2018-08-06

NPM No. 025-2018

Requesting Entity: National Home Mortgage Finance Corporation (NHMFC)

Issues Concern: Applicability of RA No. 9184 in the Securitization process as defined under RA No. 9267

 

Details

Whether the Securitization process of a Procuring Entity (PE) is considered as a procurement activity


Section 5(n) of Republic Act (RA) No. 9184 defines the procurement as the acquisition of goods, consulting services, and the contracting for infrastructure projects by the procuring entity. On the other hand, securitization is defined under Section 3(a) of RA No. 9267 as the process by which assets are sold on without recourse basis by the Seller to a Special Purpose Entity (SPE) via a “True Sale” transaction, 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 in accordance with the Plan. A true sale transaction is characterized under Section 12 of RA No. 9267, a careful perusal of which would reveal that securitization partakes of the nature of disposition rather than acquisition of government properties because it involves sale of assets to a SPE. Thus, the engagement of third parties for purposes of securitization is not covered by RA No. 9184, but by RA No. 9267 and other applicable laws, rules and regulations.