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This page features the full text of
Republic Act No. 8556.
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:
"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:
"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:
"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:
"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:
"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:
"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:
"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
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