EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHIUPPINES ) 
Second Regular Session 
)
SENATE 
S. No. 1652
Introduced by Senator Ralph G. Recto
AN ACT
GRANTING TAX EXEMPTIONS AND FEE PRIVILEGES TO SPECIAL PURPOSE 
VEHICLES WHICH ACQUIRE OR INVEST IN NON-PERFORMING ASSETS, 
SETTING THE REGULATORY FRAMEWORK THEREFOR, AND FOR OTHER 
PURPOSES
EXPLANATORY NOTE
COVID-19 pandemic is wreaking havoc not only on humanity, but also on the 
global economy. Undoubtedly, the great majority of the world population will be 
saved from the deadly effects of this virus, but many of them may also succumb to 
extreme poverty and hunger due to the adverse effects of the pandemic to the 
economy.
Economic experts are now predicting an economic recession in many 
jurisdictions brought about by the enforcement of lockdowns to control the spread of 
the virus. Also, a post-pandemic adoption of the "new normal" may dramatically 
change the economic and social landscape of every country.
In the Philippines, our economic managers and both houses of Congress are 
working on an economic stimulus package to jumpstart the economy and help the 
micro, small and medium enterprises (MSMEs) and those critically-impacted 
businesses.
During the enhanced community quarantine (ECQ), only 21,691 firms were 
open but suffered loss of on the average 74.3% of their total sales, while 135,438


firms were closed.1 Also, it is expected that many of these firms will be closed this 
year for an average of three (3) to nine (9) months.2 Almost all sectors are affected 
by the COVID-19 crisis, but the hardest hit are those in the arts, entertainment, and 
recreation; tourism; education; construction; finance and insurance activities; and 
real estate.3 This temporary shutdown of business operations would greatly affect 
their financial capacity to meet both short-term and long-term liabilities including 
loans from banks and other financial institutions.
Citing Its latest report on the Philippine financial system, the Bangko Sentral 
ng Pilipinas (BSP) said that the country's entire financial system, with banking sector 
at the core, remains strong and stable to withstand external vulnerabilities such as 
the COVID-19 pandemic.4 However, it remains uncertain how long this health crisis 
may last, thus making the future of our economy unpredictable.
The economic uncertainty brought about by the pandemic may soon take a 
hit on every balance sheet of businesses and enterprises that may result in their 
inability to pay bank loans, thereby causing the rise in non-performing loans (NPLs) 
of the entire banking industry. As of April 2020, the NPL ratio stood at 2.3% of the 
banks'total loan portfolio.5
In anticipation of the increase in bad loans to an unprecedented level and to 
help maintain stability in the financial system, this bill seeks to provide a legal 
framework for the establishment of asset management companies (AMCs) such as 
the special purpose vehicle (SPV) for the purpose of acquiring or investing in non­
performing assets (NPAs) of the banks and other financial institutions. This is similar 
to the Special Purpose Vehicle Act of 2002 which was enacted to help cushion the 
impact of the 1997 Asian financial crisis to the entire Philippine financial system.
1 DOF MSME Survey, April 4-8,2020
2 DOF MSME Survey, April 4-8,2020
3 DOF MSME Survey, April 4-8,2020
4 Report on the Philippine Financial System, 2nd Semester 2019
5 http://www.bsp.gov.ph/statistics/stataqapbs.asp


SPVs are private sector-owned AMCs established primarily to acquire and 
dispose bad assets of the banks. In general, AMCs are effective means to 
expeditiously solve NPL problems.6 The usual procedure is that banks unload 
nonperforming assets to an AMC, clean up their books, and continue on with its 
primary role of financial intermediation.7 The AMCs, either government- or private- 
owned, then take care of disposing the acquired assets through a variety of means 
such as public auction, resale of assets to original borrowers, joint ventures, 
securitization, or even running the acquired business themselves.8 Typically, the 
special character of AMCs makes them more flexible than banks to carry out certain 
activities that help maximize asset values.9
The establishment of SPVs is beneficial both to the banks and the private 
sector-led AMCs. This will improve the liquidity condition of the banks and other 
financial institutions. On the other hand, the SPVs will be afforded an opportunity to 
reap profits from the subsequent disposition of valuable NPAs which are usually 
acquired at a discounted price. Furthermore, to encourage the private sector to 
establish SPVs, this bill seeks to grant certain tax exemptions and fee privileges on 
the sale or transfer of NPAs.
In view of the foregoing, the approval of this bill is earnestly sought.
RALPH G. RECTO
/jiao
6 Gloria 0. Pasadilla, PIDS Discussion Paper Series No. 2005-06, March 2005
7 Gloria 0. Pasadilla, PIDS Discussion Paper Series No. 2005-06, March 2005
* Gloria O. Pasadilla, PIDS Discussion Paper Series No. 2005-06, March 2005
9 Gloria O. Pasadilla, PIDS Discussion Paper Series No. 2005-06, March 2005


EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHIUPPINES ) 
Second Regular Session 
)
SENATE 
S. No. 1652
, July 06 2020
uj date;
. 1:55 p.m.
Introduced by Senator Ralph G. Recto
AN ACT
GRANTING TAX EXEMPTIONS AND FEE PRIVILEGES TO SPECIAL PURPOSE 
VEHICLES WHICH ACQUIRE OR INVEST IN NON-PERFORMING ASSETS, 
SETTING THE REGULATORY FRAMEWORK THEREFOR, AND FOR OTHER 
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assem bled:
1 
ARTICLE I
2 
General Provisions
3 
Section 1. We. -This Act shall be known as "The Special Purpose Vehicle
4 
(SPV) Act of 2020".
5 
Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State:
6 
(a) To develop and maintain a sound financial sector for the country;
7 
(b) To address the problems on non-performing assets of the financial sector;
8 
(c) To encourage private sector investments in non-performing assets;
9 
(d) To eliminate existing barriers in the acquisition of non-performing assets;
10 
(e) To help In the rehabilitation of distressed businesses for the purpose of
11 
contributing to economic value added; and
12 
(f) To Improve the liquidity of the financial system which can be harnessed to
13 
propel economic growth and maintain financial stability.
14 
Sec. 3. Definition of Terms. - For purposes of this Act, the term:
15 
(a) Approval Certificate means the certificate of approval or authority issued
16 
by the Commission to an application by an SPV to issue Investment Unit Instruments
17 
(lUIs), pursuant to the provisions of this Act;


1 
(b) Approved Plan means an SPV Plan for which an Approval Certificate has
2 
been issued by the Commission.
3 
(c) Commission refers to the Securities and Exchange Commission.
4 
(d) Financial Institutions (FIs) mean credit-granting institutions which shall be
5 
limited to the following:
6 
(1) the Bangko Sentral ng Pilipinas (BSP);
7 
(2) a bank, as defined under Republic Act No. 8791, aiso known as "The
8 
General Banking Law of 2000";
9 
(3) a financing company, as defined under Republic Act No. 8556, also known
10 
as "The Financing Company Act of 1998";
11 
(4) an investment house, as defined under Presidential Decree No. 129, as
12 
amended, also known as "The Investment Houses Law";
13 
(5) a lending company, as defined under Republic Act No. 9474, also known
14 
as "Lending Company Regulation Act of 2007";
15 
(6) government financial institutions (GFIs), which for purposes of this Act,
16 
refer to the Philippine Deposit Insurance Corporation (PDIC), Land Bank of the
17 
Philippines (LBP), and Development Bank of the Philippines (DBP), and such other
18 
GHs as may be included by the Secretary of Finance;
19 
(7) government-owned-or-controlled-corporations (GOCCs), which for
20 
purposes of this Act, refer to the National Home Mortgage Finance Corporation
21 
(NHMFC), Philippine Guarantee Corporation (PGC), Home Development Mutual Fund
22 
(HDMF), Social Security System (SSS), Government Service Insurance System
23 
(GSIS), Small Business Corporation (SBC), National Housing Authority (NHA), and
24 
such other GOCCs as may be Included by the Secretary of Finance; and
25 
(8) other institutions licensed by the BSP to perform (i) quasi-banking
26 
functions and (ii) credit-granting activities. Including non-stock savings and loan
27 
associations, pawnshops, and non-bank credit card issuers.
28 
(e) Investment Unit Instrument (lUI) refers to a participation certificate, debt
29 
instrument or similar instrument issued by the SPV and subscribed by Permitted
30 
Investors as provided in Section 11 hereof, pursuant to an Approved Plan: Provided,
31 
That these shall not include the instruments to be issued by the SPV to the selling
32 
FIs as full or partial settlement of the non-performing assets transferred to the said
33 
SPV: Provided, further, That such issuances of the SPV shall not be considered as


