(1)

December 17, 2009

REPUBLIC ACT NO. 9856

AN ACT PROVIDING THE LEGAL FRAMEWORK FOR REAL ESTATE

INVESTMENT TRUST AND FOR OTHER PURPOSES

ARTICLE I

General Provisions

SECTION 1. Short Title. — This Act shall be known as "The Real

Estate Investment Trust (REIT) Act of 2009". EaISTD

SECTION 2. Declaration of Policy. — It is the policy of the State to

promote the development of the capital market, democratize wealth by broadening
the participation of Filipinos in the ownership of real estate in the Philippines, use
the capital market as an instrument to help finance and develop infrastructure
projects, and protect the investing public by providing an enabling regulatory
framework and environment under which real estate investment trusts, through
certain incentives granted herein, may assist in achieving the objectives of this
policy.

SECTION 3. Definition of Terms. — For the purposes of this Act, the

term:

(a) "Adviser" means a lawyer, accountant, auditor, financial or business

consultant, and such other persons rendering professional advisory
services to the real estate investment trust.

(b) "Affiliate" means a corporation that directly or indirectly, through

one or more intermediaries, is controlled by, or is under the common
control of another corporation, which thereby becomes its parent
corporation.

(c) "Associate" of a person includes:

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 i. Any relative of such person within the fourth (4th) degree of
consanguinity or affinity; and

ii. Any company in which he/she and his/her relative within the
fourth (4th) degree of consanguinity or affinity, directly or
indirectly, has an interest of twenty-five percent (25%) or
more.

(d) "Cash Equivalent Items" means instruments or investments that are

highly liquid and marketable and are considered good as cash as
determined in accordance with the rules and regulations prescribed
by the Commission.

(e) "Commission" or "SEC" means the Securities and Exchange

Commission of the Philippines. SaDICE

(f) "Constitutive Documents" means the articles of incorporation and

bylaws of a REIT.

(g) "Control" exists in favor of a parent corporation when it has the

power to direct or govern the financial and operating policies of an
enterprise so as to obtain benefits from its activities. Control is
presumed to exist when the parent owns, directly or indirectly,
through subsidiaries, more than one-half (1/2) of the voting power of
an enterprise, unless in exceptional circumstances, it can clearly be
demonstrated that such ownership does not constitute control.
Control also exists even when the parent owns one-half (1/2) or less
of the voting power of an enterprise when there is power:

i. Over more than one-half (1/2) of the voting rights by virtue of

an agreement with investors;

ii. To direct or govern the financial and operating policies of the

enterprise under a statute or an agreement;

iii. To appoint or remove the majority of the members of the

board of directors or equivalent governing body; or

iv. To cast the majority votes at meetings of the board of

directors of equivalent governing body.

(h) "Corporation Code" refers to Batas Pambansa Bilang 68, otherwise

known as the Corporation Code of the Philippines.

(i) "Deposited Property" means the total value of the REIT's assets
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 based on the latest valuation determined in accordance with the rules
and regulations promulgated by the Commission.

(j) "Distributable Income" means net income as adjusted for unrealized

gains and losses/expenses and impairment losses and other items in
accordance with internationally accepted accounting standards.
Distributable income excludes proceeds from the sale of the REIT's
assets that are re-invested in the REIT within one (1) year from the
date of the sale. aITDAE

(k) "Exchange" means any entity registered with the Commission as a

stock exchange pursuant to the Securities Regulation Code.

(l) "Fund Manager" refers to the person responsible for the allocation of
the deposited property to the allowable investment outlets and
selection of income-generating real estate. It shall execute
investment strategies for the REIT and oversee and coordinate all of
the following activities: property acquisition; property management;
leasing; operational and financial reporting (including operating
budgets); appraisals; audits; market review; accounting and reporting
procedures, as well as refinancing and asset disposition plans. For
clarity, a fund manager is considered independent from the REIT and
its sponsors/promoters under this Act if it is in compliance with the
independence, corporate governance (including the fit and proper
rule) and other requirements prescribed by this Act, its implementing
rules and regulations and the Commission.

(m) "Income-generating Real Estate" means real property which is held

for the purpose of generating a regular stream of income such as
rentals, toll fees, user's fees and the like, as may be further defined
and identified by the Commission. The Commission may promulgate
rules to include real rights over real property, provided they generate
interest or other regular payments to the REIT.

(n) "Independent Director" means a director who has the qualifications

and none of the disqualifications of an independent director specified
in the Securities Regulation Code and its implementing rules and
regulations.

