1) Scope and basic concept

A long-term land lease is typically understood in practice as a lease of land (or land with improvements) for multiple years—often 5, 10, 25, 50 years or more—used for business operations, development, agriculture, logistics, energy projects, or other sustained undertakings. Philippine law does not treat “long-term lease” as a single special contract type; rather, compliance comes from overlapping rules on:

Contracts and obligations (Civil Code rules on lease),
Property and registrability (Civil Code and land registration rules),
Business registration and local permitting (DTI/SEC, BIR, LGUs),
Taxation (national and local),
Land use, construction, and sector regulation (zoning, building, environment, utilities, agrarian, IP, public lands, etc.),
Foreign participation rules (when foreigners or foreign-owned corporations are involved).

This article focuses on business permits and registration as they apply to long-term land leasing, and how those requirements change depending on whether you are (a) the lessor (landowner leasing out) or (b) the lessee (tenant taking land for a project/business).

This is general legal information for the Philippine context and is not legal advice.

2) The “two tracks” of compliance: (A) the lease as a property deal, and (B) the business that will operate on the land

Long-term leasing usually triggers compliance on two tracks:

A. The lease transaction (property/contract track)

Concerns: valid authority to lease, proper documentation, notarization, registration/annotation, and taxes on the transaction.

B. The operating activity (business/licensing track)

Concerns: business registration (DTI/SEC), BIR registration, and LGU permits to conduct the intended business on the site, plus any sector clearances (zoning, building, environment, etc.).

A common mistake is treating a long-term lease as “just a contract.” In reality, the lease is often the “land control document” needed to secure permits, financing, and regulatory approvals.

3) Who must register as a business and obtain a Mayor’s/Business Permit?

3.1 The lessee (tenant) operating a business on the land

If the lessee will operate a business on the property (warehouse, factory, farm enterprise, resort, solar project, commercial building, etc.), the lessee will almost always need:

Business registration (DTI or SEC, depending on entity),
BIR registration (TIN/registration of books/invoicing), and
LGU business permits in the city/municipality where the site is located (Mayor’s Permit / Business Permit), plus required local clearances.

Even if the lessee is already registered elsewhere, it typically must register a branch/facility or declare a place of business and obtain permits where it actually operates.

3.2 The lessor (landowner) leasing out land as a business

Whether the lessor needs local business permitting depends on how the leasing is carried out:

Occasional/private leasing (e.g., an individual leasing a single parcel as a passive investment) is sometimes treated in practice as not requiring a full “leasing business” permit in every case, but it still triggers tax registration and compliance.
Leasing as a continuing commercial activity (multiple properties/tenants, property management, “for lease” operations, issuing official receipts/invoices, employing staff, maintaining an office) is more likely to be treated as a business that requires:
- registration (DTI/SEC as applicable),
- BIR registration as a lessor, and
- an LGU Mayor’s/Business Permit for the leasing activity (often where the leasing office is located, and sometimes where the property is located depending on LGU practice).

Because LGU enforcement varies, sophisticated lessors typically structure compliance assuming leasing is a taxable business activity and align their local permitting accordingly.

4) Entity registration: DTI vs SEC, and what is typically required

4.1 Individuals (not doing business as an entity)

An individual lessor/lessee may transact personally, but once there is a business, registration is needed:

Sole proprietorship: register the business name with DTI if operating under a trade name.
Professionals/individuals earning rental income still register with BIR for tax purposes even if no DTI registration is used.

4.2 Corporations and partnerships

Philippine corporation/partnership: register with SEC and ensure the primary purpose allows the intended activity (leasing, real estate holding, development, manufacturing, etc.).
Foreign corporation: generally needs authority to do business in the Philippines (license to transact), and must consider constitutional and statutory restrictions that affect land control and project operations.

4.3 Foreign nationals and foreign-owned enterprises leasing land

Foreigners cannot own land (with narrow exceptions), but leasing is generally allowed subject to rules. Large, long-term leases by foreign investors commonly rely on the Investors’ Lease framework (often discussed as allowing longer terms, typically up to a long initial term with a renewal option, subject to conditions), and still require the same operational permits (SEC/DTI, BIR, LGU, zoning, etc.) for the business.

Key point: even if land leasing is allowed, operating a regulated business on that land may be restricted by foreign ownership caps and sectoral laws.

