Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No. 862 a

Introduced by Honorable Junie E. Cua

THE PHILIPPINE BANKING INDUSTRY RESILIENCY ACT AGAINST COVID-19 PANDEMIC

EXPLANATORY NOTE

The Coronavirus Disease 2019 (“COVID-19") pandemic has been plaguing the global
community posing a serious downside risk to the economy. In response, the Philippine
government has taken various measures like travel restrictions, enhanced community
quarantine, and cessation of operations of all private establishments, except those rendering
basic and essential services and other establishments expressly exempted, among others, in a
bid to contain the virus. These necessary measures have caused widespread shutdown of
business activities, triggered an economic downturn, and dramatically impacted the financial
sector.

The State recognizes the role of banks and other financial institutions as mobilizers of
savings and investments for the country’s growth and development. These financial institutions
are main components of the financial system and their continued financial health is critical to
the maintenance of financial stability. It is essential, therefore, that banks and other financial
institutions are able to maintain their financial health to be effective partners of the National
Government in helping our country “heal as one” from the adverse economic effects of the
COVID-19 pandemic.

To date, as a result of the pandemic and disruption of economic activities, most financial
institutions are facing a period of delayed loan collections and are at risk of recording higher
non-performing assets (“NPAs”) across all borrower segments. NPAs consist of financial
institutions’ (1) non-performing loans (“NPLs”) and (2) real and other properties acquired
(“ROPAs") in settlement of loans and receivables. NPAs prevent banks and financial institutions
from effectively performing their crucial role of financial intermediation. They result in the


financial intermediaries incurring heavy costs in the management and administration ot NPAs —
spcteneues that are best lett Co asset management companics Moreover, much of the financial
thed up in NPAs, High NPA ratios adversely affect investor and

onduct af financial intermediation.

intermediaries’ tquidity
depositor confidence, ultimately hampering the efficient
ines, simulation shows & potential

According to the Bankers Association of the Philippi
increase in NPLs from an estimated 5% today to 20% or more in.a matter of months, This would
translate into approximately P240-P300 billion of NPs, of which between SO% to 80%, or P120-
joo bation, may have to be written off, Similar substantial inerease is also expected for ROPAS,
in order to respand to the Jooming increase in NPAs, the State must enact measures to
help banks and other financial institutions offioad thelr NPAS, Induce economic activity, and
ropel economic growth, Thus, this bill proposes

improve the liquidity of the financial system to p
the onactment of the Financial institutions Strategic Transfer ("FIST") Law which aims to help:
ment of their NPAS in order |

financial institutions in thelr bad debt resolution and man:
cushion the adverse Impact af COVID-19 pandemic on their

This proposed law uses an internationally-accepted
purpose entity or vehicle, This proposed law introduce:
financial institutions’ needs considerir “present cit
Jaw encourages financial Institutions, as defined \
companies, created as Financial Institu
specialize in the resolution of distressed
government financial institutions,
incorporate and Invest in FISTCs
end view of contributing to
new uses for NPLs and ROPAS, |

The proposed law extends :
disposing of their NPAs by

‘on certain transactions involving
avenue calculated to strengthen.
role as mobilizers of savings



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No. 6622

Introduced by Honorable Junie E. Cua

THE PHILIPPINE BANKING INDUSTRY RESILIENCY ACT AGAINST COVID-19 PANDEMIC

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Title. - This Act shall be known as “Financial Institutions Strategic
Transfer (FIST) Law.”

SECTION 2. Declaration of Policy. - The Coronavirus Disease 2019 (COVID-19)
pandemic has greatly affected nations worldwide, including the Philippines, and is causing
serious slowdown of the economy. The State recognizes the role of banks and other financial
institutions as mobilizers of savings and investments and in providing the needed financial
system liquidity to keep the economy afloat. Thus, it is essential that banks and other financial
institutions are able to maintain their financial health in order to cushion the adverse economic
impact of this pandemic. It is hereby declared the policy of the State:

(a) to develop and maintain a sound financial sector for the country;

(b) to address the non-performing asset problems of the financial sector;

(c) to encourage public and private sector investments in non-performing assets;

(d) to eliminate existing barriers in the acquisition of non-performing assets;

(e) to help in the rehabilitation of distressed businesses with the end in view of
contributing to economic value added; and

(f) to improve the liquidity of the financial system which can be harnessed to
propel economic growth and maintain financial stability.

