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
"(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. 5. Sec. 5 of the same Act is hereby amended to read as follows:cralaw
Sec. 6. Sec. 6 of the same Act is hereby amended to read as follows:cralaw
Sec. 7. Sec. 7 of the same Act is hereby amended to read as follows:cralaw
"(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
"(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.
"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:
"(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
"(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.
"(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.
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
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