5) Core registrations and permits (practical checklist)

Below is a practical “stack” of common requirements. Not all projects need all items, but long-term land leases used for business often touch many of them.

5.1 Core national registrations (for the operating business)

DTI or SEC registration

DTI for sole proprietorship
SEC for partnerships/corporations

BIR registration Common components:

Registration of business/place of business
Authority to print or use invoicing system/e-invoicing compliance where applicable
Registration of books of accounts
Applicable withholding tax registrations (if you will withhold)

Other national registrations (as applicable)

SSS, PhilHealth, Pag-IBIG (if hiring employees)
DOLE registration and labor compliance (if employing)
PEZA/BOI registrations (if incentives are sought; not required for ordinary leasing)

5.2 Core LGU permits for operating on the land (lessee side, and sometimes lessor side)

LGUs commonly require a sequence that starts with site suitability and ends with the business permit:

Barangay clearance (business barangay clearance)
Locational/Zoning clearance (or equivalent: land use compatibility)
Building permit (if constructing) and related permits:
- electrical permit, mechanical permit, sanitary/plumbing permit, electronics permit (as applicable)
Occupancy permit (often required before full operation)
Fire Safety Inspection Certificate (FSIC) (BFP requirement commonly tied to business permit issuance/renewal)
Sanitary permit/health certificate (business type dependent)
Environmental and waste-related local clearances (depending on LGU and nature of business)
Mayor’s/Business Permit (often renewed annually)

Note: For many projects, the lease contract (or a notarized/registrable land control document) is required early to prove the right to use the site.

6) Lease documentation requirements that affect permitting and enforceability

6.1 Written contract and notarization

For long-term arrangements, leases are typically:

Reduced to writing (critical for enforceability and bankability),
Notarized to become a public instrument (useful for evidentiary weight and registration/annotation).

6.2 Authority to lease and spousal/ownership consents

Long-term leases can be challenged if the signatory lacks authority. Common authority issues:

Co-owned property: consent/authority of co-owners may be required depending on the nature/term and acts of administration vs disposition.
Married owners: if property forms part of the absolute community or conjugal partnership, spousal consent rules matter, particularly for long terms that resemble encumbrances.
Corporate lessor: board authority, secretary’s certificate, and corporate signatory authority are typically required.
Heirs/estate: unsettled estate or tax issues can block annotation and project financing.

6.3 Registrability / annotation with the Registry of Deeds

For long-term leases, registration/annotation is a key practical step because:

It helps bind third parties and protect the lessee’s rights against subsequent buyers/mortgagees (subject to the rules of land registration and priority).
It improves bankability and due diligence acceptability.

In practice, registries frequently require:

Notarized lease contract (sometimes in prescribed form),
Technical descriptions / title details,
Owner’s duplicate title and/or supporting docs,
Tax clearances or proof of payment of documentary stamp tax (depending on the transaction),
Corporate authority documents (if parties are juridical entities).

If the land is unregistered or held only under tax declaration, “registration” is limited; parties often rely on notarization, possession, and layered documentation, but this creates higher risk.

7) Taxes and tax registration typically implicated (transaction and ongoing)

7.1 BIR: rental income taxation (lessor side)

Rent is generally taxable income. Key tax dimensions include:

Income tax (individual or corporate),
Possible VAT or percentage tax depending on registration/thresholds and classification,
Withholding taxes—often the lessee (if a withholding agent) must withhold and remit creditable withholding tax on rent.

Because thresholds, classifications, and withholding rules are updated through regulations, the conservative approach is to treat long-term leasing as a structured tax compliance activity: register correctly, invoice properly, and align lease clauses with withholding and VAT allocation.

7.2 Documentary Stamp Tax (DST)

Leases of real property are commonly subject to documentary stamp tax, computed based on consideration/rent and term under the National Internal Revenue Code framework. Proof of DST payment may be requested for registry transactions or audits.

7.3 Local taxation: real property tax and business tax

Real Property Tax (RPT) is generally the owner’s burden, but leases often allocate it by contract.
Local business tax/fees may apply to the operating business; lessors engaged in leasing as business may also be assessed by the LGU for local business tax/fees depending on ordinances and classification.

A well-drafted lease typically states:

Who bears RPT, special assessments, and increases,
Who bears withholding tax and VAT (and how “gross-up” works),
Invoicing requirements and timing.

