Republic of the Philippines

SENATE OF THE PHILIPPINES

Pasay City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

Senate Bill No. ____

Introduced by Senator _________

AN ACT
ENSURING PHILIPPINE FINANCIAL INDUSTRY RESILIENCY
AGAINST THE COVID-19 PANDEMIC

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

assembled:

SECTION 1. Title. – This Act shall be known as “Financial Institutions Strategic

Transfer (FIST) Act.”

Sec. 2. Declaration of Policy. – The Coronavirus Disease 2019 (COVID-19) pandemic

has greatly affected nations worldwide, including the Philippines, and the measures adopted by
the government to contain the outbreak have unavoidably caused serious economic setbacks and
tremendous financial pressure on markets and industries. Because of the unpredictability of the
course and outcome of the health crisis, it is necessary to lay down the appropriate policies not
only to marshal available resources towards the most affected and vulnerable sectors but more
importantly, to strengthen the financial sector so that economic recovery can be achieved faster,
and with more lasting positive effects.

The State recognizes the role of banks and other financial institutions as mobilizers of
savings and investments and in providing the needed financial system liquidity to keep the
economy afloat. Thus, it is essential that banks and other financial institutions are able to
maintain their financial health in order to cushion the adverse economic impact of this pandemic.
It is hereby declared the policy of the State:

(a) to develop and maintain a sound financial sector for the country;
(b) to address the non-performing asset problems of the financial sector;
(c) to encourage public and private sector investments in non-performing assets;
(d) to eliminate existing barriers in the acquisition of non-performing assets;

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 (e) to help in the rehabilitation of distressed businesses with the end in view of
their becoming economic value-added contributors; and
(f) to improve the liquidity of the financial system which can be harnessed to
propel economic growth and maintain financial stability.

Sec. 3. Definition of Terms. – As used in this Act:

(a) Approval Certificate means the certificate of approval or authority issued by the
Commission to an application by a Financial Institutions Strategic Transfer Corporation (FISTC)
to issue Investment Unit Instruments (IUIs), pursuant to the provisions of this Act;

(b) Approved Plan means an FISTC Plan for which an Approval Certificate has been
issued by the Commission;

(c) Commission refers to the Securities and Exchange Commission;

(d) Financial Institutions, or 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) government financial institutions (GFIs), which for purposes of this Act,
refer to the Philippine Deposit Insurance Corporation (PDIC), Land Bank of
the Philippines (LBP), and Development Bank of the Philippines (DBP), and
such other GFIs as may be included by the Secretary of Finance;

(7) government-owned-or-controlled-corporations (GOCCs), which for

purposes of this Act, refers 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), National Housing Authority (NHA), and such other GOCCs as may be
included by the Secretary of Finance; and

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 (8) other institutions licensed by the BSP to perform (i) quasi-banking
functions and (ii) credit-granting activities, including non-stock savings and
loan associations, pawnshops, and non-bank credit card issuers;

(e) FISTC Plan refers to the plan submitted to the Commission for its approval as pre-
requisite to the issuance of an Investment Unit Instrument;

(f) Investment Unit Instrument (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 non-
performing assets 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;

(g) Non-Performing Assets, or NPAs consist of the non-performing loans and real and
other properties acquired by FIs;

(h) Non-Performing Loans, or NPLs refer to secured or unsecured loans, receivables, and
other financial assets of similar nature, including restructured loans, which are to be considered
credit-impaired and defined as such in the rules and regulations to be issued to implement this
Act;

(i) Real and Other Properties Acquired (ROPAs) refer to real and other properties, other
than those used for operating purposes or held for investment, acquired by an FI in settlement of
loans and receivables, including real properties, shares of stocks, and security interest which
have been acquired by way of dation in payment (dacion en pago) or judicial or extra-judicial
foreclosure or execution of judgment or enforcement of security interest;

(j) True Sale refers to a sale wherein the selling FI transfers or sells its NPAs to an
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 in accordance with the conditions
prescribed in the rules and regulations to be issued to implement this Act, and subject to the
following results:

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

(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.

