DOCUMENTARY REQUIREMENTS FOR REGISTRATION

OF
CORPORATIONS AND PARTNERSHIPS
( as of June 30, 2013 )

All applications and supporting documents must be in four (4) copies and have cover sheets.
Documents signed abroad must be authenticated by the Philippine Embassy or Consulate in the country where signed.
All audited Financial Statements and special audit reports must be certified by an independent Certified Public Accountant (CPA),
with Statement of Representation filed with the SEC. Said Statement must indicate the CPA Cert. No., PRC/BOA No. and the PTR No.
of the CPA.

All applications must indicate the Tax Identification Number (TIN) of the incorporators, stockholders/members for corporations, and
partners for partnerships.

For foreign incorporator, subscriber or director, indicate passport number for purposes of incorporation and Tax Identification
Number for amendment of the Articles of Incorporation.

I. REGISTRATION OF CORPORATIONS
A. STOCK CORPORATION
Basic Requirements
1.

Name Verification Slip (secure online or from SEC Name Verification Unit );

2.

Articles of Incorporation and By-laws;

3.

Treasurers Affidavit; and

4.

Joint affidavit of two incorporators undertaking to change corporate name, as provided in its Articles of Incorporation or as
amended thereafter, immediately upon receipt of notice or directive from the Securities and Exchange Commission that
another corporation, partnership, or person has acquired a prior right to the use of that name or that name has been
declared misleading, deceptive, confusingly similar to a registered name, or contrary to public morals, good customs or
public policy. (not required if the Articles of Incorporation have a provision on this commitment ).

Additional Requirements
5.

Endorsement/clearance from other government agencies, if applicable.

6.

For corporations with foreign equity: Proof of remittance by non-resident aliens and foreign corporate subscribers to
register their investment with the Bangko Sentral ng Pilipinas ( BSP ) or an affidavit that they will not register their
investment with the BSP

7.

For corporations with more than 40% foreign equity: application form required by the Foreign Investments Act of 1991 (R.A.
7042, as amended)

8.

For corporations with applications with the Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority
(SBMA), Clark Development Corporation (CDC), Cagayan Economic Zone Authority (CEZA) or other economic zones:
Certificate of Authority or endorsement from said government agencies

9.

Additional requirements based on kind of payment of subscription indicated hereunder

REPUBLIC ACT NO. 8556

AN ACT AMENDING REPUBLIC ACT NO. 5980, AS AMENDED, OTHERWISE KNOWN AS THE FINANCING COMPANY ACT.
Section 1. This Act shall be known as the "Financing Company Act of 1998."
Sec. 2. Declaration of Policy. It is hereby declared to be the policy of the State to regulate and promote the activities
of financing and leasing companies to place their operations on a sound, competitive, stable and efficient basis as
other financial institutions, to recognize and strengthen their critical role in providing medium and long-term credit for
investments in capital goods and equipment especially by small and medium enterprises particularly in the countryside

and to curtail and prevent acts or practices prejudicial to the public interest so that they may be in a better position to
extend efficient service in a fair manner to the general public and to industry, commerce and agriculture and thereby
more fully contribute to the sound development of the national economy.
Sec. 3. Sec. 3 of the same Act is hereby amended to read as follows:cralaw
"Sec. 3. Definition of Terms. As used in this Act, the term:

"(a) 'Financing companies' hereinafter called companies, are corporations, except banks, investments houses, savings
and loan associations, insurance companies, cooperatives, and other financial institutions organized or operating under
other special laws, which are primarily organized for the purpose of extending credit facilities to consumers and to
industrial, commercial, or agricultural enterprises, by direct lending or by discounting or factoring commercial papers
or accounts receivable, or by buying and selling contracts, leases, chattel mortgages, or other evidences of
indebtedness, or by financial leasing of movable as well as immovable property;
"(b) 'Securities and Exchange Commission' shall mean the office of the Securities and Exchange Commission of the
Philippines;
"(c) 'Credit' shall mean any loan, mortgage, financial lease, deed of trust, advance or discount, any conditional sales
contract, contract to sell, or sale or contract of sale of property or service, either for present or future delivery, under
which, part of all or the price is payable subsequent to the making of such sale or contract; any contract, any option,
demand, lien or pledge, or to the other claims against, or for the delivery of, property or money, any purchase, or other
acquisition of or any credit upon the security of, any obligation or claim arising out of the foregoing, and any
transaction or series of transactions having similar purpose or effect;
"(d) 'Financial leasing' is a mode of extending credit through a non-cancelable lease contract under which the lessor
purchases or acquires, at the instance of the lessee, machinery, equipment, motor vehicles, appliances, business and
office machines, and other movable or immovable property in consideration of the periodic payment by the lessee of a
fixed amount of money sufficient to amortize at least seventy (70%) of the purchase price or acquisition cost, including
any incidental expenses and a margin of profit over an obligatory period of not less than two (2) years during which the
lessee has the right to hold and use the leased property with the right to expense the lease rentals paid to the lessor
and bears the cost of repairs, maintenance, insurance and preservation thereof, but with no obligation or option on his
part to purchase the leased property from the owner-lessor at the end of the lease contract.
"(e) 'Purchase discount' is the difference between the value of the receivable purchased or credit assigned, and the net
amount paid by the finance company for such purchases or assignment, exclusive of fees, services, charges, interest
and other charges incident to the extension of credit.
"(f) 'Lease rentals' shall refer to the periodic payments made by the lessee to the lessor under Sec. 3(d), above."
Sec. 4. Sec. 4 of the same Act is hereby amended to read as follows:cralaw
"Sec. 4. Grant of Authority to Securities and Exchange Commission. The Securities and Exchange Commission is
hereby empowered to enforce the provisions implementing regulations except insofar as the Bangko Sentral may have
supervisory authority under the provisions of Republic Act No. 7653 with respect to financing companies licensed to
perform quasi-banking functions, and insofar as the Monetary Board has authority to prescribe financing company
rates and charges under Sec. 5 hereof."
Sec. 5. Sec. 5 of the same Act is hereby amended to read as follows:cralaw
"Sec. 5. Limitation on purchase discounts, lease rentals, fees, service and other charges. The Monetary Board of the
Bangko Sentral ng Pilipinas is hereby empowered to prescribe, in consultation with financing companies and the
Securities and Exchange Commission, the maximum rate or rates of purchase discounts, lease rentals, fees, service and
other charges of financing companies, and to change, eliminate or grant exemptions from or suspend the effectivity of
such rules whenever warranted by prevailing economic and social conditions."
Sec. 6. Sec. 6 of the same Act is hereby amended to read as follows:cralaw
"Sec. 6. Form of organization and capital requirements. Financing companies shall be organized in the form of stock
corporations at least forty percent (40%) of the voting stock of which is owned by citizens of the Philippines and shall
have a paid-up capital of not less than Ten million pesos (P10,000,000) in case the financing company is located in
Metro Manila and other first class cities, Five million pesos (P5,000,000) in other classes of cities and Two million five
hundred thousand pesos (P2,500,000) in municipalities: Provided, however, That no foreign national may be allowed to
own stock in any financing company unless the country of which he is a national accords the same reciprocal rights to
Filipinos in the ownership of financing companies or their counterpart entities in such country: and Provided,
further, That financing companies duly existing and in operation before the effectivity of this Act shall comply with the
minimum capital requirement within one (1) year from the date of the said effectivity."

Sec. 7. Sec. 7 of the same Act is hereby amended to read as follows:cralaw

"Sec. 7. Requirement for registration. Aside from requiring compliance with the provisions of the Corporation Code,
the Securities and Exchange Commission shall not register the articles of incorporation of any financing company
unless its office is satisfied on the evidence submitted to it, that:

"(a) All the requirements of existing laws to engage in the business for which the applicant is proposed to be
incorporated or organized have been complied with;
"(b) The organization, direction and administration, as well as the integrity and responsibility of the organizers and
administrators reasonably assure the protection of the interest of the general public;
"(c) All the requirements of this Act have been complied with: Provided, That financing companies duly incorporated or
registered prior to the approval of this Act, and which are actually existing and operating as such, shall file an
information sheet with the Securities and Exchange Commission in the form to be prescribed by the Securities and
Exchange Commission within sixty (60) days after notice from the said Commission. No person, association,
partnership, or corporation shall hold itself out as doing business as a 'financing company' or'finance and investment
company' or any other title or name tending to give the public the impression that it is engaged in the operations and
activities of a financing company, unless so authorized under this Act."
Sec. 8. Sec. 8 of the same Act is hereby repealed.
Sec. 9. Sec. 9 of the same Act is hereby renumbered as Sec. 8.
Sec. 10. There is hereby inserted after Sec. 8 as renumbered, new Sec.s 9, 10, 11, 12 and 13 to read as follows:cralaw
"Sec. 9. Rights and powers. Financing companies shall have the following powers, in addition to those granted by
this Act and by other laws:

"(a) Engage in quasi-banking and money market operations with the prior approval of the Bangko Sentral ng Pilipinas;
"(b) Engage in trust operations subject to the provisions of the General Banking Act upon prior approval by the Bangko
Sentral ng Pilipinas;
"(c) Issue bonds and other capital instruments subject to pertinent rules and regulations of the Bangko Sentral ng
Pilipinas;
"(d) Rediscount their paper with government financial institutions subject to relevant laws, rules and regulation;
"(e) Participate in special loan or credit programs sponsored by or made available through government financial
institutions; and
"(f) Provide foreign currency loans and leases to enterprises who earn foreign currency by exports or other means,
subject to existing laws and rules and regulations promulgated by the Bangko Sentral ng Pilipinas.

"Nothing in this Sec. shall be construed as precluding a financing company from performing such services or exercising
such powers as may be granted by the Bangko Sentral ng Pilipinas or the Securities and Exchange Commission or as
may be incidental to its activities as a corporation.
"Sec. 10. Applicability of incentives and exemptions to financial leases. Any incentive, exemption or benefit,
including tax credits and investment incentives granted by law or regulation to any purchaser, importer, borrower or
other eligible person in connection with any purchase, importation, acquisition, or other transaction shall not be lost,
diminished or impaired when the associated financing is through a financial lease rather than through borrowing or
other conventional method of financing. Financing companies providing the financial lease in such cases shall be
entitled to any incentive, exemption, benefit or privilege available to lenders, importers, purchasers or other eligible
person in such transactions under the applicable law or regulation.
"Sec. 11. Parity clause. When providing medium and long-term credit to small and medium enterprises, financing
companies shall enjoy such other rights, powers, benefits and privileges as may be granted by the law or regulation to
other non-bank financial institutions when they provide similar credit to such enterprises."
"Sec. 12. Liability of lessors. Financing companies shall not be liable for loss, damage or injury caused by a motor
vehicle, aircraft, vessel, equipment, machinery or other property leased to a third person or entity except when the
motor vehicle, aircraft, vessel, equipment or other property is operated by the financing company, its employees or
agents at the time of the loss, damage or injury.

"Sec. 13. Registry of financial lease. The Register of Deeds shall open and maintain a register of financial leases, as
an adjunct to the chattel mortgage registry.
"Said lease register shall contain the following particulars:

"(1) Name or description of property, including:

"(a) Brand name or name of manufacturer;
"(b) Name of model, if any;
"(c) Year of model, or manufacture, if available; and
"(d) Serial number, if any.
"(2) Acquisition cost;
"(3) Name of owner or finance company lessor;
"(4) Name of lessee;
"(5) Date of lease agreement or schedule;
"(6) Date of expiry of lease; and
"(7) Date of entry in lease registry."
Sec. 11. Sec. 10 of the same Act is hereby renumbered as Sec. 14. As renumbered, Sec. 14 is hereby amended to read
as follows:cralaw
"Sec. 14. Penalty. A fine of not less than Ten thousand pesos (P10,000.00) and not more than One hundred thousand
pesos (P100,000.00) or imprisonment for not more than six (6) months or both, at the discretion of the court, shall be
imposed upon:

"(1) Persons, associations, partnerships or corporations, including the managing officer thereof, that shall:

"(a) Engage in the business of a financing company without authority from the Securities and Exchange Commission;
"(b) Hold themselves out to be financing companies, either through advertisement in whatever form, whether in its
stationery, commercial paper or other document, or through other representations without authority;
"(c) Make use of trade or firm name containing the words 'Financing Company' or 'Leasing Company' or 'Finance and
Leasing Company or 'Finance and Investment Company' or any other designation that would give the public the
impression that it is engaged in the business of a financing company or leasing company as defined in this Act without
authority; and
"(d) Violate the provisions of this Act.

