Article 153Supplement v1, p. 153

COMMERCIAL LAWS SUPPLEMENT

(vi) other credit enhancements as may be approved by

the Commission.

(c) The identities and qualifications of the Originator,

Seller, Servicer, underwriter an dealer of the ABS, and

description of any compensation the issuer, seller or any

underwriter has received or will receive in the future in

connection with the ABS;

(d) The identity, qualifications and compensation of the

trustee that will administer the assets conveyed to the

SPE for the benefit of the ABS holders of the ABS holders

which trustee shall not be related directly or indirectly to

the Originator or Sellers;

(e) The aggregate principal amount of the value of ABS to

be issued, the principal amount of each class within the

ABS, and the denominations which shall not be lower

than Five thousand pesos (P5,000.00) in which the ABS

will be issued;

(f) The structure of the ABS to be registered, including the

structure

and

payment

priorities

of

each

class

of

certificates within the ABS, anticipated payments and

yields for each class, and the circumstances under which

the ABS may be redeemed or retired;

(g) A full description of the assets contained, or to be

contained, in the asset pool supporting the ABS;

(h) The rating agency/agencies for the ABS, the criteria

used or to be used to rate the ABS, and any limitation,

qualifications or material risks not addressed by the

rating agency/agencies;

(i) A full description of how the issuer will collect and

maintain

remittances

from

the

assets

pending

distribution to holders of the ABS, including the issuer's

investment

policies

and

the

identity

of the issuer's

investment advisor, if any;

(j) The plan for the management and administration of

the

assets,

asset

pool

and

the

ABS,

including

the

disposition of the foreclosed properties, if any; and

(k) The manner of disposal of any residual value or asset

with the SPE after all obligations to holders of ABS shall

have been settled.

SECTION 7. Registration of Asset-Backed Securities

(ABS) . - All ABS shall be registered with the Commission

in accordance with Sections 8 and 12 of the Securities

Regulation

Code

and

its

implementing

rules

and

regulations: Provided , however , That issuers of ABS falling

under Sections 9 and 10 thereof shall be required to file

with

the

Commission,

a

notice,

with

a

disclosure

statement.

SECTION 8. Approval . - The commission shall issue to an

SPC or SPT the corresponding order and permit to sell

ABS

only

after

compliance

with all the registration

requirements

and

the

approval of the Plan by the

Commission.

SECTION 9. Originator is a Bank; Special Purpose Trust .

- In case the originator of the assets is a bank or any other

financial intermediary which under special laws is subject

to the supervision of the BSP, or an entity directly related

to said bank or other financial intermediary, or in the

event the SPE is constituted in the form of an SPT, an

endorsement by the BSP of the Plan shall be required

before it s approval by the Commission.

SECTION 10. Powers of the SPE . - Each SPE shall have

the power to:

(a) Accept the sale or transfer of assets;

(b) Issue and offer the ABS for sale to investors;

(c) Undertake on its own or through contracts with any

person, such activities as contained in the approved Plan;

(d) Create any indebtedness or encumbrances to defray

administrative or other necessary expenses as specified

in the Plan; and

(e) Pay out or invest its funds in accordance with the Plan

or as approved by the Commission.

SECTION 11. Restriction . - the SPE shall not undertake

any activity other than that contained in the approved

Plan except upon a written approval of the Commission

and the written consent of the holders of the ABS

representing at least two-thirds (2/3) of the outstanding

amount of the ABS: Provided , That in case the originator

of the assets is a bank or nay other financial intermediary

which under special laws is subject to the supervision of

the BSP, or an entity directly or indirectly related to said

bank or other financial intermediary, or in the event the

SPE

is

constituted

in

the

form

of

an

SPT,

prior

endorsement by the BSP is necessary.

SECTION 12. Transfer of Assets and Security . - The

transfer of the assets from the Originator or Seller to the

SPE shall be deemed to be a "true sale" when it results in

the following:

(a) The transferred Assets are legally isolated and put

beyond the reach of the Originator or Seller and its

Creditors;

(b) The transferee SPE has the right to pledge, mortgage

or exchange those transferred Assets;

(c) The transferor relinquishes effective control over the

transferred assets;

(d)

The

transfer

shall

be

effected by either a sale,

assignment or exchange, in any event on a without

recourse basis to the Originator or Seller;

(e) The transferee shall have the right to profits and

disposition with respect to the assets;

(f) The transferor shall have the right to recover the assets

and

the

transferee

shall

not

have

the

right

to

reimbursement of the price or other consideration paid

for the assets; and

(g) The transferee shall undertake the risks associated

with the assets. This shall not, however, prevent the

transferor

from

giving

normal

representations

or

warranties of the assets sold.

SECTION

13.

Withdrawal

of

Registration .

-

If

the

Commission

finds

that

the

Originator

or Seller has

undertaken the securitization so as to seek the benefits of

this Act without a true intention to carry it out, the

Commission shall withdraw or cancel the registration of

the ABS and the registration of the SPE as issuer, and

cause the dissolution of the SPC or termination of the

SPT. The Originator or Seller and as the case may be, the

trustees, shall pay as fine an amount equal to the taxes

from which the SPE has been exempted plus a surcharge

of twenty-five percent (25%) of the face value of the ABS

issued, without prejudice to the penalties under this law

and the National Internal Revenue Code of 1997.

SECTION 14. Inheritance and Donor's Tax Evasion . - It

shall be unlawful for any person, whether or not it

contemplation of death, to cause directly, the issuance,

for the benefit of another or others, of ABS and avail of

the tax incentives granted by this Act for the purpose of

evading the payment of donor's or estate taxes.

SECTION 15. Dissolution of the Special Purpose Entity

(SPE) . - The SPE shall be dissolved in the following cases:

(a) It fail to accept the transfer of assets or issue ABS to

investors within six (6) months from the date of approval

of the Plan unless extended by the Commission;

(b) Holders of at least two third (2/3) of the total amount

of its ABS still outstanding have resolved to dissolve the

SPE and the approval of the Commission has been

obtained; in case the Originator of the assets is a bank or

any other financial intermediary which under special

laws, is subject to supervision of the BSP, or an entity

directly or indirectly related to said bank or other financial

intermediary, or in the event the SPE is constituted in the

form of an SPT, an endorsement by the BSP shall be

required prior to approval of the Commission;

(c) Conditions for dissolution that are specified in the Plan

occur; or

© Compiled by RGL

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