(o) "IRR" refers to the implementing rules and regulations promulgated

to implement the provisions of this Act.

(p) "Investible Funds" refer to funds of the REIT that can be placed in
investment vehicles other than income-generating real estate such as
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 real estate-related assets, managed funds, government securities, and
cash and cash equivalents. SaDICE

(q) "Investor" means the owner of investor securities or investor shares.

(r) "Investor Securities" or "Investor Shares" mean shares of stock

issued by a REIT or derivatives thereof.

(s) "Managed Funds" mean any arrangement whereby funds are

solicited from the investing public and pooled for the purpose of
investing in securities duly registered with and/or approved by the
appropriate regulatory agency of the government for investment by
the REIT.

(t) "Material Contract" refers to an agreement or arrangement where the

amount involved is at least five percent (5%) of the deposited
property of the REIT or which is not entered into in the ordinary
course of business of the REIT. Provided, however, That the
following shall be deemed a material contract regardless of the
amount:

i. Related party transactions under Section 8.11 hereof;

ii. Contract between the REIT and fund manager;

iii. Agreement between the REIT and property manager;

iv. Agreements between and among shareholders such as voting

trust agreements, pooling agreements, joint venture
agreements or other shareholder agreements as may be
determined by the Commission;

v. Any acquisition or disposition of real estate by the REIT;

vi. Contracts relating to investments of the REIT under Section

8.3 hereof;

vii. Any contract creating mortgages, encumbrances, liens or

rights on the real estate of the REIT;

viii. Contract of any nature that limits the declaration or

distribution of dividends by the REIT;

ix. Any contract relating to joint venture, spin-off, consolidation

or merger involving the REIT; and TIEHSA

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 x. Any contract that may be expected to materially affect the
market activity and/or the price of the investor securities
issued by the REIT as may be determined by the Commission.

(u) "Net Asset Value" or "NAV" means the total assets less total
liabilities as determined by the implementing rules and regulations
(IRR) of the Commission.

(v) "Net Income" means net income as determined under the Philippine
Financial Reporting Standards (PFRS).

(w) "Overseas Filipino Investor" refers to an individual citizen of the

Philippines who is working abroad, including one who has retained
or reacquired his Philippine citizenship under Republic Act No.
9225, otherwise known as the "Citizenship Retention and
Re-acquisition Act of 2003".

(x) "Parent" means a corporation which has control over another

corporation, directly or indirectly, through one or more
intermediaries.

(y) "Principal Officer" means the chairman of the board of directors,

president, chief executive officer, chief operating officer, treasurer,
chief financial officer, corporate secretary, vice president, their
equivalent positions, or such other officers occupying positions of
significant influence in a company as may be determined by the
Commission.

(z) "Principal Stockholder" means a stockholder who is directly or

indirectly the beneficial owner of more than ten percent (10%) of
any class of security of the REIT.

(aa) "Public Shareholder" means a shareholder of a REIT other than the

following persons (non-public shareholders):

i. The sponsor/promoter of the REIT; ECaTDc

ii. A director, principal officer or principal shareholder of the

sponsor/promoter of the REIT;

iii. A director, principal officer or principal shareholder of the

REIT;

iv. An associate of a director, principal officer or principal

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 shareholder of the REIT or its sponsor/promoter;

v. A related corporation to the REIT or its sponsor/promoter;

and

vi. Any person who holds legal title to the shares of stock of the
REIT for the benefit of another for the purpose of
circumventing the provisions of this Act.

(bb) "Property Manager" refers to a professional administrator of real

properties who is engaged by the REIT to provide property
management services, lease management services, marketing
services, project management services, including rent collection,
tenant services, care of the physical plant, security, leasing,
marketing of the property to outside prospects, and other similar
services pertaining to the property under administration. For clarity,
a property manager is considered independent from the REIT and its
sponsor(s)/promoter(s) under this Act if it is in compliance with the
independence, corporate governance (including the fit and proper
rule) and other requirements prescribed by this Act, its IRR and the
Commission.

(cc) "Real Estate Investment Trust" or "REIT" is a stock corporation

established in accordance with the Corporation Code of the
Philippines and the rules and regulations promulgated by the
Commission principally for the purpose of owning
income-generating real estate assets. For purposes of clarity, a REIT,
although designated as a "trust", does not have the same technical
meaning as "trust" under existing laws and regulations but is used
herein for the sole purpose of adopting the internationally accepted
description of the company in accordance with global best practices.
TIaCcD

(dd) "Real Property" shall have the same definition as "Immovable

Property" under Article 415 of the Civil Code of the Philippines.
Real estate, when used in this Act, shall have the same meaning as
real property.