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


(a) “Approval Certificate” means the certificate of approval or authority issued by the
Commission to an application by a Financial Institutions Strategic Transfer Corporation (FISTC)
to issue Investment Unit Instruments (IUls), pursuant to the provisions of this Act.

(b) “Approved Plan” means an FISTC Plan for which an Approval Certificate has been
issued by the Commission.

(c) “BSP” refers to the Bangko Sentral ng Pilipinas.
(d) “Commission” refers to the Securities and Exchange Commission.

(e) “Financial Institutions or Fis” means credit-granting institutions which shall be
limited to the following:

(1) the BSP;

(2) a bank as defined under Republic Act No. 8791, also known as “The
General Banking Law of 2000”;

(3) a financing company as defined under Republic Act No. 8556, also known
as “The Financing Company Act of 1998”;

(4) an investment house as defined in Presidential Decree No. 129, also
known as “The Investment Houses Law”;

(5) a lending company as defined under Republic Act No. 9474, also known as
“Lending Company Regulation Act of 2007”;

(6) government financial institutions (GFis), which for purposes of this Act,
refers to the Philippine Deposit Insurance Corporation (PDIC), Land Bank of
the Philippines (LBP), and Development Bank of the Philippines (DBP), and
such other GFls as may be included by the Secretary of Finance;

(7) government-owned-or-controlled-corporations (GOCCs), which for
purposes of this Act, refers to the National Home Mortgage Finance
Corporation (NHMFC), Philippine Guarantee Corporation(PGC), Home
Development Mutual Fund (HDMF), Social Security System (SSS),
Government Service Insurance System (GSIS),_ Small Business
Corporation(SBC), National Housing Authority (NHA), and such other GOCCs
as may be included by the Secretary of Finance; and

(8) other institutions licensed by the BSP to perform (i) quasi-banking
functions and (ii) credit-granting activities, including but not limited to non-


stock savings and loan associations, pawnshops, and non-bank credit card
issuers.

(f) “FISTC” means the Financial Institutions Strategic Transfer Corporation created
pursuant to the provisions of this Act.

(g) “FISTC Plan” refers to the plan submitted to the Commission for its approval as pre-
requisite to the issuance of an IUI.

(h) “Investment Unit Instruments or IUls” refers to participation certificates, debt
instruments or similar instruments issued by the FISTC and subscribed by Permitted Investors as
provided in Section 11 hereof, pursuant to an Approved Plan: Provided, That these shall not
include the instruments to be issued by the FISTC to the selling Fis as full or partial settlement
of the non-performing assets transferred to the said FISTC: Provided, further, That such
issuances of the FISTC shall not be considered as deposit substitutes: Provided, finally, That
these shall not form part of the capital stock of the FISTC.

(i) “Non-Performing Assets or NPAs” consist of the Non-Performing Loans and Real and
Other Properties Acquired (ROPA) by Fis.

(i) “Non-Performing Loans or NPLs” refers to secured or unsecured loans, receivables,
and other financial assets of similar nature, including restructured loans, which are considered
credit-impaired as defined in the Implementing Rules and Regulations (IRR).

(k) “ROPAs” refers to real and other properties, other than those used for operating
purposes or held for investment, acquired by an Fl in settlement of loans and receivables,
including real properties, shares of stocks, and security interest which have been acquired by
way of dation in payment (dacion en pago) or judicial or extra-judicial foreclosure or execution
of judgment or enforcement of security interest.”

(|) “True Sale” refers to a sale wherein the selling Fl transfers or sells its NPAs without
recourse for cash or property to an FISTC, without prejudice to the Fl and FISTC agreeing on
sharing of profits, and subject to the following results:

(1) The transferor transfers full legal and beneficial title to and relinquishes
effective control over the transferred NPAs; and

(2) The transferred NPAs are legally isolated and put beyond the reach of the
transferor and its creditors:

Provided, That the transferring FI shall not have direct or indirect management of the
transferee FISTC: Provided, further, That the selling Fl does not have ownership of more than
ten percent 10% in the transferee FISTC.


