Law Summary
Introduction
Republic Act No. 9343, approved on April 24, 2006, amends Republic Act No. 9182, known as the Special Purpose Vehicle (SPV) Act of 2002. This amendment facilitates the establishment and registration of new SPVs and introduces tax exemptions and fee privileges concerning the transfer of non-performing assets (NPAs).
Amendment of Application Filing Period
Legal Principle/Provision:
- The amendment to Section 6 establishes a specific timeframe for filing applications for the establishment and registration of SPVs.
Key Definitions Introduced:
- SPV: Special Purpose Vehicle designed to manage NPAs.
Important Requirements or Procedures Outlined:
- Applications must be submitted to the Commission.
Relevant Timeframes, Deadlines, or Expiration Details:
- Applications must be filed within 18 months from the effective date of this amendatory Act.
Consequences:
- Failure to comply may result in the inability to establish or register an SPV.
• Applications for SPV registration must be filed with the Commission within 18 months of the law's effectivity.
Tax Exemptions and Fee Privileges
Legal Principle/Provision:
- Section 15 outlines tax exemptions applicable to the transfer of NPAs between financial institutions (FIs) and SPVs.
Key Definitions Introduced:
- NPA: Non-Performing Assets, which are assets that are not generating income.
Important Requirements or Procedures Outlined:
- The transfer of NPAs from FIs to SPVs and from SPVs to third parties is exempt from various taxes and fees.
Relevant Timeframes, Deadlines, or Expiration Details:
- Tax exemptions and fee privileges are valid for two years from the law's effectivity for transfers from FIs to SPVs.
- SPVs benefit from a five-year entitlement period for certain transfers after acquisition.
Consequences:
- Properties acquired for socialized or low-cost housing cannot be converted to other uses.
• Transfers of NPAs between FIs and SPVs are exempt from:
- Documentary stamp tax
- Capital gains tax
- Withholding income taxes
- Value-added tax or gross receipts tax • Reduced fees:
- 50% of mortgage registration and transfer fees
- 50% of filing fees for foreclosure initiated by SPVs
- 50% of land registration fees • Privileges extend to individuals for single family residential units under specific conditions.
Separability Clause
Legal Principle/Provision:
- Any provision declared unconstitutional will not affect the validity of the remaining provisions of the Act.
Consequences:
- Ensures continuity of the law despite potential legal challenges.
• If any part of the Act is unconstitutional, the rest remains in effect.
Repealing Clause
Legal Principle/Provision:
- Conflicts with existing laws, decrees, or regulations are repealed, modified, or amended.
• Any inconsistent law is repealed or modified to align with this Act.
Effectivity
Legal Principle/Provision:
- The Act takes effect following publication.
Relevant Timeframes, Deadlines, or Expiration Details:
- Effective 15 days post-publication in the Official Gazette or two newspapers of general circulation.
• The Act becomes effective 15 days after its publication.
Key Takeaways
- Republic Act No. 9343 amends the SPV Act to streamline the registration of SPVs and provides significant tax exemptions and fee privileges for the transfer of NPAs.
- Applications for SPVs must be submitted within 18 months of the law's enactment.
- Tax exemptions are available for two years for transfers to SPVs and extend to five years for subsequent transactions.
- The law includes provisions for separability and repealing conflicting regulations, ensuring its effectiveness.