(ee) "REIT Plan" refers to the plan, including its amendments, of the
REIT registered with the Commission.

(ff) "Real Estate-Related Assets" mean:

i. Debt securities and listed shares issued by listed property

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 companies; or

ii. Other funds and assets, including personal property,

incidental to the ownership of real estate.

(gg) "Related Corporation" means the parent, subsidiary or affiliate of the

REIT.

(hh) "Related Party" includes:

i. The director, officer or principal stockholder of the REIT or

associate of such persons;

ii. The sponsor/promoter of the REIT;

iii. The fund manager of the REIT;

iv. The adviser of the REIT;

v. The property manager of the REIT;

vi. A director, principal shareholder or principal officer of the

sponsor/promoter of the REIT, REIT's fund manager or
property manager, or associate of any such persons; and

vii. Related corporation to the REIT.

(ii) "Securities Regulation Code" or "SRC" refers to the Securities

Regulation Code of 2000 and its implementing rules and regulations.
EcDATH

(jj) "Sponsor/Promoter" means any person who, acting alone or in

conjunction with one or more other persons, directly or indirectly,
contributes cash or property in incorporating a REIT.

(kk) "Subsidiary" means a corporation more than fifty percent (50%) of

the voting stock of which is owned or controlled, directly or
indirectly, through one or more intermediaries, by another
corporation, which thereby becomes its parent corporation.

(ll) "Synthetic Investment Products" are derivatives and other securities

created exclusively out of one or more financial instruments to
simulate the returns of the underlying financial instruments, such as
credit-linked notes, collateralized debt obligations, total return
swaps, credit spread options, credit default options, and similar

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 products determined by the Commission.

(mm) "Taxable Net Income" means the pertinent items of gross income
specified in Section 32 of the National Internal Revenue Code of
1997, as amended, less all allowable deductions enumerated in
Section 34 of the National Internal Revenue Code of 1997, as
amended, less the dividends distributed by a REIT out of its
distributable income as of the end of the taxable year as: (a)
dividends to owners of the common shares; and (b) dividends to
owners of the preferred shares pursuant to their rights and limitations
specified in the articles of incorporation of the REIT.

ARTICLE II

Real Estate Investment Trust

SECTION 4. Investment in the REIT. — Investment in the REIT shall

be by way of subscription to or purchase of shares of stock of the REIT.

No shares of stock of the REIT shall be offered for subscription or sale

except in accordance with a REIT plan and other requirements and restrictions as
may be prescribed by the Commission. ESTDcC

SECTION 5. Registration and Listing. — The shares of stock of the

REIT must be registered with the Commission and listed in accordance with the
rules of the Exchange.

SECTION 6. Nationality Requirement. — A REIT that owns land

located in the Philippines must comply with foreign ownership limitations
imposed under Philippine law.

SECTION 7. Dividend Distribution. — A REIT must distribute

annually at least ninety percent (90%) of its distributable income as dividends to
its shareholders not later than the last day of the fifth (5th) month following the
close of the fiscal year of the REIT. Subject to the provisions of this Act, the
dividends shall be payable only from out of the unrestricted retained earnings of
the REIT as provided for under Section 43 of the Corporation Code of the
Philippines. The percentage of dividends received by the public shareholders to the
total dividends distributed by the REIT from out of its distributable income must
not be less than such percentage of their aggregate ownership of the total
outstanding shares of the REIT. Any structure, arrangement or provision which
would have the effect of diminishing or circumventing in any form this entitlement
to dividends shall be void and of no force and effect.

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 Distributable income excludes proceeds from the sale of the REIT's assets
that are re-invested by the REIT within one (1) year from the date of the sale.

SECTION 8. Requirements. — Unless the Commission provides

otherwise and after public hearing, taking into account public interest, the need to
protect investors and develop the country's real estate investment industry to make
it globally competitive, the following requirements shall apply:

8.1 Minimum Public Ownership — A REIT must be a public company

and to be considered as such, a REIT must: (a) maintain its status as
a listed company; and (b) upon and after listing, have at least one
thousand (1,000) public shareholders each owning at least fifty (50)
shares of any class of shares who in the aggregate own at least
one-third (1/3) of the outstanding capital stock of the REIT. TAScID

The Commission shall prescribe a recording and monitoring system

that will effectively ensure that the shares of the public shareholders
are traceable to their names and for their own benefit and not for the
benefit of any of the non-public shareholders mentioned above.