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 ARTICLE II
Financial Institutions Strategic Transfer Corporation

Sec. 4. Financial Institutions Strategic Transfer Corporation. — An FISTC is a stock

corporation organized in accordance with Republic Act No. 11232, otherwise known as “The
Revised Corporation Code of the Philippines,” and the rules promulgated by the Commission,
for purposes of registering the FISTC: Provided, That if the FISTC will acquire land, at least
sixty percent (60%) of its outstanding capital stock shall be owned by Philippine nationals
pursuant to Republic Act No. 7042, as amended, otherwise known as the “Foreign Investments
Act.” The BSP, GFIs and GOCCs may create an FISTC subject to their respective charters and
the approval of the Governance Commission for Government Owned or Controlled Corporations
(GCG): Provided, That the limitations under Section 3(hj) of this Act shall not apply to BSP and
such GFIs or GOCCs.

FISTCs which are not qualified to acquire or hold land in the Philippines shall be allowed
to bid and take part in foreclosure sales of real property mortgaged to them, as well as to avail of
enforcement and other proceedings, and accordingly to take possession of the mortgaged
property, for a period not exceeding five (5)-years from actual possession: Provided, That in no
event shall the title to the property be transferred to such FISTC. In case the FISTC is the
winning bidder, it shall, during the said five (5)-year period, transfer its rights to a qualified
Philippine national, without prejudice to a borrower’s rights under applicable laws. Should a
FISTC be not able to transfer such property within the five (5)-year period, the FISTC shall be
penalized one half of one percent (½ of 1% ) per annum of the price at which the property was
foreclosed, until the FISTC is able to transfer the property to a qualified Philippine national.

Sec. 5. Powers of an FISTC. – An FISTC shall have the following powers:

(a) Invest in, or acquire NPAs of FIs;

(b) Engage third parties to manage, operate, collect and dispose of NPAs acquired from
an FI;

(c) Rent, lease, hire, subject to security interest, mortgage, transfer, sell, exchange,
usufruct, secure, securitize, collect rents and profits, and other similar acts concerning its NPAs
acquired from an FI;

(d) in case of NPLs, to restructure debt, condone debt and undertake other restructuring
related activities. In restructuring debt, the FISTC may reduce the principal amount, interest
earned, interest rates, and the period for calculating the interest, extend the time for debt
repayment or relax the conditions for debt repayment, agree to the conversion of the borrower’s
debt to equity in the borrower’s business, agree to a transfer of assets or claims from the
borrower to repay the debt or dispose of some of the borrower’s property or claims to third
persons;

(e) Buy or transfer shares issued by the borrower for the purpose of business
reorganization or rehabilitation of the borrower, subject to the provisions of the Revised

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Corporation Code of the Philippines in respect to the rights of the shareholders of the borrower
company, and apply other measures or restructuring techniques with the approval of the
Commission;

(f) Enter into dation in payment arrangements, foreclose judicially or extra-judicially and
other forms of debt settlement involving NPLs;

(g) Spend funds to renovate, improve, complete or alter its NPAs acquired from an FI;

(h) Issue equity or participation certificates or other forms of IUIs for the purpose of
acquiring, managing, improving and disposing of its NPAs acquired from an FI;

(i) Borrow money and issue other instruments of indebtedness for the purpose of paying
operational and administrative costs;

(j) Guarantee credit, and accept, intervene or honor the bills of borrowers;

(k) Advance funds to borrowers as may be required for an acquired asset or any debt
restructuring agreement pursuant thereto, or under any court order or rehabilitation plan; and

(l) Engage the services of a third-party asset servicing company for the collection and
receipt of the debt payments for debts under debt restructuring or business reorganization,
management and disposition of assets of the FISTC in accordance with the rules, procedures and
conditions prescribed by the Commission or by the courts. Except in the case of ROPAs whose
redemption periods have already expired, the FISTC shall notify the borrower and all persons
holding prior encumbrances upon the properties, or a part thereof, or are actually holding the
same adversely against the borrower, of the appointment of such third-party asset servicing
company within fifteen (15) days from the date of the appointment.

