Opinion No. 24-26 Re: Total Amount of Credit a Financing Company May Extend for Real Estate Transactions

Exchange Securities and Commission INE

BAGONG PILIPINAS

25 September 2024

SEC-0GC Opinion No. 24-26 RE: Total Amount of Credit a for Real Estate Transactions Financing Company May Extend

Email: tiongcosiaobellolaw.com TIONGCO SIAO BELLO & ASSOCIATES LAW OFFICES 2104-05 Robinsons Equitable Tower, ADB Avenue Ortigas Center, 1605, Philippines Pasig City

Attention: Atty. Greg Joseph S.J. Tiongcc Atty. Thomas Miguel A. Martinez Atty. Lisa Marie A. Garan

Dear Attorneys:

credit a financing company may extend to third parties for real estate transactions. This refers to your letter dated 18 June 2024, requesting a legal opinion on the total amount of

for real estate transactions. But before it proceeds with this course of action, and to ensure its compliance with the laws, rules and regulations to avoid any potential violations, you are asking the following query: registered with the Commission seeking to expand its clientele to accommodate borrowers obtaining loans In your letter, you stated that your client, United Financing Company (UFC), is a financing company

or the Financing Company Act (FCA) is the only limitation on the total amount of credit to third parties for real estate transactions that is applicable to financing companies not outlined in Section 7 of the IRR. Whether Section 9(d) of the Implementing Rules and Regulations (IRR) of Republic Act No. 8556

implements. Section 4 of the FCA states: The FCA regulates the business of financing companies in the Philippines, which the Commission

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 Section 5 hereof. Section 4. Grant of Authority to Securities and Exchange Commission. - The Securities and

Section 9(d) of the [RR provides the rule on allowable total credit that a financing company may extend: Pursuant to the above-mentioned provision, the Commission promulgated the IRR of the FCA.

Section 9. Loans and Investments.

b. xx a. xxx C. XXX

The SEC Headquarters, 7907 Makati Avenue www.sec.gov.ph | imessagemo@sec.gov.ph (+63 2) 5322 7696 Salcedo Village, Bel-air, Makati City INVESTORS" IN PEPLE We invest in people CERTIFIED I50 900 120 1 Managemgnt 8O ST S

d. The total crediti that a financing company may extend to any person, company, corporation or firm shall not exceed thirty (30%) percent of its net Worth?

It is a basic principle in statutory construction that where the law does not distinguish, neither should we.3 Ubi lex non distinguit nec nos distinguere debemus. Section 9(d) of the IRR does not qualify for a financing company can extend a credit for any kind of transaction of the borrower, subject to the 30% what kind of transaction a loan can be extended by a financing company. Applying the aforesaid principle, limit aforementioned.

the applicable rules of the Bangko Sentral ng Pilipinas, to wit: However, financing companies outlined under Section 7 of the IRR of the FCA shall be subject to

Section 7. Applicability of Bangko Sentral ng Pilippinas Regulations

or units, shall be subject to applicable rules and regulations of the Bangko $entral ng Pilipinas (BSP) and must comply with BSP requirements prior to issuance by the Commission of the Certificate of Authority to Operate as a Financing Company: The following financing companies, including their branches, agencies, extension offices

d) Financing companies with authority to engage in trust operations. b a C Financing companies with quasi banking license; Financing companies that are subsidiaries/affiliates of banks; Financing companies that are subsidiaries/affiliates of non-bank financial intermediaries with quasi banking license;

Hence, we answer your query in the affirmative.

the query and relevant solely to the particular issues raised therein and shall not be used in the nature of a standing rule binding upon the courts, or upon the Commission in other cases of similar or dissimilar It shall be understood that the foregoing opinion is rendered based solely on the facts disclosed in

circumstances.4 If upon investigation, it will be disclosed that the facts relied upon are different, this opinion shall be rendered null and void.

Please be guided accordingly

Yours most respectfully.

ROMUALD C.PKDILLA General Counsel

claims, 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;" (IRR of FCA) 2 Networth is the excess of assets over liabilities, net of appraisal surplus, unbooked valuation reserves, capital adjustments, I Section 3 (c) 'Credit shall mean any loan, mortgage, financial lease, deed of trust, advance or discount, any conditional sales contract. contract of 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 3 Spouses RomeoLL. Plopeno and Rosielinda Plopenio represented by Gavino Plopeno vs. Department of Agrarian Reform and Land Bank of the Philippines, G.R. No. 161090, July 4, 2012 Edmundo LL. Plopenio represented by Gavino Plopeno vs. Department of Agrarian Reform and Land Bank of the Philippines, G.R. No. 161092, July 4, 2012 overstatement of assets and unbooked liabilities (Sec. 1(1) of the IRR of FCA.) 4 SEC Memorandum Circular No. 15, Series of 2003, 16 December 2003