Compliance with the minimum public ownership requirement under

this section must be duly certified by a responsible person designated
by the Commission upon listing, as of record date for any dividend
declaration or any corporate action requiring shareholder approval
and other relevant times as may be required by the IRR of this Act.

8.2 Capitalization — A REIT must have a minimum paid-up capital of

Three hundred million pesos (Php300,000,000.00).

8.3 Allowable Investments — A REIT may only invest in:

i. Real estate, whether freehold or leasehold, located in the

Philippines. A REIT may invest in income-generating real
estate located outside of the Philippines: Provided, That such
investment does not exceed forty percent (40%) of its
deposited property and only upon special authority from the
Commission. The Commission in issuing such authority shall
consider, among others, satisfactory proof that the valuation
of assets is fair and reasonable. An investment in real estate
may be by way of direct ownership or a shareholding in an
unlisted special purpose vehicle constituted to hold/own real
estate;

ii. Real estate-related assets, wherever the issuers, assets, or

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 securities are incorporated, located, issued, or traded;

iii. Managed funds, debt securities and listed shares issued by

local or foreign non-property corporations;

iv. Government securities issued on behalf of the Philippine

government or governments of other countries and securities
issued by multilateral agencies;

v. Cash and cash equivalent items; and CHDTEA

vi. Such other similar investment outlets as the Commission may

allow.

8.4 Investment in Synthetic Investment Products — A REIT may invest

not more than five percent (5%) of its investible funds in synthetic
investment products such as, but not limited to, credit default swaps,
credit-linked notes, collateralized debt obligations, total return
swaps, credit spread options, and credit default options, and only
upon special authority from the appropriate regulatory authority.

8.5 Income-generating Real Estate — At least seventy-five percent

(75%) of the deposited property of the REIT must be invested in, or
consist of, income-generating real estate. caADIC

8.6 Property Development — A REIT must not undertake property

development activities whether on its own, in a joint venture with
others, or by investing in unlisted property development companies,
unless it intends to hold the developed property upon completion.
The total contract value of property development activities
undertaken and investments in uncompleted property developments
should not exceed ten percent (10%) of the deposited property of the
REIT.

8.7 Single Entity Limit — Not more than fifteen percent (15%) of
investible funds of the REIT may be invested in any one issuer's
securities or any one managed fund, except with respect to
government securities where the limit is twenty-five percent (25%).

8.8 Foreign Assets — A REIT may invest in local or foreign assets,

subject to the terms of its articles of incorporation. Where an
investment in a foreign real estate asset is made, the REIT should
ensure that the investment complies with all the applicable laws and
requirements in that foreign country such as, but not limited to,

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 foreign ownership restrictions, if any, and requisites of having good
and valid title to that real estate. ACEIac

8.9 Joint Venture — When investing in real estate as a joint owner, the
REIT should make such investment by acquiring shares or interests
in an unlisted special purpose vehicle constituted to hold/own the
real estate and the REIT should have freedom to dispose of such
investment. The joint venture agreement, memorandum and articles
of association or other constitutive documents of the special purpose
vehicle should provide for a minimum percentage of distributable
profits of the special purpose vehicle that will be distributed and
grant the REIT veto rights over key operational issues of the special
purpose vehicle.

8.10 Aggregate Leverage Limit — The total borrowings and deferred

payments of a REIT should not exceed thirty-five percent (35%) of
its deposited property: Provided, however, That the total borrowings
and deferred payments of a REIT that has a publicly disclosed
investment grade credit rating by a duly accredited or internationally
recognized rating agency may exceed thirty-five percent (35%) but
not more than seventy percent (70%) of its deposited property.

8.11 Related Party Transactions — Any contract or amendment thereto,

between the REIT and related parties, including contracts involving
the acquisition or lease of assets and contracts for services, must
comply with the following minimum requirements:

i. Full, fair, timely and accurate disclosures on the identity of

the parties, their relationship with the REIT, and other
important details of the transaction have been made to the
Exchange and the Commission;

ii. Be on fair and reasonable terms, including the contract price;

iii. Approved by at least a majority of the entire membership of

the board of directors, including the unanimous vote of all
independent directors of the REIT;

iv. Accompanied by a fairness opinion by an independent

appraiser done in accordance with the valuation methodology
prescribed by the Commission, in the case of an acquisition or
disposition of real estate assets and property or share swaps or
similar transactions; and ACTISE

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 v. Any other matter that may be materially relevant to a
prospective investor in deciding whether or not to invest in
the REIT.

