [agreement] CONTRACT entered into under this
9 
Act, or use of the leased area for the purpose other than that authorized,
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shall warrant the ipso facto termination of the lease [agreement]
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CONTRACT without prejudice to the right of the lessor to be
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compensated for the damages [he] THE LESSOR may have suffered
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thereby^];
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"(3) Any lease agreement under this Act which is renewable at the
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option of the lessee subject to the same terms and conditions of the
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original contract shall be interpreted to mean as renewable upon the
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mutual agreement of the parties^];
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"(4) In addition to the conditions for the renewal of a lease agreement
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[after the period of fifty-(50) years as provided herein], the foreign lease
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shall show that it has made social and economic contributions to the
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country[T]; AND
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"(5) In the case of tourism projects, lease of private lands by foreign
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investors qualified herein shall be limited to projects with an investment
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of not less than five million (5M) US dollars, seventy percent (70%) of
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which shall be infused in said project within three years from the signing
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of the lease contract."
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Sec. 5. A new Section 5-A is hereby inserted after Section 5 of Republic Act No.
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7652, to read as follows:
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"SEC. 5-A. SUBLEASE. - UNLESS THERE IS AN EXPRESS
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PROHIBITION IN THE CONTRACT, THE LESSEE MAY SUBLET
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THE PROPERTY WITH THE CONSENT OF THE LESSOR. THE


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CONDITIONS UNDER SECTION 4 OF THIS ACT SHALL APPLY TO
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THE SUBLEASE CONTRACT."
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Sec. 6. A new Section 5-B is hereby inserted after the new Section 5-A of
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Republic Act No. 7652, to read as follows:
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"SEC. 5-B. REGISTRATION OF SUBLEASE CONTRACTS. -
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SUBLEASE CONTRACTS WITH A TERM OF TWENTY-FIVE (25)
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YEARS OR MORE SHALL BE REGISTERED WITH THE REGISTRY
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OF DEEDS AND ANNOTATED ON THE TITLE TO THE LAND.
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SUBLEASE CONTRACTS WITH A TERM OF LESS THAN TWENTY-
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FIVE (25) YEARS ARE EXEMPT FROM MANDATORY
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REGISTRATION BUT MAY BE REGISTERED VOLUNTARILY FOR
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LEGAL PROTECTION AND PUBLIC NOTICE."
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Sec. 7. Section 6 of Republic Act No. 7652 is hereby amended to read as
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follows:
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"SEC. 6. Termination of Lease Contract. - [The Secretary of
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Trade and Industry shall terminate any lease contract entered into under
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the provisions of this Act, if the investment project is not initiated within
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three (3) years from the signing of the lease contract.] FAILURE TO
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INITIATE THE INVESTMENT PROJECT WITHIN THREE (3)
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YEARS FROM THE SIGNING OF THE LEASE CONTRACT SHALL
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TERMINATE THE LEASE, REVOKE ALL ENTITLEMENTS GRANTED
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UNDER THIS ACT, AND CAUSE THE AUTOMATIC REVERSION OF
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THE PROPERTY TO THE LESSOR/LANDOWNER."
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Sec. 8. Section 7 of Republic Act No. 7652 is hereby amended to read as
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follows:
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"SEC. 7. Pena! Provision. - Any contract [or agreement] made or
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executed in violation of any of the following prohibited acts shall be null
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and void ab initio and both contracting parties shall be punished by a
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fine of not less than [One hundred thousand pcGos--(P 100,000.00)]
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ONE MILLION PESOS (PHP 1,000,000.00) [flOf] BUT NOT more
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than [One million pesos (P 1,000,000.00)] TEN MILLION PESOS


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(PHP 10,000^000.00), or imprisonment of six (6) months to (6) years,
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or both, at the discretion of the court:
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"(1) Any provision in the lease [agreement] CONTRACT
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stipulating a lease period in excess of that provided in paragraph
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(1) of Section 4;
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"(2) Use of the leased premises for the purpose contrary to
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existing laws of the land, public order, public policy, morals, or
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good customs;
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"(3) Any agreement or agreements resulting [is] IN the lease of
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land in excess of the [area] approved AREA [by the DTI]:
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Provided, That, where the excess of the totality of the area leased
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is due to the acts of the lessee, the lessee shall be held solely
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liable therefor [: Provided, further, That, in the case-of
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corporations,—associations,—or—partncrships7—the—president,-
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manager, director, -trustee,-or- officers—responsible for the
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violation hereof shall bear the criminal liability].
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"IN THE CASE OF CORPORATIONS, ASSOCIATIONS, OR
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PARTNERSHIPS, THE PRESIDENT, MANAGER, 
DIRECTOR,
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TRUSTEE, OR RESPONSIBLE OFFICERS SHALL BE HELD
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CRIMINALLY LIABLE.
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"THE PENALTIES PROVIDED UNDER THIS SECTION SHALL BE
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APPLICABLE TO ALL SUBLEASE CONTRACTS."
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Sec. 9. Impiementing Ruies and Reguiations. - Upon the effectivity of this Act,
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the Board of Investments, the Fiscal Incentives Review Board, and the Land
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Registration Authority, in consultation with other concerned government agencies and
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stakeholders, shall promulgate the necessary implementing rules and regulations for
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the effective implementation of this Act.
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Sec. 10, Separabiiity Cause. - If any provision of this Act is declared
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unconstitutional, the remainder thereof not otherwise affected shall remain in full force
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and effect.


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Sec. 11. Repealing Clause. - All laws, presidential decrees, executive orders,
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letters of instruction, proclamations, or administrative regulations that are inconsistent
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with the provisions of this Act are hereby repealed, amended, or modified accordingly.
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Sec. 12. Effectivity Clause. - This Act shall take effect after fifteen (15) days
5 
following its publication in the Official Gazette or in a newspaper of general circulation.
Approved,