Singer Sewing Machine Company

March 1, 1990 Singer Sewing Machine Company c/o Cruz Durian Azalein Atienza Alday and Tuason ACC Law Building 421-461 Cabildo Street Intramuros, Manila Gentlemen: This refers to the audit made on the books of accounts and records of Singer Sewing Machine Company which showed that the corporation is engaged in the business of discounting receivables. cdll It may be recalled that the Commission in an undated letter signed by then Chairman Julio A. Sulit previously ruled that the purchase of receivables by the above-named company does not constitute a financing activity but is only incidental to its primary purpose of manufacturing or trading. The latest findings of the Commission, however, showed that subject company regularly purchased installment receivables from its dealers not at face value but at a discounted value . Under RA 5980, otherwise known as the "Financing Act", discounting of receivables is considered a financing activity. The law provides, thus: "(a) "Financing companies", herein after called companies, are corporations or partnerships, except those regulated by the Central Bank of the Philippines, the Insurance Commissioner and the Cooperatives Administrative Office, which are primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial or agricultural enterprises either by discounting or factoring commercial papers or accounts receivables , or by buying and selling contracts leases, chattel mortgages, or other evidences of indebtedness, or by leasing of motor vehicles, heavy equipment and industrial machinery, business and office machines and equipment, appliances and other movable property." (Emphasis supplied) It is clear from the aforecited provision that discounting of receivables is a financing company activity. Since the act of the corporation in extending financial assistance to its dealers constitutes discounting of accounts receivables, the same is subject to the provisions of RA 5980. Thus, on the basis of said findings, the Commission, in its meeting of December 14, 1989 resolved to reverse and revoke the abovementioned previous ruling on the matter and that company is hereby directed and enjoined to comply with the provisions of RA 5980 otherwise known as the Financing Company Act as well as its implementing rules and regulations promulgated by the Commission. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman