Probe on financing firms sought

MANILA, Philippines - A partylist legislator has called on his colleagues to probe into the malpractices of various financing companies in the country.

Under House Resolution 932, Buhay partylist Rep. Irwin Tieng said various financing companies are engaged in different malpractices to the disadvantage not only of the consumers but of the legitimate sellers as well.

"These practices of unscrupulous financing companies in deceiving sellers for their personal gain should be stopped," Tieng said.

He said financing companies are primarily designed to facilitate financing for consumers making huge purchases like vehicle and equipment.

He said the transfer of ownership of the subject of sale to the buyer is an essential requirement of the financing companies prior to the release of the full payment.

"The subject of sale is subsequently encumbered in favor of the financing companies for the latter's security against the buyer," Tieng said.

Tieng cited the case of Radiowealth Finance Company, which is facing cases of default payments to the sellers.

Upon the release of the equipment subject or financing to the buyer, Radiowealth willfully refused to pay the total purchase price, resulting in significant loss of the seller's business, he added.

Tieng said the Radiowealth is liable to the seller on the basis that it guaranteed full payment of the property subject to financing and has the right and obligation to collect from the buyer-borrower.

Tieng said the Financing Company Act of 1996 or Republic Act 8556 refers to a corporation engaged in extending credit facilities to consumers and to industrial and agricultural enterprises.

Financing companies are allowed to engage in direct lending or by discounting commercial papers, buying and selling contracts and leases chattel mortgages.