AT A GLANCE:
Republic Act No. 9856, otherwise known as the “Real Estate Investment Trust (REIT) Act of 2009, imposes a fine of not less than Php200,000.00 nor more than Php5,000.000.00 or imprisonment of not less than 6 years and 1 day nor more than 21 years, or both at the discretion of the court, upon any person, association, partnership or corporation, its officer, employee or agent, who, acting alone or in connivance with others, commits the acts specified under Section 19 of the REIT Act.
What Happens if a REIT Violates the REIT Act?
Under Section 19 of Republic Act No. 9856, otherwise known as the “Real Estate Investment Trust (REIT) Act of 2009,” the law imposes penalties for certain acts committed in violation of the REIT Act and the rules and regulations promulgated under it.
What Acts are Punishable Under the REIT Act?
Section 19 of Republic Act No. 9856 specifically enumerates the following acts as punishable under the REIT Act:
- Understate or overstate the financial statements of the RElT;
- Cause any loss, conversion, misappropriation of the assets, securities or income of the REIT;
- 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;
- 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;
- Submit false or misleading certification on the minimum public ownership required by the REIT Act; or
- Violate any of the provisions of the REIT Act, or the rules and regulations promulgated under authority hereof.
Who May Be Held Liable Under the REIT Act?
Section 19 of R.A. No. 9856 imposes the prescribed penalties upon any person, association, partnership, or corporation, including its officer, employee, or agent, who, acting alone or in connivance with others, commits any of the acts enumerated therein.
Who May Be Held Liable When the Offender is a Juridical Entity?
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. (Section 19, R.A. No. 9856)
What Penalty shall be imposed if a REIT Violates the REIT Act?
If a REIT Violates the REIT act in accordance to those indicated in Section 19 of Republic Act No. 9856, the person committing such violation shall be penalized with 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. (Section 19, R.A. No. 9856)
Are the Penalties Under the REIT Act Exclusive?
No. The prosecution and conviction of the offender and the imposition of the above penalties shall be without prejudice to the administrative, civil and criminal liabilities of the offender under the Securities Regulation Code (SRC). (Section 19, R.A. No. 9856)
What Happens if a REIT is Established Merely to Obtain the Benefits of the REIT Act?
Under Section 18 of R.A. No. 9856, if the Commission finds that a REIT was established to seek the benefits of the Act without a true intention to carry out its provisions and/or the implementing rules and regulations, the Commission shall revoke or cancel the registration of the securities of the REIT. The REIT shall pay the applicable taxes, together with interests and surcharges, under the NIRC, as amended.
RELATED ARTICLES:
- Taxation and Tax Incentives of Real Estate Investment Trusts (REIT)
- Fit and Proper Rule Under the Real Estate Investment Trust (REIT) Act of 2009
Click here to subscribe to our newsletter
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
All rights reserved.