1 
deposit substitutes: Provided, finally, That these shall not form part of the capital
2 
stock of the SPV.
3 
(0 Non-Performing Assets or NPAs consist of the non-performing loans and
4 
real and other properties acquired by Rs.
5 
(g) Non-Performing Loans or NPLs refer to secured or unsecured loans,
6 
receivables, and other financial assets of similar nature, including restructured loans,
7 
which are to be considered credit-impaired and defined as such in the Implementing
8 
Rules and Regulations (IRR).
9 
(h) Real and Other Properties Acquired (ROPAs) refer to real and other
10 
properties, other than those used for operating purposes or held for investment,
11 
acquired by an R in settlement of loans and receivables, Including real properties,
12 
shares of stocks, and security interest which have been acquired by way of dation in
13 
payment (dacion en pago) or judicial or extra-judicial foreclosure or execution of
14 
judgment or enforcement of security Interest.
15 
(i) SPV means the Special Purpose Vehicle created pursuant to the provisions
16 
of this Act.
17 
(j) SPV Plan refers to the plan submitted to and approved by the Commission
18 
as pre-requisite to the Issuance of an lUI.
19 
(k) True Sale refers to a sale wherein the selling FI transfers or sells its NPAs
20 
to an SPV, without recourse to cash or property in exchange for the transfer or sale,
21 
and without prejudice to the R and SPV agreeing on sharing of profits in accordance
22 
with the conditions prescribed in the IRR, and subject to the following results:
23 
(1) The transferor transfers full legal and beneficial title to and relinquishes
24 
effective control over the transferred NPAs; and
25 
(2) The transferred NPAs are legally isolated and put beyond the reach of the
26 
transferor and its creditors:
27 
Provided, That the transferring R shall not have direct or indirect control of
28 
the transferee SPV: Provided, further. That the selling R shall not have legal or
29 
beneficial ownership of more than ten percent (10%) of the transferee SPV.
30 
ARTICLE II
31 
Special Purpose Vehicle
32 
Sec. 4. Special Purpose Vehicle. - An SPV shall be organized as a stock
33 
corporation in accordance with Republic Act No. 11232, otherwise known as "The


1 
Revised Corporation Code of the Philippines" and the rules and regulations
2 
promulgated by the Commission for purposes of registering the SPV: Provided, That
3 
if the SPV will acquire land, at least sixty percent (60%) of its outstanding capital
4 
stock shall be owned by Philippine nationals pursuant to Republic Act No. 7042, as
5 
amended, otherwise known as the "Foreign Investments Act." The BSP, GFIs and
6 
GOCCs may create an SPV subject to their respective charters and the approval of
7 
the Governance Commission for Government Owned or Controlled Corporations
8 
(GCG): Provided, further, That the iimitations under Section 3 (k) of this Act shall not
9 
apply to BSP and such GRs or GOCCs.
10 
Sec. 5. Powers of an SPV. - An SPV shall have the following powers:
11 
(a) To invest in, or acquire NPAs of FIs;
12 
(b) To engage third parties to manage, operate, collect and dispose of NPAs
13 
acquired from an R;
14 
(c) To rent, lease, hire, subject to security interest, mortgage, transfer, seli,
15 
exchange, usufruct, secure, securitize, collect rents and profits, and other similar
16 
acts concerning its NPAs acquired from an R;
17 
(d) In case of NPLs, to restructure debt, condone debt and undertake other
18 
restructuring related activities. In restructuring debt, the SPV may reduce the
19 
principai amount, interest earned, interest rates, and the period for calcuiating the
20 
interest, extend the time for debt repayment or relax the conditions for debt
21 
repayment, agree to the conversion of the borrower's debt to equity in the
22 
borrower's business, agree to a transfer of assets or ciaims from the borrower to
23 
repay the debt or dispose of some of the borrower's property or claims to third
24 
persons;
25 
(e) To take, buy or transfer shares issued by the borrower for the purpose of
26 
business reorganization or rehabilitation of the borrower, subject to the provisions of
27 
the Revised Corporation Code of the Philippines in respect to the rights of the
28 
sharehoiders of the borrower company, and apply any other measures or
29 
restructuring techniques with the approval of the Commission;
30 
(f) To enter into dation in payment {dacion en pago) arrangements, foreclose
31 
judicially or extra-judicially and other forms of debt settlement involving NPLs;
32 
(g) To spend funds to renovate, improve, complete or alter its NPAs acquired
33 
from an R;


