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<&& 
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;),it i i.~.;:IrranY 
14TH CONGRESS OF THE 
1 
REPUBLIC OF THE PHILIPPINES 
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Second Regular Session 
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Prepared by the ,Committees on Banks, Financial Institutions and 
Currencies and Ways and Means in substitution of Senate Bill No. 63 
AN ACT 
PROVIDING THE REGULATORY FRAMEWORK FOR REAL ESTATE 
INVESTMENT COMPANIES AND FOR OTHER PURPOSES 
Be if enacted by the Senate and House of Representatives of the 
Philippines in Congress assembled: 
ARTICLE I 
GENERAL PROVISIONS 
SECTION I. 
Short Title. - This Act shall be known as “The Real Estate 
lnvestment Company Act of 2008.” 
SEC. 2. Declaratlon of Policy. - It is the policy of the State to promote 
the development of the capital market, broaden 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 
for real estate investment companies. 
SEC. 3. Definition of Terms. - For the purposes of this Act, the term: 
a. 
“Associate” of a director or officer includes: 
i. 
Any member of the director’s immediate family (Le,, 
parent, 
spouse, child, stepchild, brother or sister, by consanguinity 
or affinity); and 


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ii. 
Any company in which he/she and hislher immediate family 
together, directly or indirectly, have an interest of twenty-five 
(25%) percent or more. 
b. 
“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, 
C. 
“Commission” or “SEC” means the Securities and Exchange 
Commission of the Philippines. 
d. 
“Constitutive Documents” means the Articles of Incorporation 
and by-laws of a REIC. 
e. 
“Deposited Property” means the total value of the REIC’s assets 
based on the latest valuation determined in accordance with the 
rules and regulations promulgated by the Commission. 
f. 
“Distributable Income” means net income as adjusted for 
unrealized gains and losseslexpenses and impairment losses, as 
prescribed by the Commission. 
g. 
“Exchange” means any entity registered with the Commission as 
an exchange pursuant to the Securities Regulation Code. 
h. 
“Independent Director” means a director who 
has the 
qualifications and none of the disqualifications specified in the 
Securities Regulation Code and its implementing rules and 
regulations. 
I. 
“Interested Party” includes: 
I. 
The sponsor/promoter of the REIC; 
The REIC Property and Fund Managers; 
ii. 
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iii. 
The adviser or consultant of the REIC, sponsor/promoter, 
Property and Fund Managers of the REIC; 
iv. 
A director or officer of (i) the sponsor/promoter of the REIC, 
or (ii) the REIC Property and Fund Managers; and the 
adviser or Associate of any such director; or 
v. 
A related corporation, partnership or party as may be defined 
by the Commission. 
1. 
“Investor” means the owner of Investor Securities or Investor 
Shares. 
k. 
“Investor Securities” or “Investor Shares” means shares of 
stock issued by a RElC or derivatives thereof. 
I. 
“Net Asset Value” or “NAV” means the total assets less total 
liabilities as determined by the 
Implementing Rules and 
Regulations (IRR) of the Commission. 
m. 
“Net Income” means net income as determined under the 
Philippine Financial Reporting Standards (PFRS). 
n. 
“Overseas Filipino Investor” refers to an individual citizen of the 
Philippines who is working or who has worked abroad, including 
one who is retained or re-acquired his Philippine citizenship under 
Republic Act No. 9225, otherwise known as the “Citizenship 
Retention and Re-acquisition Act of 2003”. 
0. 
“Real Estate Investment Company” or “REIC” is the legal 
vehicle established for the sole purpose of allowing small and large 
investors alike to participate in the ownership of income-producing 
real estate assets and real estate-related assets. Unless otherwise 
provided by the applicable law, a RElC shall be a stock corporation 
established in accordance with the Corporation Code of the 
Philippines and listed in an Exchange in accordance with its listing 
rules. 
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P. 
“Real Property” shall have the same definition as “Immovable 
Property” under Article 415 of the New Civil Code of the 
Philippines. 
4. 
“Real Estate-Related Assets” shall mean: 
i. 
Debt securities and shares issued by listed property 
companies; or 
II. 
Other funds and assets, including personal property, 
incidental to the ownership of real estate comprising the 
REIC. 
r. 
“REIC Plan” means the plan, including any amendments of the 
RElC registered with the Commission in accordance with its IRR. 
S. 
“REIC 
Property 
Manager” 
shall 
mean 
the 
independent 
professional administrator of real properties who is engaged by the 
RElC to provide property management services, lease management 
services, marketing services, project management services and 
other similar services pertaining to property administration. 
t. 
“Taxable Net Income” means the pertinent items of gross income 
specified in Section 32, less all allowable deductions enumerated 
in Section 34, of the National Internal Revenue Code of 1997, as 
amended, less the dividends distributed by a RElC 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 REIC. 
ARTICLE It 
REAL ESTATE INVESTMENT COMPANY 
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SEC. 4. lnvesfment in the RNC. - Investment in a RElC shall be by way 
of subscription to or purchase of Investor Securities. 
No Investor Securities shall be offered for subscription or sale except in 
accordance with a RElC Plan and other requirements and restrictions as may be 
prescribed by the Commission. 
SEC. 5. Listing. - The Investor Securities must be registered with the 
Commission and listed in accordance with the rules of the Exchange. 
SEC. 6. Nationality Requirement. - A  RElC that owns land must comply 
with foreign ownership limitations imposed under Philippine law. 
SEC. 7. Dividend Pisfribution. - A'REIC must distribute annually at least 
ninety percent (90%) of its Distributable Income to its Investors. However, this 
excludes income on the sale of the REIC's assets that are re-invested by the 
RElC within one (I) 
year from the date of the sale. 
SEC. 8. Requirements. - Unless the Commission provides otherwise 
taking into account public interest, the need to protect investors and develop the 
country's real estate investment industry to make it globally competitive: 
8.1. 
8.2. 
Minimum Public Ownership - A RElC must, at all times, be a 
public company and to be considered as such, the RElC must, 
upon and after listing, (a) have at least one thousand (1,000) 
shareholders each owning at least one hundred (100) shares of a 
class of shares who in the aggregate own at least thirty percent 
(30%) of the outstanding capital stock of the REIC, and (b) must not 
be considered a closely-held corporation under Section 127(B) of 
the National Internal Revenue Code of 1997, as amended. 
Minimum Capital - A  RElC must have a minimum paid-up capital of 
One Hundred Million Pesos (PHP 100,000,000.00) at the time of its 
registration. 
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8.3 Allowable Investments - Subject to the requirements and 
restrictions prescribed in this Act, a RElC may only invest in: 
a. 
Income-producing Real Property, whether freehold or 
leasehold. An investment in Real Property may be by way of 
direct ownership or a shareholding in an unlisted special 
purpose vehicle constituted to hold or own Real Property; 
b. 
Real Estate-Related Assets, wherever the issuers, assets, or 
securities are incorporated, located, issued, or traded; 
c. 
Managed funds, debt securities and shares issued by listed 
local or foreign non-property corporations; 
d. 
Government securities issued on behalf of the Philippine 
Government, governments of other countries and securities 
issued by supra-national agencies; 
e. 
Cash and Cash Equivalent Items; and 
f. 
Such other investment outlets as the Commission may allow. 
8.4 
Income-Producing Real Property - At least seventy-five percent 
(75%) of the Deposited Property of the RElC must be invested in, 
or consist of, income-producing Real Property located in the 
Philippines. 
8.5 
Propertv Development - A RElC 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 (loo/) of 
its 
Deposited Property. 
8.6 Single Entitv Limit - Not more than twenty percent (20%) of the 
Deposited Property of the RElC shall be invested in any single 
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8.7 
8.8 
8.9 
issuer’s securities, whether listed or unlisted, or in any single 
managed fund. 
Foreiqn Assets - A RElC may invest in local or foreign assets, 
subject to the terms of its Constitutive Documents and the legal 
requirements of the foreign country. 
Aclclreqate Leverane Limit - The total borrowings and deferred 
payments of a RElC shall not exceed thirty-five percent (35%) of its 
Deposited Property: Provided, however, That the total borrowings 
and deferred payments of a RElC 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. 
Interested Partv Transactions - Any material contract between 
the RElC and Interested Parties, including contracts involving the 
acquisition or lease of assets, must comply with the following 
requirements: 
a. 
b. 
C. 
d. 
Full, fair, timely and accurate disclosures on the identity of 
the parties and other important details of the transaction 
have been made to the Exchange and the Commission; 
Be on fair and reasonable terms, including the contract price; 
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 REIC; and 
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 assets. 
8.10 Valuation - A full valuation of a REIC’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 
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rules of asset valuation and valuation methodology prescribed by 
the Commission. 
8.11 
Fund Manager - A RElC must appoint an independent Fund 
Manager who shall be responsible for managing the funds of the 
REIC. The Fund Manager shall be appointed in accordance with, 
and perform duties and functions and subject to such requirements 
and restrictions as may be prescribed by, the rules and regulations 
of the Commission. The following are the minimum qualifications of 
a REIC Fund Manager: 
a. 
It must be a corporation duly licensed to do business in the 
Philippines; 
b. 
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; 
c. 
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; 
d. 
It must employ a resident chief executive officer and at least 
two (2) full-time professional employees who have a proven 
track record in fund management and experience in the real 
estate industry ; and 
e. 
It must not have a conflict of interest as defined in the 
implementing rules and regulations of this Act. 
0.12. RElC Property Manaaer - The RElC must appoint a RElC 
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 REIC. The contract between the RElC and the Property 
Manager must be: (a) approved by a majority of the entire 
membership of Board of the REIC, including all the independent 
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directors of the REIC; (b) on arms-length basis and its terms are 
fair and reasonable to the REIC; and (c) promptly disclosed to the 
Exchange and the Commission. 
The RElC Property Manager shall possess the qualifications and 
be subject to such functions and responsibilities, restrictions and 
other requir6ments prescribed by the Commission. 
8.13. Independent Directors - At least one-third (1/3) of the board of 
directors of a RElC must be independent directors. 
8.14. Fit and Proper Rule - To maintain the quality of management of 
the RElC and afford better protection to RElC Investors, the 
Commission together with other concerned regulatory agencies, 
shall prescribe or pass upon and review the qualifications and 
disqualifications of individuals elected or appointed as directors or 
officers of the REIC, RElC Fund Managers, RElC Property 
Managers, distributors and other RElC 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, 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, consultant, of any RElC Fund Manager, 
RElC Property Manager, Trustee, and distributor: 
a. 
Any person convicted of any crime involving any security or 
financial product; 
b. 
Any 'person convicted of an offense involving fraud or 
embezzlement, theft, estafa or other fraudulent acts or 
transactions; 
c. 
Any person who, by reason of any misconduct, is enjoined 
by order, judgment, or decree by any court, quasi-judicial 
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body or administrative agency of competent jurisdiction from 
acting as a director, officer, employee, consultant, or agent 
occupying any fiduciary position; 
d. 
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, General Banking Law, the Insurance Code, the 
Securities Regulation Code, or any related laws and any 
rules, regulations or orders thereunder; 
e. 
Any person judicially declared to 
be insolvent, or 
incapacitated to contract; and 
f. 
Any p.erson 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 
foreg.oing paragraphs. 
A conviction in the first instance shall be considered sufficient 
ground for disqualification. 
ARTICLE 111 
TAXESANDOTHERRELATEDISSUES 
SEC.9. Income Taxation of REICs. - A RElC 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, however, 
That RElCs that are listed within three (3) years from the effectivity of the IRR of 
this Act and that qualify as a public company pursuant to Section 8.1 hereof shall 
be subject to income tax at the rate of twenty-five percent (25%) for a period of 
seven (7) years from the date of listing in lieu of the income tax rates prescribed 
by Title II of the National Internal Revenue Code of 1997, as amended. 
For 
purposes of computing the Taxable Net Income of a REIC, dividends distributed 
by a RElC from its Distributable Income after the close of a taxable year and on 
or before the fifteenth day of the fourth month following the close of the taxable 
year shall be considered as paid on the last day of such taxable year. 
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A REIC shall be subject to the income tax imposed under Title I1 of the 
National Internal Revenue Code of 1997 as amended instead of the income tax 
on its Taxable Net Income under 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: 
a. 
Failure to maintain its status as a public company as defined in 
Section 8.1 of this Act; 
b. 
Failure to maintain the listed status of the investor Securities on the 
Exchange and the registration of the Investor Securities by the 
Commission; andlor 
c. 
Failure to distribute at least ninety percent (90%) of its Distributable 
Income required under Section 7 of this Act. 
SEC. 10. Transfer of Real Property. - Any existing law to the contrary 
notwithstanding, the sale or transfer of Real Property to REICs, which includes 
the sale or transfer of any and all security interest thereto, shall be subject to tax 
as follows: 
a. 
Exempt from Documentary Stamp Tax ("DST") imposed under Title 
VI1 of the National Internal Revenue Code of 1997, as amended; 
and 
b. 
Exempt from Creditable Withholding Tax ("CWT") on the transfer of 
ordinary assets, imposed under Title ll of the National Internal 
Revenue Code of 1997 as amended, for a period of seven (7) years 
from the date of effectivity of this Act. 
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. 
The incentives granted under this section can be availed of by an unlisted 
REIC, provided it is listed with an Exchange within one (1) year from the date of 
the availment of the incentives. 
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The DST and fifty percent (50%) of the applicable registration and 
annotation fees shall nevertheless become due and demandable, together with 
the applicable surcharge, penalties, and interest thereon reckoned from the date 
such taxes and fees should have been paid if the transfer was not made 
pursuant to the provisions of this Act, upon the occurrence of any of the following 
events subject to such curing period as may be prescribed by in the IRR of this 
Act: 
a. 
Failure to list with an Exchange within the period prescribed in this 
section; 
b. 
Failure to maintain its status as a public company as defined in 
Section 8.1 of this Act; 
C. 