8.12 Valuation — A full valuation of a REIT's assets must be conducted

by an independent appraisal company, duly accredited by the
Commission, at least once a year in accordance with the applicable
rules of asset valuation and valuation methodology as prescribed by
the Commission.

8.13 Fund Manager — A REIT must appoint a fund manager that is

independent from the REIT and its sponsor(s)/promoter(s) and shall
be subject to the following minimum requirements:

i. It must be a corporation duly organized under the laws of the

Republic of the Philippines or a foreign corporation engaged
in the business of fund management with proven track record
and duly licensed to do business in the Philippines by the
appropriate regulatory agency;

ii. It must have a minimum paid-up capital stock or assigned

capital of Ten million pesos (Php10,000,000.00), unless the
Commission provides otherwise;

iii. Its office in the Philippines must have a meaningful role in its
business activities and must perform accounting, compliance
and investor relations services in the Philippines;

iv. It must comply with the requirements of the relevant law or

appropriate regulatory authority on the number of
independent directors;

v. It must comply with the corporate governance requirements,

including the fit and proper rule, prescribed by this Act and its
IRR;

vi. It must adopt measures as may be prescribed by the IRR of

this Act to avoid conflicts of interest in the discharge of its
duties as fund manager for the REIT; and HEaCcD

vii. It must employ a resident chief executive officer and at least

two (2) full-time professional employees who have a track
record and experience in financial management as well as
experience in the real estate industry.
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 8.14 REIT Property Manager — The REIT must appoint a REIT property
manager who shall be responsible for managing the real estate assets
such as apartment buildings, office buildings, warehouses, hospital
buildings, medical facilities, hotel buildings, resort facilities,
manufacturing plants and other physical assets of the REIT. The
contract between the REIT and the property manager must comply
with the disclosure and other requirements prescribed for related
party transactions.

The REIT property manager shall be independent from the REIT and
its sponsor/promoter and possess the qualifications and be subject to
such functions and responsibilities, restrictions and other
requirements prescribed by the Commission.

The property manager must comply with the following minimum

qualifications:

i. It must comply with the requirement of the SRC or the

Commission on the number of independent directors;

ii. It must comply with the corporate governance requirements,

including the fit and proper rule, prescribed by this Act and its
IRR; and

iii. It must adopt measures as may be prescribed by the IRR of

this Act to avoid conflicts of interest in the discharge of its
duties as property manager for the REIT.

8.15 Independent Directors — At least one-third (1/3) of the board of

directors of a REIT must be independent directors. TcDIaA

8.16 Fit and Proper Rule — To maintain the quality of management of the
REIT and afford better protection to REIT investors, the
Commission, or the concerned regulatory agency, shall prescribe or
pass upon and review the qualifications and disqualifications of
individuals elected or appointed as directors or officers of the REIT,
REIT fund managers, REIT property managers, distributors and
other REIT participants and disqualify those found unfit. The
appropriate regulatory agency may disqualify, suspend or remove
any director or officer who commits or omits an act which renders
him unfit for the position.

In determining whether an individual is fit and proper to hold the

position, regard shall be given to his integrity, experience, education,
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 training, and competence: Provided, however, That the following
persons shall in no case be allowed to serve or act in the capacity of
officer, director or consultant of any REIT, REIT fund manager, or
REIT property manager:

i. Any person convicted of any crime involving any security or

financial product;

ii. Any person convicted of an offense involving fraud or

embezzlement, theft, estafa or other fraudulent acts or
transactions;

iii. Any person who, by reason of any misconduct, is enjoined by

order, judgment, or decree by any court, quasi-judicial body
or administrative agency of competent jurisdiction from
acting as a director, officer, employee, consultant, or agent
occupying any fiduciary position;

iv. Any person found by the appropriate regulatory agency to

have violated, or aided, abetted, counseled, commanded,
induced, or procured the violation of this Act, the Corporation
Code, the General Banking Law, the Insurance Code, the
SRC, or any related laws and any rules, regulations or orders
thereunder;

v. Any person judicially declared to be insolvent, or

incapacitated to contract; and ITcCSA

vi. Any person found guilty by a foreign court, regulatory

authority or government agency of the acts or violations
similar to any of the acts or misconduct enumerated in the
foregoing paragraphs.

A conviction in the first instance shall be considered

sufficient ground for disqualification.

8.17 Executive Compensation — The total annual compensation of all

executive officers of the REIT shall not exceed such percentage of
the net income before regular corporate income tax of the REIT
during the immediately preceding taxable year, as may be provided
in the IRR of this Act and shall be governed by the provisions on
related party transactions.