1 
(h) To issue equity or participation certificates or other forms of lUIs for the
2 
purpose of acquiring, managing, improving and disposing of its NPAs acquired from
3 
an R;
4 
(i) To borrow money and issue other instruments of indebtedness for the
5 
purpose of paying operationai and administrative costs;
6 
(j) To guarantee credit, and accept or intervene for honor the bills of
7 
borrowers;
8 
(k) To advance funds to borrowers as may be required for an acquired asset
9 
or any debt restructuring agreement pursuant thereto, or under any court order or
10 
rehabilitation plan; and
11 
(I) To engage the services of a third-party asset servicing company for the
12 
collection and receipt of the payments for debts under debt restructuring or business
13 
reorganization, management and disposition of assets of the SPV in accordance with
14 
the rules, procedures and conditions prescribed by the Commission or by the courts.
15 
Except in the case of ROPAs whose redemption periods have already expired, the
16 
SPV shall notify the borrower and all persons holding prior encumbrances upon the
17 
properties, or a part thereof, or are actually holding the same adversely against the
18 
borrower, of the appointment of such third-party asset servicing company within
19 
fifteen (15) days from the date of the appointment.
20 
Sec. 6. Period for Filing of Applications. - Applications for the establishment
21 
and registration of an SPV shall be filed with the Commission within twenty-four (24)
22 
months beginning from the date of effectivity of the IRR promulgated pursuant to
23 
this Act: Provided, That the President upon the recommendation of the Secretary of
24 
Finance may extend the period by a maximum of twenty-four (24) months.
25 
Entities created under Republic Act No. 9182, as amended, are qualified to
26 
avail of the privileges and incentives under this Act, subject to compliance with the
27 
requirements prescribed in the IRR.
28 
Sec. 7. Capitalization of an SPV. - An SPV shall have an adequate minimum
29 
capitalization in such amount as may be prescribed by the Commission or by the
30 
appropriate regulatory agency of the SPV.
31 
Sec. 8. Submission of SPV Plan. - After the establishment of an SPV pursuant
32 
to Section 4 hereof, an SPV Plan shall be submitted to the Commission for approval
33 
and shall include the following:


1 
(a) Investment policies of the SPV;
2 
(b) Contribution plan including the amounts and draft of subscription
3 
documents;
4 
(c) Features of the lUIs including the specific amounts issued and to be
5 
issued;
6 
(d) Rights of the holders of the lUIs;
7 
(e) Draft agreements for the appointment of trustees and agents with respect
8 
to the lUIs and the NPLs acquired from an R;
9 
(f) Name of the external auditor of the SPV;
10 
(g) Roles and responsibilities of the trustees, advisors, ioan servicers and
11 
property managers;
12 
(h) Draft form of financial reports of the SPV;
13 
(i) Details of distribution policies;
14 
(j) Methods for the increase and decrease of future fund contribution;
15 
(k) Methods for the alteration or modification of the approved SPV Plan;
16 
(I) Methods for the liquidation and distribution of assets to the holders of
17 
lUIs;
18 
(m) Details of credit enhancements like guarantees or standby letters of credit
19 
or advances that may be extended to the SPV by an entity which shall not be the
20 
selling R, its parent, subsidiaries or affiliates; and
21 
(n) Such other documents or information as may be required by the
22 
Commission.
23 
Sec. 9. Approval of SPV Plan. - Upon approval of the SPV Plan, the
24 
Commission shall issue an Approval Certificate stating that the application has been
25 
approved and that the lUIs may be Issued.
26 
Sec. 10. Issuance of lUIs. - The SPV may be allowed to issue lUIs subject to
27 
the rules and regulations the Commission is herein mandated to promulgate.
28 
Sec. 11. Permitted Investors. - Any qualified buyer, as defined in Section 10
29 
(I) of Republic Act No. 8799, may acquire or hold lUIs in an SPV In the minimum
30 
amount of Ten million pesos (P10,000,000.00): Provided, That an SPV shall not be
31 
authorized to acquire the lUIs of another SPV: Provided, further, That the parent,
32 
subsidiaries, affiliates or stockholders, directors, officers or any related interest of
33 
the selling R or the parent's subsidiaries, affiliates or stockholders, directors, officers