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 
d. 
Failure to distribute at least ninety percent (90%) of its Distributable 
income required under Section 7. 
SEC. 11. Issuance and Transfer of lnvestor Securities. - The following 
rules shall apply: 
a. 
b. 
C. 
The original issuance of Investor Securities shall be subject to DST 
under Title VII of the National Internal Revenue Code of 1997 as 
amended. 
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. 
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 subject to 
such DST as may be imposed under Title VI1 of the National 
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Internal Revenue Code of 1997, as amended, unless exemption for 
such sale, barter, or exchange, or other disposition of listed 
Investor Securities, including such block sales and cross sales, is 
provided for the period prescribed by the applicable law. 
d. 
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. 
SEC. 12. Dividends paid by RNCs. - Cash or Property Dividends Paid 
by a RElC to its Investors shall be subject to income tax under Title II of the 
National Internal Revenue Code of 1997, as amended, as follows: 
a. 
If the Investor a Filipino citizen, a resident alien, a nonresident alien 
whether or not engaged in trade or business in the Philippines, or a 
nonresident foreign corporation (as these terms are defined in the 
National Internal Revenue Code of 1997, as amended) the 
dividends shall be subject to a final tax of ten percent (10%). 
b. 
If the Investor is a domestic corporation, a resident foreign 
corporation, or an Overseas Filipino Investor, the dividends shall be 
exempt from .income tax. 
SEC. 13. VAT on Gross Sales or Gross Receipts of RElCs. - A RElC 
shall be subject to 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 
RElC 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. 
SEC. 14. Delisting of RElCs. - In the event the RElC is delisted from the 
Exchange, whether voluntarily or involuntarily, the tax incentives granted under 
this Act shall be ipso facto revoked and withdrawn as of the date of delisting and 
any tax incentives that may have been availed of by the RElC thereafter shall 
immediately be refunded to the Government and the surcharge and penalty 
prescribed by Section 15 hereof shall apply. 
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ARTICLE IV 
PENAL PROVISIONS 
SEC. 15. Withdrawal of Registration. - If the Commission finds that the 
RElC was established so as to seek the benefits of this Act without a true 
intention to carry it out as determined in accordance with the implementing rules 
and regulations, the Commission shall withdraw or cancel the registration of the 
securities of the REIC. The RElC shall pay the applicable taxes plus interests 
and surcharges under the National Internal Revenue Code of 1997, as amended. 
SEC. 16. Penalties. - (a) Any and all breach by the RElC Fund Manager 
or the REIC Property Manager of the provisions of this Act and the rules and 
regulations of the Commission shall be punishable by a penalty of revocation of 
its license or corporate registration, as applicable, and a fine of not less than Two 
Hundred Thousand Pesos (PHP200,000.00) and shall subject its officers and 
employees responsible for such breach to a penalty of imprisonment for two (2) 
years and a fine of not less than One Hundred Thousand Pesos 
(PHPI00,000.00). 
(b) 
Any person who violates any of the provisions of this Act, or the 
rules and regulations promulgated by the Commission under authority hereof, or 
any person who, in a RElC Plan , registration statement, notice, or any 
submission filed under this Act, makes any untrue statement of a material fact or 
omits to state any material fact required to be stated therein or necessary to 
make the statements therein not misleading, shall, upon conviction, suffer a fine 
of not less than Fifty Thousand Pesos (PHP50,000.00) nor more than Five Million 
Pesos (PHP5,000,000.00) or imprisonment of not less than six (6) years and one 
( I )  day nor more than twenty-one (21) years, or both in the discretion of the 
court. If the offender is a corporation, partnership or association or other juridical 
entity, the penalty may, in the discretion of the court, be imposed upon such 
juridical entity 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. 
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ARTICLE V 
MISCELLANEOUS PROVISIONS 
SEC. 17. Corporate Governance. - The RElC Property Manager and the 
RElC Fund Manager shall be subject to the principles of corporate governance 
adopted by the proper regulatory body. 
SEC. 18. lmplementing Rules and Regulations. - Within ninety (90) 
days from the effectivity of this Act, the Commission, in coordination with the 
Bangko Sentral ng Pilipinas ("ESP") and the Department of Finance ("DOF"), 
shall promulgate the implementing rules and regulations implementing the 
provisions of this Act: Provided, That the Commission, 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. 
SEC. 19. Repealing Clause. - All laws, executive orders, rules and 
regulations, and parts thereof which are inconsistent with this Act are hereby 
repealed or amended accordingly. 
SEC. 20. Separability Clause. - If any provision or part hereof is declared 
invalid or unconstitutional, the remainder of this Act or provision thereof not 
otherwise affected shall remain valid and subsisting. 
SEC. 21. 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. 
Approved: 
15