Sec. 6. Period for Filing of Applications. – Applications for the establishment and
registration of an FISTC shall be filed with the Commission within twenty-four (24) months
beginning from the date of effectivity of the rules and regulations of this Act, or effectivity of
applicable revenue regulations, whichever is later: Provided, That subject to consultation with
the BSP, SEC and BIR, and based on the level of non-performing assets in the banking and
financial systems and its effect on financial stability, the Secretary of Finance may extend the
period of application by a maximum of another twenty-four (24) months.

Entities created under Republic Act No. 9182, as amended, are qualified to avail of the
privileges and incentives under this Act, subject to compliance with the requirements prescribed
in the rules and regulations issued to implement this Act.

Sec. 7. Capitalization of an FISTC. – An FISTC shall have adequate minimum

capitalization in such amount as may be prescribed by the Commission or by the appropriate
regulatory agency of the FISTC.

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 Sec. 8. Submission of FISTC Plan. – After the establishment of an FISTC pursuant to
Section 4 hereof, an FISTC Plan shall be submitted to the Commission for approval and shall
include the following:

(a) Investment policies of the FISTC;

(b) Contribution plan including the amounts and draft of subscription documents;
(c) Features of the IUIs, including the specific amounts issued and to be issued;
(d) Rights of the holders of the IUIs;
(e) Draft agreements for the appointment of trustees and agents with respect to the
IUIs and the NPLs acquired from an FI;
(f) Name of the external auditor of the FISTC;
(g) Roles and responsibilities of the trustees, advisors, loan servicers and property
managers;
(h) Draft form of financial reports of the FISTC;
(i) Details of distribution policies;
(j) Methods for the increase and decrease of future fund contribution;
(k) Methods for the alteration or modification of the approved FISTC Plan;
(l) Methods for the liquidation and distribution of assets to the holders of IUIs;
(m) Details of credit enhancements like guarantees or standby letters of credit or
advances that may be extended to the FISTC by an entity which shall not be
the selling FI, its parent, subsidiaries or affiliates; and
(n) Such other documents or information as may be required by the Commission.

Sec. 9. Approval, Rejection, Suspension or Revocation of FISTC Plan.

a) Approval – Upon approval of the FISTC Plan, the Commission shall issue an Approval
Certificate stating that the application has been approved and that the IUIs may be issued.

b) Amendments to Approved FISTC Plan – If an FISTC Plan becomes on its face incomplete
or inaccurate in any material respect, upon the request of concerned parties or at its
own determination, the Commission shall issue an order directing the amendment of the
FISTC Plan. Upon compliance with such order, the amended FISTC Plan shall become
effective upon approval of the Commission or appropriate regulatory authority pursuant
to Section 4 of this Act.

c) Rejection, Suspension or Revocation – The Commission may reject a submitted FISTC

Plan if on its face it was not in compliance with the requirements of this Act or the rules
and regulations issued to implement it. It is also authorized to suspend or revoke the
effectivity of an approved plan after due notice and hearing by issuing an order to such
effect setting forth its findings in respect thereto, if it finds that:

1. The FISTC has violated any of the provisions of this Act, the rules and
regulations issued to implement it, or any order of the Commission which the
FISTC has notice of in connection with the offering of IUIs for which a FISTC
Plan has been filed;

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 2. The FISTC has been, or is engaged, or is about to engage in fraudulent
transactions;

3. The FISTC has made any false or misleading representation of material facts in
any approved plan concerning the FISTC or its IUIs;

4. The FISTC has failed to comply with any requirement that the Commission may
impose as a condition for the issuance of IUI for which a FISTC Plan has been
filed; or

5. The FISTC Plan is, on its face, incomplete or inaccurate in any material respect,
or includes any untrue statement of a material fact, or omits to state a material fact
required to be stated, or one which is necessary to obviate any misappreciation of
the statements therein.

Sec. 10. Issuance of IUIs. – The FISTC may be allowed to issue IUIs subject to the rules
and regulations the Commission is herein mandated to promulgate.