1 
or any related interest shall not acquire or hold, directly or indirectly, the lUIs of the
2 
SPV that acquired the NPAs of the H.
3 
ARTICLE III
4 
Transfer of Assets to SPV
5 
Sec. 12. Notice and Manner of Transfer of Assets. - (a) No transfer of NPLs to
6 
an SPV shall take effect unless the FI concerned shall give prior notice to the
7 
borrowers of the NPLs and all persons holding prior encumbrances upon the assets
8 
mortgaged or subject to security interest. Such notice shall be in writing and made
9 
in accordance with the 1997 Rules of Procedure, as amended, and the IRR, at their
10 
last known address or their email address registered and on file with the Rs. The
11 
borrower and the R shall be given a period of at most ninety (90) days upon receipt
12 
of notice to restructure or renegotiate the loan under such terms and conditions as
13 
may be agreed upon by the borrower and the R concerned.
14 
(b) The transfer of NPAs from an R to an SPV shall be subject to prior
15 
certification of eligibility as NPA by the appropriate regulatory authority having
16 
jurisdiction over its operations which shall Issue its certification within forty-five (45)
17 
days from the date of application by the R for eligibility.
18 
(c) After the sale or transfer of the NPLs, the transferring R shall inform the
19 
borrower in writing at the last known address or email address of the fact of the sale
20 
or transfer of the NPLs.
21 
Sec. 13. Nature of Transfer. - All sales or transfers of NPAs to an SPV shall be
22 
in the nature of a true sale after proper notice in accordance with the procedure as
23 
provided for in Section 12: Provided, That disposition of assets of a GR and a GOCC
24 
shall be covered by special rules to be incorporated in the IRR: Provided, further,
25 
That in the transfer of the NPLs, the provisions on subrogation and assignment of
26 
credits under the New Civil Code shall apply: Provided, finally. That after the sale,
27 
the SPV shall assume all rights and obligations of the transferring R.
28 
In the transfer of NPAs, the parties shall exercise the requisite due diligence
29 
and any fraud, collusion or Irregularity shall be subject to Section 24 of this Act, as
30 
well as other pertinent laws, rules and regulations.
31 
Sec. 14. Issuance of Injunctive Relief Against Transfer of Assets. - No court,
32 
other than the Court of Appeals and the Supreme Court, shall issue any temporary
33 
restraining order, preliminary injunction, preliminary mandatory injunction, status


1 
quo order, stay order, commencement order, or any other issuance of injunctive
2 
reiief against the transfer of NPAs from the n to an SPV, and from an SPV to a third
3 
party, or dation in payment {dacion en pago) by the borrower or by a third party in
4 
favor of an R or in favor of an SPV, or judidai or extrajudicial foreclosure sales or
5 
execution sales of the FI or SPV of collateral In settlement of NPLs.
6 
Any restraining order, injunction, status quo order, stay order,
7 
commencement order, or any other issuance of injunctive relief issued in violation of
8 
this Section is void and of no force and effect.
9 
The pertinent provisions of the Rules of Court on injunctions insofar as these
10 
are applicable and not inconsistent with the provisions of this Act, shall govern the
11 
issuance and dissolution of restraining orders. Injunctions, status quo orders or stay
12 
orders against said transfers.
13 
ARTICLE IV
14 
Incentives and Exemption Privileges
15 
Sec. 15. Tax Exemptions and Fee Privileges. - Any existing law to the
16 
contrary notwithstanding, the transfer of NPAs from the FI to an SPV, and from an
17 
SPV to a third party or dation In payment {dacion en pago) by the borrower or by a
18 
third party in favor of an R or in favor of an SPV shall be exempt from the following
19 
taxes:
20 
(a) Documentary stamp tax on the abovementioned transfer of NPAs and
21 
dation In payment {dacion en pago) as may be imposed under Title VII of the
22 
National Internal Revenue Code of 1997, as amended;
23 
(b) Capital gains tax imposed on the transfer of lands and/or other assets
24 
treated as capital assets as defined under Section 39(A)(1) of the National Internal
25 
Revenue Code of 1997, as amended;
26 
(c) Income tax on the transfer of land, buildings and/or other assets treated
27 
as ordinary assets as may be Imposed under Title II of the National Internal
28 
Revenue Code of 1997, as amended;
29 
(d) Value-added tax on the transfer of NPAs as may be imposed under Title
30 
IV of the National Internal Revenue Code of 1997, as amended, or gross receipts tax
31 
under Title V of the same Code, whichever is applicable.
32 
The abovementioned transfers shall also be subject to the following, in lieu of
33 
the applicable fees:


1 
(a) Fifty percent (50%) of the applicable registration and transfer fees on the
2 
transfer of real estate mortgage and security interest to and from the SPV, as
3 
imposed in accordance with the existing circulars of the Land Registration Authority
4 
(LRA);
5 
(b) Fifty percent (50%) of the filing fees for any foreclosure initiated by the
6 
SPV in relation to any NPA acquired from an R, as prescribed by the Rules of Court;
7 
and
8 
(c) Fifty percent (50%) of the land registration fees prescribed under the
9 
existing circulars of the LRA.
10 
All sales or transfers of NPAs from the FIs to an SPV or transfers by way of
11 
dation in payment {dacion en pago) by the borrower or by a third party to the R
12 
shall be entitled to the privileges enumerated herein for a period of not more than
13 
two (2) years from the date of effectivlty of the IRR: Provided, That the President
14 
upon the recommendation of the Secretary of Finance may extend such period by a
15 
maximum of two (2) years.
16 
Transfers from an SPV to a third party of NPAs acquired by the SPV within
17 
such two (2)-year period, or within such extended period, or transfers by way of
18 
dation in payment {dacion en pago) by a borrower or by a third party to the SPV
19 
shall enjoy the privileges enumerated herein for a period of not more than five (5)
20 
years from the date of acquisition by the SPV: Provided, That the President upon the
21 
recommendation of the Secretary of Finance may extend such five (5)-year period
22 
by a maximum of five (5) years: Provided, further, That properties acquired by an
23 
SPV from GRs or GOCCs which are devoted to socialized or low-cost housing shall
24 
not be converted to other uses.
25 
The tax exemptions, incentives, and fee privileges given to Rs and SPV at the
26 
various stages of the transactions under this Section shall likewise be extended to
27 
any individual subject to the conditions prescribed in the IRR: Provided, That:
28 
(i) the transaction is limited to a ROPA that is either a single family residential
29 
unit or an empty lot, or to NPL secured by real estate mortgage on a residential unit
30 
or an empty lot;
31 
(ii) there shall only be one transaction consisting of one residential unit or
32 
empty lot per individual; and