ARTICLE II
Financial Institutions Strategic Transfer Corporation

SECTION 4. Financial institutions Strategic Transfer Corporation. — An FISTC is a stock
corporation organized in accordance with Republic Act No. 11232, otherwise known as “The
Revised Corporation Code of the Philippines,” and the rules promulgated by the Commission for
purposes of registering the FISTC: Provided, That if the FISTC will acquire land, at least sixty
percent (60%) of its outstanding capital stock shall be owned by Philippine nationals pursuant
to Republic Act No. 7042, as amended, otherwise known as the Foreign Investments Act.” BSP,
GFls and GOCCs may create an FISTC subject to their respective charters and the approval of
the Governance Commission for Government Owned or Controlled Corporations: Provided,
That the limitations under Section 3(I) of this Act shall not apply to BSP and such GFls or GOCCs.

SECTION 5. Powers of an FISTC. — An FISTC shall have the following powers:
(a) to invest in, or acquire NPAs of Fis;

(b) to engage third parties to manage, operate, collect and dispose of NPAs acquired
from an Fl;

(c) to rent, lease, hire, subject to security interest, mortgage, transfer, sell, exchange,
usufruct, secure, securitize, collect rents and profits, and other similar acts concerning its NPAs
acquired from an Fl;

(d) in case of NPLs, to restructure debt, condone debt and undertake other restructuring
related activities. In restructuring debt, the FISTC may reduce the principal, interest, interest
rates, and the period for calculating the interest, extend the time for debt repayment or relax
the conditions for debt repayment, agree to the conversion of the borrower's debt to equity in
the borrower's business, agree to a transfer of assets or claims from the borrower to repay the
debt or dispose of some of the borrower's property or claims to third persons;

(e) to take, transfer shares or buy shares issued by the borrower for the purpose of
business reorganization or rehabilitation of the borrower, subject to the provisions of the
Revised Corporation Code of the Philippines in respect of the rights of the shareholders of the
borrower company, and apply any other measures or restructuring techniques with the
approval of the Commission;

(f) to enter into dation in payment (dacion en pago) arrangements, foreclose judicially
or extra-judicially and other forms of debt settlement involving NPLs;

(g) to spend funds to renovate, improve, complete or alter its NPAs acquired from an Fl;


(h) to issue equity or participation certificates or other forms of IUls for the purpose of
acquiring, managing, improving and disposing of its NPAs acquired from an Fl;

{i) to borrow money and issue other instruments of indebtedness for the purpose of
paying operational and administrative costs;

()) to guarantee credit, accept or intervene for honor the bills of borrowers;

(k) to advance funds to borrowers where required by an acquired asset or any debt
restructuring agreement pursuant thereto, or under any court order or rehabilitation plan; and

(I) to engage the services of a third-party asset servicing company for the collection and
receipt of the debt payments for debts under debt restructuring or business reorganization,
management and disposition of assets of the FISTC in accordance with the rules, procedures
and conditions prescribed by the Commission or by the courts. Except in the case of ROPAs
whose redemption periods have already expired, the FISTC shall notify the borrower and all
persons holding prior encumbrances upon the properties or a part thereof or are actually
holding the same adversely to the borrower within fifteen (15) days from the date of the
appointment of the said servicing company.

SECTION 6. Period for Filing of Applications. — Applications for the establishment and
registration of an FISTC shall be filed with the Commission not beyond eighteen (18) months
from the date of effectivity of the IRR promulgated pursuant to Section 23 of this Act: Provided,
That the Secretary of Finance may extend the period by a maximum of eighteen (18) months.

Entities created under Republic Act No. 9182, as amended, are qualified to avail of the
privileges and incentives under this Act, subject to compliance with the requirements
prescribed in the IRR and the regulations that may be issued by the Commission.

SECTION 7. Capitalization of an FISTC.— An FISTC shall have adequate minimum
capitalization in such amount as may be prescribed by the Commission.

SECTION 8. Submission of FISTC Plan. — After the establishment of an FISTC pursuant
to Section 4 hereof, an FISTC Plan shall be submitted to the Commission for approval which
shall include the following:

(a) investment policies of the FISTC;

(b) contribution plan including the amounts and draft of subscription documents;

(c) features of the IUls including the specific amounts issued and/or to be issued;

(d) rights of the holders of the IUIs;

(e) draft agreements for the appointment of trustees and agents with respect to
the IUls and the NPLs acquired from an Fl;

(f) name of the external auditor of the FISTC;



(g) roles and responsibilities of the trustees, advisors, loan servicers and property
managers;

{(h) draft form of financial reports of the FISTC;

(i) details of distribution policies;

() methods for the increase and decrease of future fund contribution;

(k) methods for the alteration or modification of the approved FISTC Plan;

(I) methods for the liquidation and distribution of assets to the holders of IUIs;

(m) details of credit enhancements like guarantees or standby letters of credit or
advances that may be extended to the FISTC by an entity which shall not be
the selling Fl, its parent, subsidiaries or affiliates; and

(n) such other documents or information as may be required by the Commission.

