Section 3Sec./Art. 3

Definition of Terms. -As used in this Act:

(a) Approval Certificate means the Certificate of Permit to Sell or Offer Sale Securities issued by the Securities and Exchange Commission (Commission) in favor of Financial Institutions Strategic Corporation (FISTC) whose FISTC Plan has been approved and rendered effective thereby authorizing the sale and distribution of Investment Unit Instruments (IUIs) pursuant to the provisions of this Act;

(b) Approved Plan means a FISTC Plan for which a Certificate of Permit to Sell or Offer for Sale Securities has been issued by the Commission;

(c) Certificate of Eligibility (COE) refers to the certificate issued by the appropriate regulatory authority as to the eligibility of the Non-Performing Loans (NPL) or Real and Other Properties Acquired (ROPAs) for purposes of availing of the tax exemptions and privileges, pursuant to the provisions of the Act;

(d) Data Package refers to the complete set of documents, as may be prescribed by the Commission, which must be prepared and made available by the selling Financial Institutions (FIs) in respect of the sale of on-Performing Assets (NPAs) or NPLs. The Data Package should contain, among others, scans of all pertinent documents and particulars of each property or loan account being sold and should be made electronically available to potential bidders;

(e) FIs means credit-granting institutions which shall be limited to the following:

(1) The Bangko Sentral ng Pilipinas (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) Accredited microfinance nongovernment organizations (NGOs), as defined under Republic Act No. 10693, otherwise known as "Microfinance NGOs Act";

(7) An insurance company as defined under Presidential Decree No. 612, also known as the "Insurance Code", as amended;

(8) Government financial institutions (GFIs), which for purposes of this Act, refer, but are not limited, to the Philippine Deposit Insurance Corporation (PDIC), Land Bank of the Philippines (LBP), and Development Bank of the Philippines (DBP);

(9) Government-owned or controlled corporations (GOCCs), which for purposes of this Act, refer, but are not limited, 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), and National Housing Authority (NHA); and

(10) 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, and nonbank credit card issuers;

(f) FISTC Plan refers to a plan submitted to the Commission for its approval as prerequisite to the issuance of an IUI;

(g) IUI refers to a participation certificate, debt instrument or similar instrument 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 NPAs 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;

(h) NPAs consist of the non-performing loans and real and other properties acquired by FIs;

(i) NPLs refer to secured or unsecured loans, receivables, and other financial assets of similar nature, including restructured loans, whose principal and/or interest have remained unpaid for the least ninety (90) days after they have become past due or any of the events of default under the loan agreement has occurred;

(j) ROPAs refer to real and other properties, acquired by an FI in settlement of loans and receivables, including real properties, shares of stocks, and personal properties which have been acquired by way of dation in payment (dacion en pago)or judicial or extrajudicial foreclosure or execution of judgment or enforcement of security interest;

(k) True Sale refers to a sale wherein the selling FI transfers or sells its NPAs to a FISTC, without recourse to cash or property in exchange for the transfer or sale, and without prejudice to the FI and FISTC agreeing on sharing of profits and subject to the following results:

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

(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 control of the transferee FISTC:Provided,further,That the selling FI does not have legal or beneficial ownership of more than ten percent (10%) of the transferee FISTC.

ARTICLE II

FINANCIAL INSTITUTIONS STRATEGIC TRANSFER CORPORATION