1 
(iii) the two (2)-year transfer period, including its extension, and the five (5)-
2 
year entitlement period granted to NPA, as may be extended by the President upon
3 
recommendation of the Secretary of Finance, shall also apply to said single family
4 
residential unit or empty lot.
5 
Sec. 16. Additional Tax Exemptions and Fee Privileges. - To encourage the
6 
infusion of capital and/or financial assistance by the SPV for the purpose of
7 
rehabilitating the borrower's business, the following additional tax exemptions and
8 
privileges shall be enjoyed:
9 
(a) The SPV shall be exempt from income tax on net interest income,
10 
documentary stamp tax and mortgage registration fees on new loans in excess of
11 
existing loans extended to borrowers with NPLs which have been acquired by the
12 
SPV.
13 
(b) In case of capital Infusion by the SPV to the borrower with NPLs, the SPV
14 
shall also be exempt from the documentary stamp tax.
15 
Provided, That the tax exemptions and fee privileges under this Section shall
16 
apply for a period of not more than five (5) years from the date of acquisition of
17 
NPLs by the SPV: Provided, further, That the President upon the recommendation of
18 
the Secretary of Finance may extend the period for the enjoyment of such tax
19 
exemptions and fee privileges by a maximum of five (5) years: Provided, finally,
20 
That distressed businesses which are indispensable to the national interest or
21 
security shall be given priority In the capital infusion by the SPV.
22 
Sec. 17. Net Operating Loss Carry-Over (NOLCO) of Participating FIs. - (a)
23 
Any loss that is incurred by an R as a result of the transfer of an NPA within the two
24 
(2)-year period from the effectivity of the IRR shall be treated as ordinary
25 
loss: Provided, That the accrued Interest and penalties shall not be included as loss
26 
on said loss carry over from operations, subject to the provisions of the National
27 
Internal Revenue Code of 1997, as amended, on net operating loss carry-over
28 
(NOLCO). Such loss incurred by the R from the transfer of NPAs within the two (2)-
29 
year period from the effectivity of the IRR may be carried over for a period of five
30 
(5) consecutive taxable years immediately following the year of such loss: Provided,
31 
further. That for purposes of corporate gain or loss, the carry-over shall be subject
32 
to pertinent laws: Provided, finally. That the tax savings derived by Rs from the
33 
NOLCO shall not be made available for dividend declaration but shall be retained as
10


1 
a form of capital build-up. The Department of Finance (DOF), upon the
2 
recommendation of the Bureau of Internal Revenue (BIR), shall issue the rules and
3 
regulations to effectively Implement the provisions of this Section.
4 
(b) The regulatory authority concerned shall promulgate the necessary rules
5 
and regulations governing the treatment of any loss of the FIs in the books of
6 
account as a result of the transfer of the NPAs.
7 
(c) In the case of non-bank GFIs and GOCCs enumerated in Section 3 hereof,
8 
the DOF, in consultation with the Commission on Audit (COA), shall promulgate the
9 
necessary rules and regulations governing the treatment of any loss in their books of
10 
account as a result of the transfer of their NPAs.
11 
Sec. 18. Abuse of Tax Exemptions and Privileges. - Any person, natural or
12 
juridical, who benefits from the tax exemptions and privileges herein granted, when
13 
such person is not entitled thereto, shall be subject to the penalties provided in
14 
Section 24 hereof. In addition, the offender shall refund to the government double
15 
the amount of the tax exemptions and privileges availed of under this Act, plus
16 
interest of twelve percent (12%) per year from the date prescribed for its payment
17 
until the full payment thereof.
18 
ARTICLE V
19 
Enforcement and Protection Provisions
20 
Sec. 19. Consumer Protection Mechanism. - The SPV shall set up an
21 
appropriate consumer protection mechanism as may be prescribed in the IRR or
22 
rules and regulations to be issued by the appropriate regulatory authority.
23 
Sec. 20. Redemption Periods. - The redemption periods allowed to borrowers
24 
under Section 47 of Republic Act No. 8791, also known as "The General Banking Law
25 
of 2000", the Rules of Court, as well as other relevant laws for non-bank borrowers
26 
shall be applicable.
27 
ARTICLE VI
28 
Reporting Provisions
29 
Sec. 21. Books of Accounts and Records. - The SPV shall set and keep
30 
accurate accounts and internal financial controls and shall appoint an external
31 
auditor that is acceptable to the Commission. The Commission, the BSP, and the BIR
32 
may look into the books of accounts and records of the SPV at any time during office
33 
hours after due notice.
11


