PHILIPPINES Law and Practice Contributed by: Rose Marie M. King-Dominguez, Melyjane G. Bertillo-Ancheta and Franco Aristotle G. Larcina, SyCip Salazar Hernandez & Gatmaitan
• the proposed merger or acquisition transaction, or investment in a public service has national security implications. National security review may be undertaken upon vol - untary declaration of the parties to the transaction or upon initiation of the relevant government department or administrative agency. Based on the recommendation from the results of the comprehensive national security review, the President may suspend or prohibit any proposed merger or acquisition transaction, or any investment in a public service that effectively results in the grant of control, whether direct or indirect, to a foreigner or a foreign corporation. Under Foreign Investments Act, as amended,, upon the order of the President, the National Economic and Development Authority (NEDA), in co-ordination with the National Security Council and the Inter-Agency Investment Promotion Coordination Committee, shall review foreign investments in “military-related indus - tries, cyber infrastructure, pipeline transportation, or such other activities which may threaten territorial integrity and the safety, security and well-being of Filipino citizens” if such investments: • are made by foreign government-controlled entities or state-owned enterprises, except independent pension funds, sovereign wealth funds and multi - national banks; or • are located in geographical areas critical to national security. The recommendations that the NEDA may make include suspension, prohibition and limitation. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments Amendments to the IRR of the Real Estate Investment Trust (REIT) Act On 8 January 2026, the SEC issued an amendment to the IRR of the REIT Act, which, among others, clari - fied the definition of “income-generating real estate”
(which must account for at least 75% of a REIT’s deposited property) to specifically include those real properties with a regular stream of income derived from the lease of (or other similar arrangement) toll roads, railways, airports and air navigation facilities, ports, information and communications technology infrastructure, energy infrastructure assets, data cen - tres, parking lots, buildings, malls, warehouses or storage facilities, immovable fixtures, machineries, facilities, and structures, and real rights over proper - ties including but not limited to usufruct, easements, and registered leases. This amendment thus clarifies the categories of real properties that may qualify as “income-generating real estate” held by a REIT. The amendments to the IRR of the REIT Act also extended the reinvestment period (from one year to two years) applicable to sponsors who transfer income-generating real property to a REIT. Within the two-year period, sponsors must reinvest proceeds realised from such transfer into other real estate assets in the Philippines. The amendments also clarified that such reinvestment may take the form of investment in equity, extension of loans or other debt instruments, and repayment of loans or other debt instruments in relation to any real estate or infrastructure project in the Philippines. Capital Markets Efficiency Promotion Act An amendment to the NIRC, which seeks to optimise taxation of products and transactions in the Philippine capital markets, was enacted into law on 1 July 2025. Among the amendments introduced by Republic Act No 12214, or the Capital Markets Efficiency Promotion Act (CMEPA) are as follows. • CMEPA imposes on both domestic and foreign corporations a 15% Capital Gains Tax (CGT) on sale of shares of stock not listed in an exchange. Prior to the effectivity of the CMEPA, the 15% CGT was imposed only on domestic corporations. • CMEPA reduced the rates of Stock Transaction Tax for domestic shares listed and traded through a stock exchange from 0.60% to 0.10%. • CMEPA reduced the Documentary Stamp Tax on original issuance of shares from 1% to 0.75% of the par value of such shares.
995 CHAMBERS.COM
Powered by FlippingBook