' t  
13TH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
'OCT 26 $4 :11 
S E N A T E  
S.B. NO. - 
I830 
Introduced by 
Senator Edgardo J. Angara 
EXPLANATORY NOTE 
The Special Purpose Vehicle (SPV) Act of 2002 (Republic Act No. 9182) was 
intended to help banks in the disposal of their non performing assets (NPAs) by granting 
tax exemptions and reduced registration and transfer fees. The SPV Act was expected 
to strengthen the balance sheets of the financial institutions and restore their capability 
to perform their role as mobilizers of savings and investments for the country's growth 
and development. 
To date, however, the benefits under the SPV Act have not been maximized. The 
financial system is still burdened by NPAs amounting to about P511.6 billion as of March 
2004 of which P274B is in nonperforming loans. The sluggish offloading of the NPAs by 
financial institutions is caused by several reasons, such as: (1) the delay in the issuance 
of the revenue regulation dealing with the tax aspect of the SPV Act; (2) the complex 
legal, accounting, tax and other issues involved in the implementation of the SPV Act; 
and (3) the huge magnitude of NPAs in the banking system which would require 
significant amount of time for proper disposal. 
With the period for the availment of the benefits under the SPV Act coming to an 
end, the offloading of NPAs is finally gaining a strong momentum. As of September 18, 
2004, which is the deadline for registration of SPVs with the Securities and Exchange 
Commission (SEC), thirty-six (36) SPVs have been registered making them eligible to 
acquire NPAs until April 8, 2005. I n  the early part of October, the BSP was processing 
nineteen (19) applications for certificates of eligibility with an aggregate amount of 
P34.4 billion of NPAs. These are good indications that banks are pursuing serious efforts 
to unload their NPAs under the SPV Act. 
This bill proposes to extend for five (5) more years the deadlines for the 
establishment of an SPV and for the availment of the tax exemptions and fee privileges 
in the sale or transfer of NPAs. The extension will allow the financial system to fully and 
properly realize the objectives for which the SPV Act was enacted. For the same reason, 
the bill also proposes to include all assets that have become nonperForming beyond June 
30, 2002. I n  view of this, the undersigned strongly recommends the immediate passage 
of this bill. 
EDGARDO J. ANGARA 


c 
13TH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
S E N A T E  
S.B. NO. - 
1830 
Introduced by 
Senator Edgardo I. Angara 
AN ACT AMENDING REPUBLIC ACT 
NUMBER NINETY ONE HUNDRED AND EIGHTY TWO (RA. NO. 9182), 
OTHERWISE KNOWN AS THE SPECIAL PURPOSE VEHICLE ACT OF 2002 
Be it enacted by the Senate and the House of Representatives of the Philippines 
in Congress assembled 
SECTION 1. Period for filing of applications - Section 6 of Republic Act No. 
9182 is hereby amended, to read as follows: 
Section 6. Period for Filing of Applications. - Applications for the 
establishment and registration of an SPV shall be filed with the 
Commission not beyond SEVENTY-EIGHT (78) [eighteen (18)] months 
from the date of approval of the Implementing Rules and Regulations 
(IRR) by the Congressional Oversight Committee (COC) created in Section 
23 Hereof. 
SECTION 2. Tax Exemptions and Fee Privileges - The third and fourth 
paragraphs of Section 15 of Republic Act No. 9182 is hereby amended, by extending the 
duration of tax exemptions and privileges, which shall read as follows: 
Section 15. Tax Exemptions and Fee Privileges - 
x x x  
All sales or transfers of NPAs from the FIs to an SPV or transfers 
by way of dation in payment (dacion en pago) by the borrower or by a 
third party to the FI shall be entitled to the privileges enumerated herein 
for a period of not more than SEVEN (7) [two (2)] years from the date 
of effectivity of the IRR: Provided, That transfers from an SPV to a third 
party of NPAs acquired by the SPV within such SEVEN-YEAR [two-year] 
period or transfers by way of dation in payment (dacion en pago) by a 
borrower to the SPV shall enjoy the privileges enumerated herein for a 
period of not more than five (5) years from the date of acquisition by the 
SPV: Provided, hrther, That properties acquired by an SPV from GFIs or 
GOCCs which are devoted to socialized or low-cost housing shall not be 
converted to other uses. 
The abovementioned tax exemptions, incentives, and fee 
privileges given to FIs and SPV at the various stages of the transactions 


under this section shall likewise be extended to any individual in 
accordance with the IRR: Provided, That: 
(i) The transaction is limited to a single family residential unit 
ROPOA or NPL secured by real estate mortgage on a residential 
unit; 
(ii) There shall only be one transaction consisting of one 
residential unit per individual; and 
(iii) The SEVEN-YEAR [two-year] transfer and the five-year 
entitlement period granted to NPA shall also apply to said single 
family residential unit. 
SECTION 3. Privileges of Participating FIs - Section 17 (a) of Republic Act No. 9182 is 
hereby amended to read as follows: 
Section 17. Privileges of Partic@aation FJs. - (a) Any loss that is incurred 
by the financial institutions as a result of the transfer of NPAs shall be treated as 
ordinary loss: Provided, That the accrued interest and penalties shall not be 
included as loss on said loss carry over from operations subject to the provisions 
of the National Internal Revenue Code of 1997 on net operating loss carry-over 
(NOLCO), except that the loss incurred by the FI from the transfer of NPAs 
within the SEVEN-YEAR [two-year] period from the effectivity of the IRR may 
be carried over for a period of five (5) consecutive taxable years immediately 
following the year of such loss: Provided, further, That for the purpose of 
corporate gain or loss the carry-over shall be subject to pertinent laws: Provided, 
fina/k, That the tax savings derived by FIs from the NOLCO shall not be made 
available for dividend declaration but shall be retained as a form of capital build- 
UP. 
SECTION 4. Applicability Clause. - Section 26 of Republic Act No. 9182 is hereby 
amended, by including assets that have become nonperforming beyond June 30, 2002, which 
shall read as follows: 
Section 26. Applicabilify Clause. - The provisions of this Act shall be 
applicable to assets that have become non-performing BEFORE OR WITHIN 
HEREOF [as of June 30,2002]. 
SECTION 5. Separabiility Clause, - If any provision or section of this Act or the 
application thereof to any person or circumstance is held to be invalid, the other 
provisions or sections of this Act, and the application of such provision or section to 
other persons or circumstances, shall not be affected thereby. 
SECTION 6. Repealing Clause. Any law, presidential decree or issuance, 
executive order, rule or regulation contrary to, or inconsistent with the provisions of this 
Act is hereby repealed, modified, or amended accordingly. 
SECTION 7. Efectivify -This Act shall take effect fifteen (15) days following 
its complete publication in the Official Gazette or in at least two (2) newspapers of 
general circulation. 
THE SEVEN-YEAR PERIOD MENTIONED UNDER SECTIONS 15 AND 17 
Approved.