8) Sector- and land-type specific regimes that can change the permitting landscape

Long-term leasing is straightforward only when it involves private land with clear title and compatible zoning. The moment you enter special land categories, compliance expands.

8.1 Agricultural land and agrarian reform restrictions

If the land is agricultural, consider:

Whether it is covered by agrarian reform rules or restrictions on conversion and land use,
Whether the arrangement could be recharacterized as an agrarian leasehold/tenancy issue depending on facts,
Whether conversion clearance is required before non-agricultural development.

Projects like industrial parks, subdivisions, resorts, and warehouses on agricultural land often require land use conversion processes and clearances.

8.2 Public lands and government-owned lands

Leases involving public land (e.g., land under government agencies, foreshore areas, reclaimed land, certain disposable lands) may be governed by:

Public land and agency-specific rules (term limits, bidding requirements, approval authorities),
Additional clearances and contract forms,
COA and public procurement constraints.

8.3 Ancestral domains and IP considerations

If the land is within or overlaps ancestral domain claims, compliance may require:

IP-related processes and community consent mechanisms (depending on the nature of the project and impacts).

8.4 Environmental and energy/resource projects

Long-term leases for:

Mining/quarrying,
Renewable energy,
Water resources,
Large infrastructure

often need layered national permits (DENR, DOE, ERC or other sector regulators) and environmental compliance requirements. In these cases, the “lease” is only one piece of the project’s legal basis.

9) Zoning, land use, construction, and operational permits: how the lease ties in

Long-term leases commonly support development. A typical lifecycle looks like:

Due diligence on title, encumbrances, access roads/easements, utilities, hazard zones
Zoning/locational clearance confirming allowable use
Environmental screening (project category determines required documentation)
Building permits and construction compliance
Occupancy permit
Business permit issuance (and annual renewals)

At multiple steps, authorities ask for proof of site control:

TCT/OCT and tax declarations (owner)
Notarized lease contract (lessee)
Authorization/consent documents (board resolutions, SPA, spousal consent, etc.)

10) Practical drafting points that directly affect permits and registrations

Certain clauses are not “nice to have” in long-term Philippine leases; they reduce regulatory and tax friction:

Purpose/use clause aligned with zoning classification and the permits you will apply for.
Term and renewal mechanics (especially for large capital projects).
Right to build / introduce improvements, and ownership of improvements during and after the term.
Sublease/assignment permissions (important for financing, project companies, and investors).
Access and easements, right of way, and utility installation rights.
Compliance allocation: who secures which permits (lessee typically secures operational permits; lessor cooperates with signatures and title documents).
Tax allocation: withholding, VAT, DST, RPT, registration fees, and who bears increases.
Registration/annotation covenant and cooperation obligations (delivery of owner’s duplicate title where needed, within safeguards).
Default and termination that consider permitting timelines (construction delays, force majeure, regulatory denials).
Insurance, indemnities, and risk allocation.

11) Penalties and consequences of non-compliance (high-level)

Failing to complete proper registration and permitting can result in:

LGU closure orders, denial of business permit renewals, fines, and administrative sanctions,
BIR assessments (deficiency taxes, surcharges, interest, compromise penalties),
Weakened enforceability of lease rights against third parties when unregistered/unannotated,
Financing failure (banks and investors typically require registrable/annotated land control and proof of permits),
Civil disputes over authority, co-ownership consent, spousal consent, or boundary/title defects.

12) Summary: what you must have in a typical long-term business land lease scenario

For the most common scenario—a business leasing private titled land long-term to build/operate a facility—the standard compliance set usually includes:

Notarized long-term lease contract with clear authority documents
Registration/annotation (where feasible and appropriate)
Business registration (DTI/SEC) for the lessee (and for lessor if leasing is conducted as a business)
BIR registration and proper invoicing/withholding structure
Zoning/locational clearance
Building and ancillary permits (if constructing)
Fire safety compliance tied to occupancy and business permitting
Occupancy permit (for built structures)
Mayor’s/Business Permit and annual renewals
Project-specific national/sector permits if the use is regulated (environmental, agrarian conversion, energy, etc.)

The decisive factors that change the requirement set are: (1) land classification and title quality, (2) intended land use and construction scope, (3) whether the lessor is in the business of leasing, and (4) whether foreign ownership or regulated industries are involved.