Sec. 11. Permitted Investors. – Any qualified buyer, as defined in Section 10 (1) of
Republic Act No. 8799, may acquire or hold IUIs in an FISTC in the minimum amount of Ten
million pesos (P10,000,000.00): Provided, That an FISTC shall not be authorized to acquire the
IUIs of another FISTC: Provided, further, That the parent, subsidiaries, affiliates or stockholders,
directors, officers or any related interest of the selling FI or the parent’s subsidiaries, affiliates or
stockholders, directors, officers or any related interest shall not acquire or hold, directly or
indirectly, the IUIs of the FISTC that acquired the NPAs of the FI.

ARTICLE III
Transfer of Assets to FISTC

Sec. 12. Notice and Manner of Transfer of Assets. – (a) No transfer of NPLs to an FISTC
shall take effect unless the FI concerned shall give prior notice to the borrowers of the NPLs and
all persons holding prior encumbrances upon the assets mortgaged or subject to security interest.
Such notice shall be in writing and made in accordance with the 1997 Rules of Civil Procedure,
as amended, and the rules and regulations issued to implement this Act, at their last known
address or their email address registered and on file with the FI.

(b) The transfer of NPAs from an FI to an FISTC shall be subject to prior certification of
eligibility as NPA by the appropriate regulatory authority having jurisdiction over its operations
which shall issue its certification within forty-five (45) days from the date of application by the
FI for eligibility.

(c) After the sale or transfer of the NPLs, the transferring FI shall inform the borrower in
writing at the last known address of the fact of the sale or transfer of the NPLs.

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 Sec. 13. Nature of Transfer. – All sales or transfers of NPAs to an FISTC shall be in the
nature of a true sale after proper notice in accordance with the procedure as provided for in
Section 12, without need for the borrower’s consent: Provided, That disposition of assets of a
GFI and a GOCC shall be covered by special rules to be incorporated in the rules and regulations
of this Act: Provided, further, That after the sale, the FISTC shall assume all rights and
obligations of the transferring FI.

In the transfer of NPAs, the parties shall exercise the requisite due diligence and any
fraud, collusion and irregularity shall be subject to penalties in Sec. 24 of this Act, as well as
other pertinent laws, rules and regulations.

Sec. 14. Issuance of Injunctive Relief Against Transfer of Assets. – No court, other than
the Court of Appeals and the Supreme Court, shall issue any temporary restraining order,
preliminary injunction, preliminary mandatory injunction, status quo order, stay order,
commencement order, or any other issuance of injunctive relief against the transfer of NPAs
from the FI to an FISTC, and from an FISTC to a third party, or dation in payment by the
borrower or by a third party in favor of an FI or in favor of an FISTC, or judicial or extrajudicial
foreclosure sales or execution sales of the FI or FISTC of collateral in settlement of NPLs.

Any restraining order, injunction, status quo order, stay order, commencement order, or
any other issuance of injunctive relief issued in violation of this Section is void and of no force
and effect.

The provisions of Rules of Court on injunctions insofar as these are applicable and not
inconsistent with the provisions of this Act shall govern the issuance and dissolution of
restraining orders, injunctions, status quo orders or stay orders against said transfers.

ARTICLE IV
Incentives and Exemption Privileges

Sec. 15. Tax Exemptions and Fee Privileges. – Any existing law to the contrary
notwithstanding, the transfer of NPAs from the FI to an FISTC, and from an FISTC to a third
party or dation in payment by the borrower or by a third party in favor of an FI or in favor of an
FISTC shall be exempt from the following taxes:

(a) Documentary stamp tax on the abovementioned transfer of NPAs and

dation in payment as may be imposed under Title VII of the National Internal
Revenue Code of 1997, as amended by Republic Act No. 10963, otherwise
known as the Tax Reform for Acceleration and Inclusion (TRAIN) Act;

(b) Capital gains tax imposed on the transfer of lands and/or other assets
treated as capital assets as defined under Section 39(A)(1) of the National Internal
Revenue Code of 1997, as amended;

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 (c) Creditable withholding income taxes imposed on the transfer of land
and/or buildings treated as ordinary assets pursuant to Bureau of Internal Revenue
(BIR) Revenue Regulation No. 2-98, as amended;

(d) Value-added tax on the transfer of NPAs as may be imposed under

Title IV of the National Internal Revenue Code of 1997, as amended, or gross
receipts tax under Title V of the same Code, whichever is applicable pursuant to
regulations of the BIR.