"(2) Any officer, employee, or agent of a financing company who shall:

"(a) Knowingly and willingly make any statement in any application, report or document required to be filed under this
Act, which statement is false or misleading with respect to any material fact; or
"(b) Overvalue or aid in overvaluing any securities for the purpose of influencing in any way the action of the company
on any loan, or discounting line.

"(3) Any officer, employee or examiner of the Securities and Exchange Commission directly charged with the
implementation of this Act who shall commit, connive, aid or assist in the commission of acts enumerated under
subSec.s 1 and 2 of this Sec.."
Sec. 12. Sec.s 11 and 12 of the same Act are hereby renumbered as Sec.s 15 and 18, respectively.
Sec. 13. Effectivity. This Act shall take effect fifteen (15) days following the completion of its publication in the
Official Gazette or in two newspapers of general circulation.
Approved: February 26, 1998

REPUBLIC ACT NO. 9267 March 19, 2004

AN ACT PROVIDING THE REGULATORY FRAMEWORK FOR SECURITIZATION AND GRANTING FOR THE PURPOSE EXEMPTIONS FROM THE
OPERATION OF CERTAIN LAWS
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
ARTICLE 1
GENERAL PROVISIONS
Section 1. Short Title. - This Act shall be known as "The Securitization Act of 2004".
SECTION 2. Declaration of Policy. - It is the policy of the State to promote the development of the capital market by supporting
securitizaiton, by providing a legal and regulatory framework for securitization and by creating a favorable market environment for a
range of asset-backed securities. For this purpose, the State shall rationalize the rules, regulations, and laws that impact upon the
securitization process, particularly on matters of taxation and sale of real estate on installment. Furthermore, the State shall pursue
the development of a secondary market, particularly for residential mortgage-backed securities and other housing-related financial
instruments, as essential to its goal of generating investment and accelerating the growth of the housing finance sector, especially for
socialized and low-income housing. The State shall likewise pursue the development of a secondary market for other types of assetbacked securities (ABS).
SECTION 3. Definition of Terms. - For purpose of this Act, the term:
(a) "Securitization" means the process by which assets are sold on a without recourse basis by the Seller to a Special Purpose Entity
(SPE) and the issuance of asset-backed securities (ABS) by the SPE which depend, for their payment, on the cash flow from the assets
so sold and in accordance with the Plan.
(b) Asset-backed securities (ABS)" refer to the certificates issued by an SPE, the repayment of which shall be derived from the cash
flow of the assets in accordance with the Plan.
(c) "Assets", whether used alone or in the term "Asset-backed securities," refer to loans or receivables or other similar financial assets
with an expected cash payment stream. The term "Assets" shall include, but shall not be limited to, receivables, mortgage loans and
other debt instruments: Provided, That receivables that are to arise in the future and other receivables of similar nature shall be
subject to approval by the Securities and Exchange Commission (SEC) or the Bangko Sentral ng Pilipinas (BSP), as the case may
be: Provided, further, That the term "Assets" shall exclude receivables from future expectation of revenues by government, national or
local, arising from royalties, fees or imposts.
(d) "Asset Pool" means the group of identified, homogeneous assets underlying the ABS.
(e) "Commission" refers to the Securities and Exchange Commission (SEC).
(f) "Credit Enhancement" means any legally enforceable scheme intended to improve the marketability of the ABS and increase the
probability that the holders of the ABS receive payment of amounts due them under the ABS in accordance with the Plan.
(g) "Originator" means the person or entity which was the original obligee of the Assets, such as financial institution that grants a loan
or a corporation in the books of which the Assets were created in accordance with the Plan.
(h) "Plan" means the plan for securitizations as approved by the Commission
(i) "Secondary Mortgage Institution (SMI)" means an entity created for the purpose of enhancing a secondary market for residential
mortgages and housing-related ABS.
(j) "Seller" means the person or entity which conveys to the SPE the Assets forming the Asset Pool in accordance with the Plan. In most
instances, the Seller may itself be the Originator.
(k) "Servicer" refers to the entity designated by the SPE to collect and record payments received on the assets, to remit such
collections to the SPE, and perform such other services as may be specifically required by the SPE, excluding asset management or
administration.
(l) "Special Purpose Entity (SPE)" means either a Special Purpose Corporation (SPC) or a Special Purpose Trust (SPT).
(m) "Special Purpose Corporation (SPC)" refers to a juridical person created in accordance with the Corporation Code of the Philippine
solely for the purpose of securitization and to which the Seller makes a true and absolute sale of assets.
(n) "Special Purpose Trust (SPT)" means a trust administered by an entity duly licensed to perform trust functions under the General
Banking Law, and created solely for the purpose of securities and to which the Seller makes a true and absolute sale of assets
SECTION 4. Declaration of Principles. - The Commissions shall exercise the powers provided for in this Act in consonance with the
principle of full disclosure, transparency and accountability. The Commission shall include in its annual report the list of SPEs with the
corresponding types and amounts of assets scrutinized.