8.18 Fund Manager and Property Manager Fees. — Fees received by the

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 REIT fund manager and the REIT property manager from the REIT
shall not exceed one percent (1%) of the net asset value of the assets
under management.

SECTION 9. Reportorial and Disclosure Requirements. —

9.1 Requirements — The REIT shall comply with the reportorial and
disclosure requirements prescribed by the Corporation Code, the
SRC and the Exchange. At the minimum, the REIT shall disclose the
following information:

i. Material contracts as defined under Section 3 of this Act;

ii. Allowable investments of the REIT under Section 8.3 hereof;

iii. Related party transactions under Section 8.11 hereof;

iv. Contracts between the REIT and fund manager or the

property manager, including the identity of the parties,
contract price, fees and the other basic terms of the contract;

v. Valuation of the real estate properties of the REIT, including

the valuation methodology used therefore; ECaSIT

vi. Material changes in the income stream of the REIT;

vii. Any fee received by any party relating to the acquisition or

disposition of the real estate of the REIT;

viii. Merger, consolidation, joint venture, takeover or spin-off

involving the REIT;

ix. Any modification of the rights of the holders of any class of

securities issued by the REIT and the corresponding effect of
such modification upon the rights of the holders;

x. Any declaration of cash dividend, stock dividend, property

dividend and pre-emptive rights by the REIT;

xi. Appointment of a receiver or liquidator for the REIT;

xii. Change in control of the REIT;

xiii. Losses or potential losses which amount to at least five

percent (5%) of the deposited property of the REIT;

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 xiv. Occurrence of any event of dissolution with details in respect
thereto;

xv. Acts or facts that might seriously impair the business

activities of the REIT;

xvi. Creation of mortgages, pledges or liens on the properties of

the REIT;

xvii. Any development activity undertaken by the REIT, including

the essential details thereof;

xviii. Direct and indirect ownership of directors and principal

officers in the securities of the REIT;

xix. Any amendment to the articles of incorporation and bylaws of

the REIT; and ATCEIc

xx. Any planned acquisition of outstanding shares or disposition

of treasury shares of the REIT.

9.2 Special Quarterly and Annual Reports — In addition to the quarterly

and annual reportorial and disclosure requirements prescribed for
public and listed companies, the REIT shall make a report on and
disclose the following to the Commission and the Exchange:

i. Summary of all real estate transactions entered into during the

period, including the identity of the parties, the contract price,
and their valuations, including the methods used to value the
assets;

ii. Summary of all the REIT's real estate assets, including the
location of such assets, their purchase prices and the latest
valuations, rentals received and occupancy rates, and/or the
remaining terms of the REIT's leasehold properties;

iii. Comparative summary of the financial performance of the

REIT covering various time periods (e.g., quarterly, one
(1)-year, three (3)-year, five (5)-year or (10)-year).

9.3 REIT Plan — The REIT plan or prospectus shall comply with the
requirements of the SRC and disclose the risks specific to investing
in REITs.

9.4 Failure of Compliance — Failure to comply with reportorial and

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 disclosure requirements shall subject the REIT to the applicable
penalties under the SRC and the rules of the Exchange, without
prejudice to the filing of the appropriate administrative, civil or
criminal action under this Act or existing laws. TSEcAD

ARTICLE III

Taxes and Other Related Issues

SECTION 10. Income Taxation of REITs. — A REIT shall be subject to

income tax under Chapter IV, Title II of the National Internal Revenue Code of
1997, as amended, on its taxable net income as defined in this Act: Provided, That
in no case shall a REIT be subject to the minimum corporate income tax, as
provided under Section 27 (E) and Section 28 (A) (2) of the same Code: Provided,
further, That for purposes of computing the taxable net income of a REIT,
dividends distributed by a REIT from its distributable income after the close of a
taxable year and on or before the last day of the fifth (5th) month following the
close of the taxable year shall be considered as paid on the last day of such taxable
year.

A REIT shall be subject to the income tax on its taxable net income as
defined in Chapter V, Title II of the National Internal Revenue Code of 1997, as
amended, instead of its taxable net income as defined in this Act, upon the
occurrence of any of the following events subject to such curing period as may be
prescribed in the IRR of this Act:

i. Failure to maintain its status as a public company as defined in

Section 8.1 of this Act;

ii. Failure to maintain the listed status of the investor securities on the
Exchange and the registration of the investor securities by the
Commission; and/or

iii. Failure to distribute at least ninety percent (90%) of its distributable

income required under Section 7 of this Act.