The abovementioned transfers shall also be subject to the following, in

lieu of the applicable fees:

a) Fifty percent (50%) of the applicable registration and transfer fees on

the transfer of real estate mortgage and security interest to and from the FISTC, as
imposed in accordance with the existing circulars of the Land Registration
Authority (LRA);

(b) Fifty percent (50%) of the filing fees for any foreclosure initiated by
the FISTC in relation to any NPA acquired from an FI, as prescribed by the Rules
of Court; and

(c) Fifty percent (50%) of the land registration fees prescribed under the
existing circulars of the LRA.

All sales or transfers of NPAs from the FIs to an FISTC or transfers by

way of dation in payment by the borrower or by a third party to the FI shall be
entitled to the privileges enumerated herein for a period of not more than two (2)
years from the date of effectivity of the rules and regulations to be issued to
implement this Act or of the applicable revenue regulations, whichever comes
later: Provided, That subject to consultation with the BSP, SEC and BIR, and
based on the level of non-performing assets in the banking and financial
systems and its effect on financial stability, the Secretary of Finance may
extend such period by a maximum of two (2) years.

Transfers from an FISTC to a third party of NPAs acquired by the FISTC

within such two-year period, or within such extended period, or transfers by way
of dation in payment by a borrower or by a third party to the FISTC shall enjoy
the privileges enumerated herein for a period of not more than five (5) years from
the date of acquisition by the FISTC: Provided, That subject to consultation
with the BSP, SEC and BIR, and based on the level of non-performing assets
in the banking and financial systems and its effect on financial stability, the
Secretary of Finance may extend such five-year period by a maximum of five (5)
years: Provided, further, That properties acquired by an FISTC from GFIs or
GOCCs which are devoted to socialized or low-cost housing shall not be
converted to other uses.

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 The tax exemptions, incentives, and fee privileges given to FIs and FISTC
at the various stages of the transactions under this Section shall likewise be
extended to any individual subject to the conditions prescribed in the rules and
regulations issued to implement this Act: Provided, That:

(i) the transaction is limited to a ROPA that is either a single

family residential unit or an empty lot, or to NPL secured by a real
estate mortgage on a residential unit or an empty lot;

(ii) there shall only be one transaction consisting of one residential

unit or empty lot per individual;

(iii) the two-year transfer period, including its extension, and the
five-year entitlement period granted to NPA, as may be extended
by the Secretary of Finance, shall also apply to said single family
residential unit or empty lot.

Sec. 16. Additional Tax Exemptions and Fee Privileges. – To encourage the infusion of
capital and financial assistance by the FISTC for the purpose of rehabilitating the borrower’s
business, the following additional tax exemptions and privileges shall be enjoyed:

(a) The FISTC shall be exempt from income tax on net interest income, documentary
stamp tax and mortgage registration fees on new loans in excess of existing loans extended to
borrowers with NPLs which have been acquired by the FISTC;

(b) In case of capital infusion by the FISTC to the borrower with NPLs, the FISTC shall
also be exempt from the documentary stamp tax;

Provided, That the tax exemptions and fee privileges granted under this Section shall
apply for a period of not more than five (5) years from the date of acquisition of NPLs by the
FISTC: Provided, further, That subject to consultation with the BSP, SEC and BIR, and
based on the level of non-performing assets in the banking and financial systems and its
effect on financial stability, the Secretary of Finance may extend the period for the enjoyment
of such tax exemption and fee privileges by a maximum of five (5) years.

