FIMA14: Financing Companies

RA 8556

RA 8556

Financing Company Act of 1998

RA 8556 defines

as act that amends RA 5980 or The Financing Company Act

RA 5980

Financing Company Act

Sec. 1

Financing Company Act of 1998

Sec. 2

Declaration of Policy

1. Policy of State shall

regulate and promote the activities of financing & leasing companies to place their operations on a sound, competitive, stable and efficient basis like other FI

regulate and promote the activities of financing & leasing companies

to place their operations on a sound, competitive, stable and efficient basis like other FI

to place their operations on a sound, competitive, stable and efficient basis like other FI

regulate and promote the activities of financing & leasing companies

2. Policy of state shall

recognize and strengthen their critical role in providing medium & long- term credit for investments in capital goods & equipment, especially by small & medium enterprises in the countryside

recognize and strengthen their critical role in providing medium & long- term credit

for investments in capital goods & equipment, especially by small & medium enterprises in the countryside

for investments in capital goods & equipment, especially by small & medium enterprises in the countryside

recognize and strengthen their critical role in providing medium & long- term credit

curtail and prevent acts or practices prejudicial to the public interest to be in better position extending efficient service

in a fair manner to the general public, industry, commerce, agriculture and more fully contribute to the sound development of the national economy

in a fair manner to the general public, industry, commerce, agriculture and more fully contribute to the sound development of the national economy

curtail and prevent acts or practices prejudicial to the public interest to be in better position extending efficient service

3. Policy of State shall

curtail and prevent acts or practices prejudicial to the public interest to be in better position extending efficient service in a fair manner to the general public, industry, commerce, agriculture and more fully contribute to the sound development of the national economy

Sec. 3

Definition of Terms

Financing Companies

corporations which primarily organized for the purpose of extending credit facilities to consumers, industrial, commercial, or agricultural enterprises by direct lending, discounting or factoring commercial papers or accounts receivable, buying and selling contracts, leases, chattel mortgages, or other evidence of indebtedness, and financial leasing of movable and immovable property

Financing Companies extend credit by

direct lending and discounting or factoring commercial papers or accounts receivable

Financing Companies extends credit through

buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness and financial leasing of movable and immovable property

Financing Companies does not include

banks, IH, savings & loan associations, IC, cooperatives, and other FI organized/operating under other special laws

Banks, IH, savings & loan associations, IC, cooperatives, and other FI organized/operating under other special laws

is not include in Financing Companies

Credit

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

Financial leasing

mode of extending credit through a non-cancelable lease contract

Financial Leasing Situation

At the instance, lessor purchases lesse’s movable or immovable property 

Periodic payment

fixed amount of money of at least 70% of the purchase price, incl. incidental expenses and margin of profit 

Obligatory Period

not less than 2 years during lessee has right to hold and use the leased property 

Right of Lesse

right to expense the lease rentals paid to the lessor

Obligation of Lesse

bears the cost of repairs, maintenance, insurance and preservation

Not an obligation of Lesse

no obligation or option on his part to purchase the leased property from the owner-lessor at the end of the lease contract

Lease rentals

refer to the periodic payments made by the lessee to the lessor

Purchase discount

 difference between the value of the receivable purchased or credit assigned, and the net amount paid by the finance company for such purchases, assignment, exclusive fees, services, charges, interest and other charges incident to the extension of credit