SECTION 11. Creditable Withholding Tax. — Income payments to a

REIT shall be subject to a lower creditable withholding tax of one percent (1%).

SECTION 12. Transfer of Real Property. — Any existing law to the

contrary notwithstanding, the sale or transfer of real property to REITs, which
includes the sale or transfer of any and all security interest thereto, shall be subject
to fifty percent (50%) of the applicable Documentary Stamp Tax (DST) imposed
under Title VII of the National Internal Revenue Code of 1997, as amended.

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 All applicable registration and annotation fees to be paid, related or
incidental to the transfer of assets or the security interest thereto, shall be fifty
percent (50%) of the applicable registration and annotation fees. EIaDHS

The incentives granted under this section can be availed of by an unlisted

REIT, provided it is listed with an Exchange not later than two (2) years from the
date of the initial availment of the incentives.

The fifty percent (50%) of the applicable DST shall nevertheless be due and
demandable together with the applicable surcharge, penalties, and interest thereon
reckoned from the date such taxes should have been paid upon the occurrence of
any of the following events subject to such curing period as may be prescribed in
the IRR of this Act:

i. Failure to list with an Exchange within the period prescribed in this

section;

ii. Failure to maintain its status as a public company as defined in

Section 8.1 of this Act;

iii. Failure to maintain the listed status of the investor securities on the
Exchange and the registration of the investor securities by the
Commission; and/or

iv. Failure to distribute at least ninety percent (90%) of its distributable

income required under Section 7 of this Act.

SECTION 13. Issuance and Transfer of Investor Securities. — The

following rules shall apply:

i. The original issuance of investor securities shall be subject to DST

under Title VII of the National Internal Revenue Code of 1997, as
amended;

ii. Any sale, barter, exchange or other disposition of listed investor

securities through the Exchange, including block sales or cross sales
with prior approval from the Exchange, shall be subject to the stock
transaction tax imposed under Section 127 (a) of the National
Internal Revenue Code of 1997, as amended;

iii. Any sale, barter or exchange or other disposition of listed investor

securities through the Exchange, including block sales or cross sales
with prior approval from the Exchange, shall be exempt from the
DST prescribed under Title VII of the National Internal Revenue

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 Code of 1997, as amended; and EDCTIa

iv. Any initial public offering and secondary offering of investor

securities shall be exempt from the tax imposed under Section 127
(b) of the National Internal Revenue Code of 1997, as amended.

SECTION 14. Dividends Paid by REITs. — Cash or property dividends

paid by a REIT shall be subject to a final tax of ten percent (10%), unless: (a) the
dividends are received by a nonresident alien individual or a nonresident foreign
corporation entitled to claim a preferential withholding tax rate of less than ten
percent (10%) pursuant to an applicable tax treaty; or (b) the dividends are
received by a domestic corporation or resident foreign corporation, or an overseas
Filipino investor in which case, they are exempt from income tax or any
withholding tax: Provided, That in the case of overseas Filipino investors, they are
exempt from the dividends tax for seven (7) years from the effectivity of the tax
regulations implementing this Act.

SECTION 15. VAT on Gross Sales or Gross Receipts of REITs. — A

REIT shall be subject to value-added tax (VAT) imposed under Title IV of the
National Internal Revenue Code of 1997, as amended, on its gross sales from any
disposal of real property, and on its gross receipts from the rental of such real
property. A REIT shall not be considered as a dealer in securities and shall not be
subject to VAT on its sale, exchange or transfer of securities forming part of its
real estate-related assets.

SECTION 16. General Application of the National Internal Revenue

Code of 1997, as amended. — Unless otherwise provided under this Act, the
internal revenue taxes under the National Internal Revenue Code of 1997, as
amended, shall apply.

SECTION 17. Delisting of REITs. — In the event the REIT is delisted

from the Exchange, whether voluntarily or involuntarily, for failure to comply
with the provisions of this Act or rules of the Exchange, the tax incentives granted
under this Act shall be ipso facto revoked and withdrawn as of the date the
delisting becomes final and executory and any tax incentives that may have been
availed of by the REIT thereafter shall immediately be refunded to the
Government and the surcharge and penalty prescribed by Section 19 hereof shall
apply. If the delisting is for causes highly prejudicial to the interest of the investing
public such as violation of the disclosure and related party provisions of this Act or
insolvency of the REIT due to mismanagement or misappropriation, conversion,
wastage or dissipation of its corporate assets, the responsible persons shall refund
to its investors at the time of final delisting the value of their shares. DTEcSa

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 ARTICLE IV

Penal Provisions

SECTION 18. Revocation of Registration. — If the Commission finds

out that the REIT was established so as to seek the benefits of this Act without a
true intention to carry out its provisions and/or the IRR, the Commission shall
revoke or cancel the registration of the securities of the REIT. The REIT shall pay
the applicable taxes plus interests and surcharges under the National Internal
Revenue Code of 1997, as amended.

