Rhealeth Krizelle Ramos

2A, Ateneo Law

FINANCING COMPANY ACT OF 1998 3. Register of Deeds

 Shall open and maintain a register of financial
R.A. 8556 leases as an adjunct to the chattel mortgage
A Summary registry

Form of organization and capital requirements

 This Act amended the former Financing Company Act (R.A.
5980)  Organized in the form of stock corporations at least 40% of
the voting stock of which is owned by Philippine citizens
 Approved: Feb. 26, 1998
 Capital needed:
Policies:  P10M: if located in Metro Manila and other first
 To regulate and promote the activities of financing and class cities
leasing companies  P5M: other classes of cities
 To recognize and strengthen their critical role in providing  P2.5M: in municipalities
medium & long-term credit for investments  No foreign national may be allowed to own stock if his
 To curtail and prevent acts or practices prejudicial to the country does not accord the same reciprocal rights to
public interest so that they may be in a better position to Filipinos
extend service in a fair manner
Requirements for registration
Important terms: 1. Compliance with the requirements provided by law of the
1. Financing companies specific business for which the applicant is proposing to be
2. Credit incorporated
3. Financial leasing 2. Reasonable assurance of protection of the interest of the
4. Purchase discount general public
5. Lease rentals 3. Compliance with the requirements of this Act
(listen to the report for further explanations)
Rights and powers of financing companies
Authorities/Agencies concerned: 1. Engage in quasi-banking and money market operations
1. SEC: Securities and Exchange Commission 2. Engage in trust operations
 Empowered to implement the provisions of this Act 3. Issue bonds and other capital instruments
4. Rediscount their paper with government financial
 Exception: cases where the BSP has supervisory
institutions
authority under the provisions of RA 7653
5. Participate in special loan and credit programs sponsored
2. Monetary Board of BSP
by or made available through government financial
 Empowered to prescribe the maximum rate/s of
institutions
purchase discounts, lease rentals, fees, service and
6. Provide foreign currency loans and leases to enterprises
other charges of financing companies
who earn foreign currency
 Also empowered to change, eliminate or grant
 All those mentioned above are subject to certain
exemptions from or suspend the effectivity of such
limitations, please listen to the report.
rules whenever warranted by prevailing socio-
economic conditions
Liability of lessors
Rhealeth Krizelle Ramos
2A, Ateneo Law

 Financing companies shall not be liable for loss, damage or  Imprisonment for not more than 6 months
injury caused by:  Both
 a motor vehicle, aircraft, vessel,
 equipment, machinery or other property leased to
a third person or entity
 except when any of the above-mentioned is
operated by the financing company, its employees
or agents at the time of the loss, damage or injury.
Penalties
1. Who may be liable
a. Persons, associations, partnerships or corporations,
including the managing officer thereof
 Engage in the business of a financing company
without authority
 Hold themselves out to be a financing company
without authority
 Make use of train or firm name containing the
words “Financing Company,” “Leasing
Company,” “Finance and Leasing Company,”
“Finance and Investment Company,” or any
other designation that gives the impression
that it engages in the business of a financing or
leasing company without authority
 Violate the provisions of this Act
b. Any officer, employee, or agent of a financing company
 Knowingly and willingly make any statement in
any document required to be filed under this
Act, which is false or misleading
 Overvalue or aid in undervaluing any securities
for the purpose of influencing the way the
action of the company on any loan, or
discounting line.
c. Any officer, employee, or examiner of the SEC directly
charged with the implementation of this Act
 Commit, connive, aid or assist in the
commission of acts enumerated above.

2. Penalty
 P10,000 to P100,000