SECTION 9. Approval. - Upon approval of the FISTC Plan, the Commission shall issue
an Approval Certificate stating that the application has been approved and that the IUls may be
issued.

SECTION 10. /ssuance of IUIs. - The FISTC may be allowed to issue IUIs subject to the
rules and regulations the Commission is herein mandated to promulgate.

SECTION 11. Permitted Investors. — Any person may acquire or hold 1Uls in an FISTC in
the minimum amount of Ten million pesos (P10,000,000.00): Provided, That an FISTC shall not
be authorized to acquire the IUls of another FISTC: Provided, further, That the parent,
subsidiaries, affiliates or stockholders, directors, officers or any related interest of the selling Fl
or the parent's subsidiaries, affiliates or stockholders, directors, officers or any related interest
shall not acquire or hold, directly or indirectly, the IUls of the FISTC that acquired the NPAs of
the Fl.

ARTICLE III
Transfer of Assets to FISTC

SECTION 12. Notice and Manner of Transfer of Assets. — (a) No transfer of NPLs to an
FISTC shall take effect unless the Fl concerned shall give prior notice to the borrowers of the
NPLs and all persons holding prior encumbrances upon the assets mortgaged or subject to
security interest. Such notice shall be in writing and made in accordance with the 1997 Rules of
Civil Procedure, as amended, and the IRR, at their last known address on file with the Fl.

(b) The transfer of NPAs from an Fl to an FISTC shall be subject to prior certification of
eligibility as NPA by the appropriate regulatory authority having jurisdiction over its operations
which shall issue its certification within forty-five (45) days from the date of application by the
Fl for eligibility.

(c) After the sale or transfer of the NPLs, the transferring Fl shall inform the borrower in
writing at the last known address of the fact of the sale or transfer of the NPLs.


SECTION 13. Nature of Transfer. — All sales or transfers of NPAs to an FISTC shall be in
the nature of a true sale after proper notice in accordance with the procedure as provided for
in Section 12, without need for the borrower's consent: Provided, That GFls’ and GOCCs’
disposition of assets shall be covered by special rules in the IRR: Provided, further, That after
the sale, the FISTC shall assume all rights and obligations of the transferring Fl.

SECTION 14, Issuance of injunctive Relief Against Transfer of Assets. - No court, other
than the Court of Appeals and the Supreme Court, shall issue any temporary restraining order,
preliminary injunction, preliminary mandatory injunction, status quo order, stay order,
commencement order, or any other issuance of injunctive relief against the transfer of NPAs
from the Fl to an FISTC, and from an FISTC to a third party, or dation in payment (dacion en
pago) by the borrower or by a third party in favor of an FI or in favor of an FISTC, or judicial or
extrajudicial foreclosure sales or execution sales of the Fl or FISTC of collateral in settlement of
NPLs.

Any restraining order, injunction, status quo order, stay order, commencement order, or
any other issuance of injunctive relief issued in violation of this section is void and of no force
and effect.

The provisions of Rules of Court on injunctions insofar as these are applicable and not
inconsistent with the provisions of this Act shall govern the issuance and dissolution of
restraining orders, injunctions, status quo orders or stay orders against said transfers.

ARTICLE IV
Incentives and Exemption Privileges

SECTION 15. Tax Exemptions and Fee Privileges. - Any existing law to the contrary
notwithstanding, the transfer of NPAs from the Fl to an FISTC, and from an FISTC to a third
party or dation in payment (dacion en pago) by the borrower or by a third party in favor of an Fl
or in favor of an FISTC shall be exempt from the following taxes:

(a) Documentary stamp tax on the abovementioned transfer of NPAs and
dation in payment (dacion en pago) as may be imposed under Title Vil of the
National Internal Revenue Code of 1997, as amended by Republic Act No. 10963,
otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act;

(b) Capital gains tax imposed on the transfer of lands and/or other assets
treated as capital assets as defined under Section 39(A)(1) of the National
Internal Revenue Code of 1997, as amended;

(c) Creditable withholding income taxes imposed on the transfer of land
and/or buildings treated as ordinary assets pursuant to Revenue Regulation No.
2-98, as amended;


(d) Value-added tax on the transfer of NPAs as may be imposed under
Title IV of the National Internal Revenue Code of 1997, as amended, or gross
receipts tax under Title V of the same Code, whichever is applicable pursuant to
regulations of the Bureau of Internal Revenue (BIR).