SECTION 19. Penalties. — A fine of not less than Two hundred

thousand pesos (Php200,000.00) nor more than Five million pesos
(Php5,000,000.00) or imprisonment of not less than six (6) years and one (1) day
nor more than twenty-one (21) years, or both at the discretion of the court, shall be
imposed upon any person, association, partnership or corporation, its officer,
employee or agent, who, acting alone or in connivance with others, shall:

i. Understate or overstate the financial statements of the REIT;

ii. Cause any loss, conversion, misappropriation of the assets, securities

or income of the REIT;

iii. Use another person to hold the legal title of the shares of the REIT
for his benefit for the purpose of circumventing the minimum public
ownership prescribed in Section 8.1 of this Act;

iv. Allow himself to be used by another person to hold legal title to the
shares of the REIT for the purpose of circumventing the minimum
public ownership prescribed in Section 8.1 of this Act;

v. Submit false or misleading certification on the minimum public

ownership required by this Act; or ICASEH

vi. Violate any of the provisions of this Act, or the rules and regulations
promulgated under authority hereof.

If the offender is a corporation, partnership or association or other juridical

entity, the penalty may, at the discretion of the court, be imposed upon such
juridical entity and/or upon the officer or officers of the corporation, partnership,
association or entity responsible for the violation, and if such officer is an alien, he
shall in addition to the penalties prescribed, be deported without further
proceedings after service of sentence.

The prosecution and conviction of the offender under this Act and the
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 imposition of the above penalties shall be without prejudice to the administrative,
civil and criminal liabilities of the offender under the SRC.

ARTICLE V

Miscellaneous Provisions

SECTION 20. Corporate Governance. — The REIT property manager

and the REIT fund manager shall be subject to the principles of corporate
governance adopted by the proper regulatory body.

SECTION 21. Use of Registration Fees. — To carry out the purposes

of this Act, the Commission shall retain and use fifty percent (50%) of all fees paid
to it relative to the establishment of REITs and the registration of their securities in
addition to its annual budget.

SECTION 22. Implementing Rules and Regulations. — Within ninety

(90) days from the effectivity of this Act, the Commission, in coordination with
the Bangko Sentral ng Pilipinas (BSP) and the Department of Finance (DOF) and
in consultation with other stakeholders such as the Philippine Stock Exchange and
the real estate industry, shall promulgate the implementing rules and regulations of
the provisions of this Act: Provided, That the Commission, the BSP and the DOF
may continue to issue separate regulations that will apply exclusively to the
institutions under their respective jurisdiction, consistent with the implementing
rules and regulations: Provided, further, That the Commissioner of the Bureau of
Internal Revenue shall issue the IRR regarding all tax provisions of this Act (Tax
Regulations), subject to the review of the Secretary of Finance, in accordance with
Section 4 of the National Internal Revenue Code, as amended, after full and
complete consultation with all sectors concerned. IEDaAc

SECTION 23. Separability Clause. — If, for any reason, any article or
provision of this Act or any portion therefore or application of such article,
provision or portion thereof to any person, group or circumstance is declared
invalid or unconstitutional, the remainder of this Act shall not be affected by such
decision.

SECTION 24. Repealing Clause. — All laws, executive orders, rules

and regulations and parts thereof which are inconsistent with this Act are hereby
repealed or amended accordingly.

SECTION 25. Effectivity Clause. — This Act shall take effect fifteen
(15) days after its complete publication in the Official Gazette or in at least two (2)
newspapers of general circulation in the Philippines.

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 Lapsed into law on December 17, 2009 without the signature of the
President, in accordance with Article VI, Section 27 (1) of the Constitution.

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 Endnotes

1 (Popup - Popup)
SEC Notice - Re-publication of Amendments of the Implementating Rules and Regulations of
Republic Act No. 9856 (REIT Law)
Amendments to IRR of Real Estate Investment Trust (REIT) Act of 2009 (RA 9856)
IRR of Real Estate Investment Trust (REIT) Act of 2009 (RA 9856)

Revenue Regulations No. 013-11

RA 386
RA 8424
RA 8799

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