Article 154Supplement v1, p. 154

COMMERCIAL LAWS SUPPLEMENT

(d) The Commission orders dissolution in accordance with

Section 13 and 19.

SECTION 16. Effects of Dissolution of SPE . - The SPE and

the registration of the ABS shall be terminated, cancelled

withdrawn in any of the cases provided for under the last

preceding section.

SECTION

17.

Appointment

of

an

Interim

Representative . - If the Commission finds that an SPE

has no authorized representative to act on its behalf or

such persons cannot act for any reason resulting in the

interruption of its activities pursuant to the approved

Plan, the Commission shall have the power to appoint

any person or persons to act as interim representative for

the SPE. The interim representative shall have the full and

exclusive authority to implement the approved Plan.

In the event of an appointment of replacement of an

interim representative, the Commission shall post the

notice

at

the

Commission's

office

and

other

its

publication in at least two (2) newspapers of national

circulation.

SECTION

18.

Delivery

of

Property

and

Records

it

Interim

Representative .

-

Where

an

interim

representative has been appointed in accordance with

Section 17.

(a) The directors, officers, or any employees of the SPE

shall take all appropriate steps to safeguard the property

and the benefits of the holders of the ABS of the SPE and

shall deliver the property accounts, documents, and seals

of the SPE to the interim representative; and

(b) Any person who possesses property or documents of

the SPE shall notify the representative of such possession.

SECTION

19.

Failure

to

Continue

Business .

-

The

Commission shall order the dissolution of an SPE upon

finding that the SPE cannot continue to undertake its

business, and shall proceed to liquidate the SPE in

accordance with the Corporation Code.

SECTION 20. Power of Inspection . - The Commission

shall have the power to inspect or order the Production of

the records of the SPE.

ARTICLE III THE SERVICER

SECTION 21. Duties . - The Service shall perform its duties

pursuant to the terms and conditions of the servicing

agreement and such other written instructions as the

SPE, the trustees or its interim representative may issue

or in case-to-case basis. Collections made by the Servicer

shall be remitted promptly to the SPE or as may be

agreed upon the parties in the servicing agreement, but

in no case shall be remittance period be longer than one

(1) month.

SECTION

22.

Reports .

-

The

Servicer

shall

prepare

periodic reports as may be required by the SPE, the

trustee or its interim representative within thirty (30) days,

including reports of any borrower or obligator which fails

to pay its debt or obligation at maturity date or any

adverse development that may be affect the collectibility

of any loan account or receivable comprising the asset

pool.

SECTION 23. Extent of Authority . - The Servicer shall

have such authority as is expressly stated in the servicing

agreement and unless otherwise specifically provided

therein, such authority shall encompass the general

powers of administration. The Servicer shall have no

authority to waive penalties and charges except with the

written authority from the Board of SPE, the trustee or

the interim representative, should one be appointed

SECTION 24. Qualifications . - The Servicer shall be a

corporation duly incorporated under Philippine law, with

a minimum authorized capitalization of Ten million pesos

(P10,000,00.00)

or

such

higher

amounts

as

the

Commission may prescribe. It shall be independent of the

SPC

or

the

trustee

and

shall

not

share

common

ownership, officers, or directors with the SPC or the

trustees. The Originator or Seller may act as the Servicer

as may be approved by the Commission or the BSP, as

the case may be.

SECTION 25. Standard of Conduct . - The Servicer shall

act

with

utmost

good

faith

and

shall

perform

its

obligations under the servicing agreement with the due

diligence of a good father of a family.

SECTION 26. Penalties . - Breach by the Servicer of its

obligations arising from the failure to abide by the

standard of conduct set forth in the preceding section

shall subject the Servicer to the penalty of revocation of

its corporate registration and a fine of not less than One

Million pesos (P1,000,000.00) and shall subject its officers

and employees responsible for such noncompliance with

the standard of conduct referred to above, to a penalty of

imprisonment for not more than five (5) years and a fine

of

not

less

than

One

Hundred

Thousand

pesos

(100,000.00). Breach arising from bad faith or gross

negligence shall subject the Servicer to revocation of its

corporate registration and a fine of not less than Five

million

pesos

(P5,000,000.00)

and

shall

subject

the

officers and employees responsible for such breach to a

penalty of imprisonment for not more than six (6) years

and one (1) day up to a maximum of twenty (20) years and

a fine of not less than Five hundred thousand pesos

(P500,000.00).

ARTICLE IV TAX AND OTHER RELATED ISSUES

SECTION

27.

income

Taxation

of

Special

Purpose

Entity . - The SPE in the form of an SPC shall be subject to

income

tax

under

Section

27(a),

Chapter IV of the

National

Internal

Revenue

Code

of

1997.

An

SPE

constituted as an SPT shall be subject to income tax in

accordance with the provisions of Section 61, Chapter X of

the same Code.

SECTION 28. Transfer of Assets . - The sale or transfer of

assets to the SPE, which includes sale or transfer of any

and all security interest thereto, it made in accordance

with the Plan shall be exempted from value-added tax

(VAT) and documentary stamp tax (DST), or any other

taxes imposed in lieu thereof. Except for registration fees

with the Commission, all applicable registration and

annotation fees to be paid, related or incidental to the

transfer of assets, or the security interest thereto, shall be

fifty percent (50%) of the applicable registration and

annotation fees.

The transfer of assets by dation in payment (dacion en

pago) by the obligor in favor of an SPE shall not be

subject to capital gains tax as provided under Section 27

(d)(5) of the National Internal Revenue Code of 1997.

SECTION 29. Issuance and Transfer of Securities . - The

original issuance of ABS and other securities related

solely to such securitization transaction, such as, but not

limited to, seller's equity, subordinated debt instruments

purchased by the originator, and other related forms of

credit enhancement shall be exempt from VAT, or any

other taxes imposed in lieu thereof, but subject to DST. All

secondary

trades

and

subsequent

transfers

of

ABS,

including

all

forms

of

credit

enhancement

in such

instruments, shall be exempt from DST and VAT, or any

other taxes imposed in lieu thereof.

SECTION 30. Non-Classification of SPE as a Bank,

Quasi-Bank

or

Financial

Intermediary .

-

The

SPE,

created pursuant to a Plan, shall not be classified as a

ban,

quasi-bank or financial intermediary under the

provisions of the New Central Bank Act, the General

Banking Law and the National Internet Revenue Code of

1997, and shall not be subject to the gross receipts tax

(GRT) or any other tax imposed in lieu thereof.

SECTION

31.

Securities

not

to

be

Categorized

as

Deposit

Substitutes .

-

The

ABS

issued

by

an SPE

pursuant to the Plan approved by the Commission shall

not be considered as deposit substitutes under the laws

mentioned in Section 30 hereof: Provided , however , That

for purposes of taxation, the yield for the ABS shall be

© Compiled by RGL

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