The abovementioned transfers shall also be subject to the following, in
lieu of the applicable fees:

a) Fifty percent (50%) of the applicable registration and transfer fees on
the transfer of real estate mortgage and security interest to and from the FISTC,
as imposed in accordance with the existing circulars of the Land Registration
Authority (LRA);

(b) Fifty percent (50%) of the filing fees for any foreclosure initiated by
the FISTC in relation to any NPA acquired from an Fl, as prescribed by the Rules
of Court; and

(c) Fifty percent (50%) of the land registration fees prescribed under the
existing circulars of the LRA.

All sales or transfers of NPAs from the Fis to an FISTC or transfers by way
of dation in payment (dacion en pago) by the borrower or by a third party to the
Fl shall be entitled to the privileges enumerated herein for a period of not more
than two (2) years from the date of effectivity of the IRR: Provided, That the
Secretary of Finance may extend the period by a maximum of two (2) years.

Transfers from an FISTC to a third party of NPAs acquired by the FISTC
within such two-year period, or within such extended period, or transfers by way
of dation in payment (dacion en pago) by a borrower to the FISTC shall enjoy the
privileges enumerated herein for a period of not more than five (5) years from
the date of acquisition by the FISTC: Provided, That the Secretary of Finance may
extend such five-year period by a maximum of five (5) years: Provided, further,
That properties acquired by an FISTC from GFls 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 FISTC 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
ROPA or NPL secured by real estate mortgage on a residential unit;

10


(ii) there shall only be one transaction consisting of one
residential unit per individual;

the two-year transfer period, including its extension, and the
five-year entitlement period granted to NPA, as may be extended
by the Secretary of Finance, shall also apply to said single family
residential unit.

SECTION 16. Additional Tax Exemptions and Fee Privileges.- To encourage the
infusion of capital and/or financial assistance by the FISTC for the purpose of rehabilitating the
borrower's business, the following additional tax exemptions and privileges shall be enjoyed:

(a) The FISTC shall be exempt from income tax on net interest income, documentary
stamp tax and mortgage registration fees on new loans in excess of existing loans extended to
borrowers with NPLs which have been acquired by the FISTC.

(b) In case of capital infusion by the FISTC to the borrower with NPLs, the FISTC shall also
be exempt from the documentary stamp tax.

Provided, That the above-mentioned tax exemptions and fee privileges shall apply for a
period of not more than five (5) years from the date of acquisition of NPLs by the FISTC:
Provided, further, That the Secretary of Finance may extend the period by a maximum of five
(5) years.

SECTION 17. Privileges of Participating Fis. - (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 Fl from the
transfer of NPAs within the 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 purposes of corporate gain or loss the carry-over shall be
subject to pertinent laws: Provided, finally, 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. The BIR shall issue the applicable rules and regulations to effectively implement the
provisions of this section.

(b) The regulatory authority concerned shall promulgate the necessary rules and
regulations governing the treatment of any loss of the Fls in the books of account as a result of
the transfer of the NPAs.

(c) In the case of non-bank GFls and GOCCs enumerated in Section 3 hereof, the
Department of Finance (DOF), in consultation with the Commission on Audit (COA), shall

1


promulgate the necessary rules and regulations governing the treatment of any loss in their
books of account as a result of the transfer of their NPAs.

SECTION 18. Abuse of Tax Exemptions and Privileges. — Any person, natural or juridical,
who benefits from the tax exemptions and privileges herein granted, when such person is not
entitled thereto, shall be subject to the penalties provided in Section 25 hereof. In addition, the
offender shall refund to the government double the amount of the tax exemptions and
privileges availed of under this Act, plus interest of twelve percent (12%) per year from the date
prescribed for its payment until the full payment thereof.

ARTICLE V
Enforcement and Protection Provisions

SECTION 19. Consumer Protection Mechanism. The FISTC shall set up an appropriate
consumer protection mechanism as may be prescribed in the IRR or regulations issued by the
appropriate regulatory authority.

SECTION 20. Redemption Periods. — The redemption periods allowed to borrowers of
banks under Section 47 of Republic Act No. 8791, also known as “The General Banking Law of
2000”, the Rules of Court, as well as other relevant laws for non-bank borrowers shall be
applicable.