Sec. 17. Net Operating Loss Carry-Over (NOLCO) of Participating FIs. – (a) Any loss
that is incurred by an FI as a result of the transfer of an NPA within the two-year period from the
effectivity of the rules and regulations issued to implement the provisions of this Section, shall
be treated as ordinary loss: Provided, That the accrued interest and penalties shall not be
included as loss on said loss carry over from operations, subject to the provisions of the National
Internal Revenue Code of 1997 on net operating loss carry-over (NOLCO). Such loss incurred
by the FI from the transfer of NPAs within the two-year period from the effectivity of the rules
and regulations issued to implement this Act may be carried over for a period of five (5)
consecutive taxable years immediately following the year of such loss: Provided, further, That
for purposes of corporate gain or loss, the carry-over shall be subject to pertinent laws: Provided,
finally, That the tax savings derived by FIs from the NOLCO shall not be made available for

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dividend declaration but shall be retained as a form of capital build-up. The DOF, upon the
recommendation of the BIR, shall issue the rules and regulations to effectively implement the
provisions of this Section.

(b) The regulatory authority concerned shall promulgate the necessary rules and
regulations governing the treatment of any loss of the FIs in the books of account as a result of
the transfer of the NPAs.

(c) In the case of non-bank GFIs and GOCCs enumerated in Section 3 (d) hereof, the
Department of Finance (DOF), in consultation with the Commission on Audit (COA), shall
promulgate the necessary rules and regulations governing the treatment of any loss in their books
of accounts as a result of the transfer of their NPAs.

Sec. 18. Abuse of Tax Exemptions and Privileges. – Any person, natural or juridical, who
benefits from the tax exemptions and privileges herein granted, when such person is not entitled
thereto, shall be subject to the penalties provided in Section 24 hereof. In addition, the offender
shall refund to the government double the amount of the tax exemptions and privileges availed of
under this Act, plus interest of twelve percent (12%) per year from the date prescribed for its
payment, until full payment thereof.

ARTICLE V
Enforcement and Protection Provisions

Sec. 19. Consumer Protection Mechanism. The FISTC shall set up an appropriate
consumer protection mechanism as may be prescribed in the rules and regulations to be issued by
the appropriate regulatory authority.

Sec. 20. Redemption Periods. – The redemption periods allowed to borrowers of banks
under Section 47 of “The General Banking Law of 2000”, the Rules of Court, as well as other
relevant laws for non-bank borrowers shall be applicable.

ARTICLE VI
Accounting and Reporting Provisions

Sec. 21. Books of Accounts and Records. – The FISTC shall set and keep accurate
accounts and internal financial controls and shall appoint an external auditor that is acceptable to
the Commission. The Commission, the BSP, and the BIR may look into the books of accounts
and records of the FISTC at reasonable hours on business daysany time during office hours,
after due notice.

Sec. 22. Reports. – The Commission, the regulatory authorities, and the BIR shall
prescribe the submission of reports from the FISTC and the FIs for the proper implementation of
this Act.

ARTICLE VII

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 Final Provisions

Sec.23. Primary Implementing Agency. – The Commission shall be the primary

implementing agency of this Act. It shall have the authority to enlist the assistance of any branch,
department, bureau, office, agency or instrumentality of the government, including GOCCs and
GFIs which may include the use and transfer of its personnel, facilities and resources.

Sec. 24. Penalties and administrative sanctions. – Any person who violates any of the
provisions of this Act, or the rules and regulations promulgated thereunder, or any person who,
in a notice, certification or plan filed under this Act, makes any untruthful statement of a material
fact or omits to state any material fact required to be stated therein, shall, upon conviction, suffer
a fine of not less than One hundred thousand pesos (P100,000.00) nor more than Two million
pesos (P2,000,000.00) or imprisonment of not less than six (6) years nor more than twelve (12)
years, or both, at the discretion of the court, without prejudice to the penalties provided under
Section 18 hereof, Section 37 of Republic Act No. 7653, as amended, and other applicable laws.
If the offender is a corporation, association, partnership or any juridical person, the penalty shall
be imposed upon the responsible officers, as the case may be, who participated in the
commission of the crime or who shall have knowingly permitted or failed to prevent its
commission. If the offender is a juridical person, other than a bank or financial institution
supervised by the BSP, the court may order the suspension or revocation of its license. The
offender, if an alien, shall, in addition to the penalties herein prescribed, be deported without
further proceedings after serving the penalties herein prescribed. The offender, if a public official
or employee, shall, in addition to the penalties prescribed herein, suffer absolute or temporary
disqualification from government or public office, as the case may be.