ARTICLE II
SPECIAL PURPOSE ENTITY
SECTION 5. Special Purpose Entity (SPE). - The SPE in the form of an SPC shall be a stock corporation established in accordance with
the Corporation Code of the Philippines and the rules promulgated by the Commission solely for the purpose of securitization and
registered as such with the Commission. An SPE constituted as an SPT shall be a trust administered by an entity duly licensed to
perform trust functions under the General Banking Law and need not be registered as such with the Commission. In any event, the
SPE, whether in the form of an SPT or SPC, shall be solely organized and operated for purposes of securitization in accordance with this
Act. The Commission and the BSP shall, from time to time, determine the required capitalization for the SPCs and SPTs, respectively.
SECTION 6. Approval of the Plan. - After the establishment of an SPE pursuant to Section 5 hereof, the proposed Plan shall be
submitted to the Commission for approval, which shall include the following:
(a) The nature and mechanics of the sale of assets from the Seller to the SPE, including the terms, conditions and circumstances
specified in the Plan wherein the assets may be reverted to the Seller:
(b) The credit enhancements or liquidity supports for the ABS which may be provided in the following manner:
(i) standby letter of credit issued by a commercial bank or universal bank other than the trustee bank or the Originator or Seller or its
subsidiary/affiliate, its parent company or the parent company's subsidiary/affiliate;
(ii) surety bond issued by any insurance company other than the Originator or Seller or its subsidiary or affiliate, its parent company or
the parent company's subsidiary or affiliate, or the parent or subsidiary of the trustee bank;
(iii) guarantee issued by any entity other than the Originator or Seller or its subsidiary/affiliate, its parent company or the parent
company's subsidiary/affiliate, or the trustee bank or its parent or subsidiary;
(iv) over-collateralization provided by the Seller wherein the assets conveyed to the SPC or SPT exceed the amount of ABS to be
issued;
(v) subordinated securities issued by an SPE to any entity including those issued to the Seller that are lower ranking, or junior to other
obligation, and are paid after claims to holders of senior are satisfied; and
(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
(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 subject to a twenty percent (20%) final withholding tax, except those held by taxexempt investors.
SECTION 32. Re-transfer of Assets. - Where the implementation of the Plan or the provision of this Act requires or provides a transfer of
the assets and collateral back to the Originator or Seller, then the provisions of Section 28 shall apply to such transfer.
SECTION 33. Incentives for Securitization. - In order to promote the securitization of the mortgage and housing related receivables of
the government housing agencies as may be determined by the Housing and Urban Development Coordinating Council (HUDCC) and
the Department of Finance (DOF), the yield or income of the investor from any low-cost or socialized housing-related ABS shall be
exempt from income tax.
SECTION 34. Waiver of Rights. - For purposes of securitization pursuant to this Act, the buyer of real estate on installment payments
may agree to waive his rights under Republic Act No. 6552, the provision of Section 7 of the said notwithstanding.
ARTICLE V
SECONDARY MORTGAGE INSTITUTION
SECTION 35. Registration of Secondary Mortgage Institution (SMI). - An SMI, which shall be primarily responsible in providing liquidity
mechanism to primary mortgage lenders/holders as well as in developing a secondary market for mortgage and housing-related ABS,
shall also be registered with the Commission.
SECTION 36. Registration of Business and Operational Plan. - The SMI shall also register its business and operational plan with the
Commission and shall, as a minimum, be subject to the same disclosure requirements as SPCs.
SECTION 37. Promulgation of Rules. - The Commission, in consultation with the BSP and the Insurance Commission (IC), shall
promulgate rule regarding the ownership, organization, capitalization and opertion of the SMI.
In promulgating such rules, the Commission shall consider the size of the asset pools to be held by the SMI, the amount of debt to be
issued by it, the extent of its operation and the powers of the SMI specified under this Act.
SECTION 38. Powers of the SMI. - For purposes of securitization under this Act and pursuant to the Plan submitted to the Commission,
the SMI may perform any or all of the following:
(a) Wholesale purchase of residential mortgages and housing-related contract receivables;
(b) Buy and sell residential mortgage and housing-related ABS;
(c) Provide loans to primary lending institutions against residential mortgages;
(d) Issue housing-related ABS through an SPE, and issue bonds and other debt instruments;
(e) Perform ancillary functions including, but not limited to, title insurance, through a subsidiary, wholly or partially owned by an SMI,
and loan servicing; and
(f) Perform such other functions as the Commission may determine necessary to mobilize and channel funds from the capital markets
to the mortgage and housing finance sector.
SECTION 39. SMI Capitalization and Organizational Requirements. - Any SMI established for the housing sector shall be a stock
corporation and shall have a minimum initial paid-up capital of Two billion pesos (P2,000,000,000.00):Provided, That the total
obligation of the SMI, including both actual and contingent obligations, shall not exceed fifteen (15) times its paid-up
capital: Provided, further, That the actual obligations of the SMI shall not exceed ten (10) times its paid-up
capital: Provided, furthermore, That the ratios indicated herein may be adjusted by the Commission with approval of the DOF and BSP
upon a showing that the conditions of the secondary and primary markets and the financial viability of the SMI warrant such