ARTICLE VI
Reporting Provisions

SECTION 21. Books of Accounts and Records. — The FISTC shall set and keep accurate
accounts and internal financial controls and shall appoint an external auditor acceptable to the
Commission in this regard. The Commission, the BSP, and the BIR may look into the books of
accounts and records of the FISTC at any time.

SECTION 22. Reports. - The Commission, the regulatory authorities, and the BIR shall
prescribe the submission of reports from the FISTC and the Fls for the proper implementation
of this Act.

ARTICLE VIL
Final Provisions

SECTION 23. Implementing Rules and Regulations. — Within thirty (30) days from the
effectivity of this Act, the Commission, jointly with the BSP, the DOF, and the BIR, shall
promulgate the necessary IRR for the effective implementation of this Act: Provided, That the
Commission, BSP, DOF and BIR may issue separate regulations that will apply exclusively to the
institutions under their respective jurisdiction. In drafting their separate regulations, the
appropriate regulatory authorities may grant incentives and privileges as may be allowed by
their respective charters and by this Act.

12


SECTION 24. Oversight Committee. - There is hereby created an Oversight Committee
to oversee, monitor, and evaluate the implementation of this Act. The Oversight Committee
shall be composed of three (3) members each from the House of Representatives (HOR) and
from the Senate. The members of the HOR shall come from the Committee on Banks and
Financial Intermediaries while the members of the Senate shall come from the Committee on
Banks, Financial Institutions and Currencies. The Oversight Committee shall be co-chaired by
the Chairpersons of the HOR Committee on Banks and Financial Intermediaries and the Senate
Committee on Banks, Financial Institutions and Currencies.

SECTION 25. Primary Implementing Agency.~ The Commission shall be the primary
implementing agency of this Act and for its effective implementation, it shall have the authority
to enlist the assistance of any branch, department, bureau, office, agency or instrumentality of
the government, including GOCCs and GFls which may include the use and transfer of its
personnel, facilities and resources.

SECTION 26. Penalties. - Any person who violates any of the provisions of this Act, or
any person who, in a registration statement, notice, certification or plan filed under this Act,
makes any untruthful statement of a material fact or omits to state any material fact required
to be stated therein, shall, upon conviction, suffer a fine of not less than One hundred thousand
pesos (P100,000.00) nor more than Two million pesos (P2,000,000.00) or imprisonment of not
less than six (6) years nor more than twelve (12) years, or both, at the discretion of the court,
without prejudice to the penalties provided under Section 18 hereof and other applicable laws.
If the offender is a corporation, association, partnership or any juridical person, the penalty
shall be imposed upon the responsible officers, as the case may be, who participated in the
commission of the crime or who shall have knowingly permitted or failed to prevent its
commission. If the offender is a juridical person, other than a bank or financial institution
supervised by the BSP, the court may order the suspension or revocation of license. If the
offender is an alien, he shall, in addition to the penalties herein prescribed, be deported
without further proceedings after serving the penalties herein prescribed. If the offender is a
public official or employee, he shall, in addition to the penalties prescribed herein, suffer
absolute or temporary disqualification from government or public office, as the case may be.

SECTION 27. Applicability Clause. - The provisions of this Act shall be applicable to
assets that have become non-performing as of December 31, 2020: Provided, That the
Secretary of Finance may extend the said period by a maximum of two (2) years.

SECTION 28. Conscience Clause. - Nothing in this Act shall be construed to condone or
exempt from any liability any person responsible for acts or omissions constituting unsound

business practices or mismanagement.

SECTION 29. Use of Registration Fees.— To carry out the purposes of this Act, the
Commission shall retain and use all fees paid to it relative to the establishment of an FISTC in

13


addition to its annual budget and to what is provided for under Section 75 of the Securities
Regulation Code.

SECTION 30. Separability Clause. — If any provision of this Act is held unconstitutional
or invalid, all other provisions not affected thereby shall remain valid.

SECTION 31. Repealing Clause. - Republic Act No. 9182, as amended by Republic Act
No. 9343, otherwise known as “The Special Purpose Vehicle (SPV) Act of 2002,” is hereby
repealed. All laws, decrees, executive orders, rules and regulations or parts thereof, which are
inconsistent with this Act, are hereby repealed, amended or modified accordingly.

SECTION 32. Effectivity. - This Act shall take effect immediately upon its publication in
the Official Gazette or in a newspaper of general circulation.

14