1 
Sec. 22. Reports. - The Commission, the regulatory authorities, and the BIR
2 
shall prescribe the submission of reports from the SPV and the FIs for the proper
3 
Implementation of this Act.
4 
ARTICLE VII
5 
Final Provisions
6 
Sec. 23. Primary Implementing Agency. - The Commission shall be the
7 
primary implementing agency of this Act. It shall have the authority to enlist the
8 
assistance of any branch, department, bureau, office, agency or instrumentality of
9 
the government, including GOCCs and GRs which may include the use and transfer
10 
of its personnel, facilities and resources.
11 
Sec. 24. Penalties. - Any person who violates any of the provisions of this Act,
12 
or the rules and regulations promulgated thereunder, or any person who, in a
13 
notice, certification or plan filed under this Act, makes any untruthful statement of a
14 
material fact or omits to state any material fact required to be stated therein, shall,
15 
upon conviction, suffer a fine of not less than One hundred thousand pesos
16 
(P100,000.00) nor more than Two million pesos (P2,000,000.00) or imprisonment of
17 
not less than six (6) years nor more than twelve (12) years, or both, at the
18 
discretion of the court, without prejudice to the penalties provided under Section 18
19 
hereof. Section 37 of Republic Act No. 7653, as amended, and other applicable laws.
20 
If the offender is a corporation, association, partnership or any juridical person, the
21 
penalty shall be imposed upon the responsible officers, as the case may be, who
22 
participated in the commission of the crime or who shall have knowingly permitted
23 
or failed to prevent its commission. If the offender is a juridical person, other than a
24 
bank or financial institution supervised by the BSP, the court may order the
25 
suspension or revocation of its license. If the offender is an alien, the offender shall,
26 
in addition to the penalties herein prescribed, be deported without further
27 
proceedings after serving the penalties herein prescribed. If the offender is a public
28 
official or employee, the offender shall, in addition to the penalties prescribed
29 
herein, suffer absolute or temporary disqualification from government or public
30 
office, as the case may be.
31 
Sec. 25. Applicability Clause. - The provisions of this Act shall be applicable to
32 
assets that have become non-performing as of December 31, 2020: Provided, That
12


1 
the President upon the recommendation of the Secretary of Finance may extend the
2 
said period by a maximum of two (2) years.
3 
Sec. 26. Conscience Clause. - Nothing in this Act shall be construed in such a
4 
manner that condones or exempts from any liability any person responsible for acts
5 
or omissions constituting unsound business practices or mismanagement.
6 
Sec. 27. Oversight Committee.- There is hereby created a Joint
7 
Congressional Oversight Committee to oversee, monitor, and evaluate the
8 
implementation of this Act. It shall be composed of the chairpersons of the Senate
9 
Committee on Banks, Financial Institutions and Currencies, and the House of
10 
Representatives Committee on Banks and Financial Intermediaries, and additional
11 
four (4) members, at least one member of which shall be from the minority, from
12 
the same committees of each house to be designated by the Senate President and
13 
the Speaker of the House of Representatives, respectively.
14 
Sec. 28. Use of Registration Fees. - To carry out the purposes of this Act, the
15 
Commission shall retain and use all fees paid to it relative to the establishment of an
16 
SPV in addition to its annual budget and to what is provided for under Section 75 of
17 
Republic Act No. 8799 or the Securities Regulation Code.
18 
Sec. 29. Implementing Rules and Regulations. - Within thirty (30) days from
19 
the effectivlty of this Act, the Commission, jointly with the BSP, the DOF, and the
20 
BIR, shall promulgate the necessary IRR for the effective implementation of this
21 
Act: Provided, That within thirty (30) days from the effectivlty of this Act, the DOF,
22 
upon the recommendation of the BIR, shall promulgate the revenue regulations
23 
implementing the tax exemptions under this Act: Provided, further, That the
24 
Commission, BSP, DOF and BIR may Issue separate rules and regulations that will
25 
apply exclusively to the Institutions under their respective jurisdiction, which shall
26 
not be inconsistent with the IRR to be issued by the Commission.
27 
Sec. 30. Separability Clause. - If any provision or part hereof Is declared
28 
unconstitutional, the remainder of this Act or any provision not affected shall remain
29 
in full force and effect.
30 
Sec. 31. Repealing Clause. - Republic Act No. 9182, as amended, otherwise
31 
known as the "Special Purpose Vehicle Act of 2002," is hereby repealed. All laws,
32 
acts, decrees, executive orders, issuances, and rules and regulations or parts thereof
13


1 
which are contrary to and inconsistent with this Act are hereby repealed, amended
2 
or modified accordingiy.
3 
Sec. 32. Effectivity. - This Act shaii take effect fifteen (15) days after its
4 
compiete publication in the Official Gazette or in at least two (2) newspapers of
5 
general circulation.
Approved,
14