adjustment: Provided, Finally, That the investment of financial entities in the SMI shall be subjected to and be made to comply with
rules and regulations of the appropriate regulatory agency.
Government financial institutions and government-owned or-controlled corporations, may collectively hold and own up to a maximum
of thirty percent (30%) of the SMI's capital: Provided, That such investment does not conflict with their existing charters
A government financial institution may invest up to a maximum of ten percent (10%) of its total investible funds in housing-related
assets or five percent (5%) in non-housing related assets: Provided, That such investment does not exceed five percent (5%) of the
total amount of each ABS issue.
Within ten (10) years of its incorporation, the SMI shall offer and list at least twenty percent (20%) of its common shares in the stock
exchange, which period shall be extendible only upon approval of the Commission in instances where the lace of financial viability of
the SMI warrants such extension.
SECTION 40. Prohibited Activities of the SMI. - The SMI shall be prohibited from:
(a) Originating or financing individual mortgage loans;
(b) Providing loans to other parties engaged in a business other than that approved in the Plan submitted to the Commission: and
(c) Providing capital equity to other companies.
SECTION 41. Extension of Benefits to the SMI. - The benefits provided to the transactions entered into by the SPCs under Sections 28 to
33 of this Act shall also be granted to the same transactions entered into by the SMIs for purposes of securitzation in accordance with
the provisions of this Act.
SECTION 42. Dissolution of the SMI. - The Commission shall order the dissolution and liquidation of the SMI upon a finding that it;
(a) Cannot continue to undertake its business; or
(b) Is not operation actively; or
(c) Is engaging in activities that conflict with its objectives as an SMI; or
(d) Has fulfilled a condition for dissolution specified in its Articles of Incorporation.
ARTICLE VI
RATING SYSTEM
SECTION 43. Rating ABS. - No ABS shall be issued unless such ABS has been rated by a duly accredited credit rating agency.
SECTION 44. Credit Rating Agency. - Every credit rating agency which now exists or which may hereafter be formed shall be subject to
the provisions of this Act.
SECTION 45. Accreditation of Credit Rating Agency. - No credit rating agency shall commence rate-making operations pursuant to this
Act until it shall have obtained an accreditation from the Commission under such rules and regulations as the Commission may deem
appropriate.
SECTION 46. Examination of Credit Rating Agencies. - Credit rating agencies shall be subject to examination by the Commission as the
latter may deem warranted: Provided, That the Commission shall conduct an examination of the credit rating agencies at least once
every three (3) years.
SECTION 47. Noncompliance of Accredited Rating Agencies. - The Commission may suspend or revoke the accreditation given to any
credit rating agency which fails to comply with the Commission's lawful order within the time limited by such order, or any extension
thereof which the Commission may grant.
ARTICLE VII
PENAL PROVISIONS
SECTION 48. Penalties. - Any person who violates any of the provisions of this Act, or the rules and regulations promulgated by the
Commission under authority hereof, or any person who, in a registration statement, notice, or Plan filed under this Act, makes any
untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the
statements therein not misleading, shall, upon conviction, suffer a fine of not less than Fifty thousand pesos (P50,000.00) nor more
than Five million pesos (P5,000.00) or imprisonment of not less than six (6) years and one (1) day nor more than twenty-one (21)
years, or both in the discretion of the court. If the offender is corporation, partnership or association or other juridical entity, the
penalty may in the discretion of the court be imposed upon such juridical entity upon the officer or officers of the corporation,
partnership, association or entity responsible fro the violation, and if such officer is an alien, he shall in addition to the penalties
prescription prescribed, be deported without further proceedings after service of sentence.

ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 49. Implementing Rules and Regulations (IRR). - The Commission, in coordination with the BSP, DOF and the IC, shall
promulgate the implementing rules and regulations which shall be submitted to the Congressional Oversight Committee which shall
review, revise and approve the same: Provided, That the Commission BSP, DOF and the IC may continue to issue separate regulations
that will apply exclusively to the institutions under their respective jurisdiction, consistent with the IRR as approved by the
Congressional Oversight Committee.
SECTION 50. Congressional Oversight Committee. - There is hereby created a Congressional Oversight Committee composed of seven
(7) members from the Senate and seven (7) members from the House of the Representatives. The members from the Senate shall be
appointed by the Senate President with at least two (2) Senators representing the Minority. The members from the House of
Representatives shall also appointed by the Speaker with at least two (2) members representing the Minority. After the Oversight
Committee has approved the IRR, it shall thereafter become functus officio, and therefore cease to exist.
SECTION 51. Repeating Clause. - All laws, executive orders, rules and regulations, and parts thereof which are inconsistent with this Act
are hereby repealed or amended accordingly.
SECTION 52. Separability Clause. - If for any reason any article or provision of this Act or any portion therefore or application of such
article, provision, or portion thereof to any person, group, or circumstance is declared invalid or unconstitutional, the remainder of this
Act shall not be affected by such decision.
SECTION 53. Effectivity Clause. - This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at
least two (2) newspapers of general circulation, whichever comes earlier.

Approved:
FRANKLIN DRILON
President of the Senate

JOSE DE VENECIA JR.

Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 4453 and Senate Bill No. 2095 was finally passed by the House of Representatives
and the Senate on January 28, 2004 and January 29, 2004, respectively.
OSCAR G G. YABES
Secretary of Senate

Approved: March 19, 2004

GLORIA MACAPAGAL-ARROYO
President of the Philippines

ROBERTO P. NAZARENO
Secretary General
House of Represenatives

Please send down to the rest of the class.

Much thanks.
For Weds.
1. Corporate strategy
2. Dividend decision - review codal provision on cash/stock dividend, procedure in issuing dividend: The Corporation Code
3. Illiquidity vs. insolvency
4. Matching liabilities with assets
5. Fixed rate financing and call protection
6. Implications for lawyers
7. 2.a The Players

(i) The Company Perspective- SEC/BSP

- SEC registration requirements: see SEC website
-Financing Company Act of 1998, as amended: rationale/state policy? What are financing companies?
Capitalization and equity requirements?
- Securitization Act took of 2004: rationale/state policy? What is securitization? Powers of an entity incorporated
under the Act? What is a true sale?
AFTER PRELIMS
(ii) Investors and Intermediaries- SRC
(iii) Exchanges, Regulators, and Industry AssociationThe PSE and the SRC
(iv) Ancillary Players
2.b Types of Business Organization
2.c Publicly Traded v. Privately held Companies- SRC/SEC
1.

Raising Funds- Corporate Financing

PLUS the three attached articles: study. summarise, understand basic concepts, will be discussed in class.