If the offender is a juridical person, the Commission may impose penalties such as fines
upon institutions under its jurisdiction and its officers and order the suspension or revocation of
its license. With respect to financial institutions under its jurisdiction, the BSP shall impose upon
them the sanctions prescribed under Section 37 of Republic Act No. 7653, as amended, as well
as upon their directors, officers and employees. This shall be without prejudice to the appropriate
penalties that may be imposed by the courts.

If, after due notice and hearing, the Commission finds that: (a) there is a violation of this
Act, its rules, or its orders; or (b) any FISTC or other person has, in a FISTC plan or in other
reports, applications, accounts, records or documents required by law or rules to be filed with the
Commission, made any untrue statement of a material fact, or omitted to state a material fact
required to be stated, or one which is necessary to obviate any misappreciation of the statements
therein; the Commission shall, in its discretion, impose any or all of the following sanctions as
may be appropriate in light of the facts and circumstances:

i. suspension, or revocation of any approved FISTC plan for the offering of IUIs;
ii. fine as may be determined by the Commission; and
iii. other penalties within the power of the Commission to impose.

Sec. 25. Applicability Clause. – The provisions of this Act shall be applicable to assets
that have become non-performing as of December 31, 2020: Provided, That subject to

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consultation with the BSP, SEC and BIR, and based on the level of non-performing assets
in the banking and financial systems and its effect on financial stability, the Secretary of
Finance may extend the said period by a maximum of two (2) years.

Sec. 26. Conscience Clause. – Nothing in this Act shall be construed to condone or
exempt from any liability any person responsible for acts or omissions constituting unsound
business practices or mismanagement.

Sec. 27. Oversight Committee. – There is hereby created a Joint Congressional Oversight
Committee (JCOC) to oversee, monitor, and evaluate the implementation of this Act. The JCOC
shall be composed of five (5) members each from the House of Representatives and from the
Senate. The JCOC shall be co-chaired by the Chairpersons of the House Committee on Banks
and Financial Intermediaries and the Senate Committee on Banks, Financial Institutions and
Currencies. The Speaker and the Senate President shall designate the other four members of the
JCOC of the House and the Senate from among the members of the House Committee on Banks
and Financial Intermediaries and the Senate Committee on Banks, Financial Institutions, and
Currencies, at least one member of which shall be from the minority.

Sec. 28. Use of Registration Fees. – To carry out the purposes of this Act, the
Commission shall retain and use all fees paid to it relative to the establishment of an FISTC in
addition to its annual budget and to what is provided for under Section 75, on partial use of
income, of Republic Act No. 8799 or the Securities Regulation Code.

Sec. 29. Implementing Rules and Regulations. — Within thirty (30) days from the
effectivity of this Act, the Commission, jointly with the BSP, the DOF, and the BIR, shall
promulgate the necessary rules and regulations for the effective implementation of this Act:
Provided, That within thirty (30) days from the effectivity of this Act, the DOF, upon
recommendation of the BIR, shall promulgate the revenue regulations implementing the fiscal
incentives under this Act: Provider further, That the Commission, BSP, DOF and BIR may issue
separate regulations that will apply exclusively to the institutions under their respective
jurisdiction. In drafting their separate regulations, the appropriate regulatory authorities may
grant incentives and privileges as may be allowed by their respective charters, this Act and other
pertinent laws.

Sec. 30. Separability Clause. – If any provision of this Act is held unconstitutional or
invalid, all other provisions not affected thereby shall remain valid.

Sec. 31. Repealing Clause. – Republic Act No. 9182, as amended by Republic Act No.
9343, otherwise known as “The Special Purpose Vehicle (SPV) Act of 2002,” is hereby repealed.
All laws, decrees, executive orders, rules and regulations or parts thereof, which are inconsistent
with this Act, are hereby repealed, amended or modified accordingly.

Sec. 32. Effectivity. – This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in a newspaper of general circulation.

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