Presidential Decree No. 1454 (PD 1454) — Amending Section 5 of Republic Act Numbered Five Thousand Nine Hundred Eighty, Otherwise Known as the "Financing Company Act"
Presidential Decree No. 1454 (PD 1454) — Amending Section 5 of Republic Act Numbered Five Thousand Nine Hundred Eighty, Otherwise Known as the "Financing Company Act"
Data as of July 4, 2026 · Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails. · Read the official text ↗
WHEREAS, the limitations on the purchase discount rates of
finance companies on transactions involving the assignment of credit or the
purchase of installment papers, accounts receivable and other evidences of
indebtedness, are fixed by law under Section 5 of the Financing Company Act;
WHEREAS, there is a need to adopt a more flexible policy on
the purchase discounts, fees, and other charges of financing companies that
would be more responsive to the requirement of changing economic and social
conditions;
WHEREAS, it is desirable and necessary that the Central Bank
of the Philippines, as the government agency charged with the responsibility of
fostering monetary, credit and exchange condition conducive to a balanced and
sustainable growth of the economy, be vested with the power to regulate change
or modify, in coordination with the Securities and Exchange Commission, the
purchase discount rates, fees and other charges of finance companies in the same
manner that it has legal authority to regulate the interest rate and other
charges that may be collected by banks and other financial intermediaries;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution, do hereby
decree and order the amendment of Republic Act No. 5980, as follows:
SECTION 1. Section 5 of Republic Act No. 5980 is hereby
amended to read as follows:
"SEC. 5. Limitation on purchase discount fees, service
and other charges.—
"The Monetary Board of the Central Bank of the Philippines is hereby
empowered to prescribe, in consultation with the Securities and Exchange
Commission, the maximum rate or rates of purchase discounts, fees, service and
other charges of financing companies, and to change such rate(s) whenever
warranted by prevailing economic and social conditions.
"In the case of assignment of credit or the buying of installment papers,
accounts receivable and other evidences of indebtedness by financing companies,
the purchase discount, exclusive of interest and other charges, shall be limited
to fourteen per cent (14%), or such percentage as may be prescribed by the
Monetary Board, of the value of the credit assigned or the value of the
installment papers, accounts receivable and other evidences of indebtedness
purchased based on a period of twelve months or less, and to one and one-sixth
per cent (1-1/6%), or such percentage as may be prescribed by the Monetary
Board, for each additional month or fraction thereof in excess of twelve months,
regardless of the terms and conditions of the assignment or purchase.
"In the case of assignment of credit or the buying of installment papers,
accounts receivable, and other evidences of indebtedness pertaining to
appliances, furniture, and office equipment, the purchase discount exclusive of
interest charges shall be limited to eighteen per cent (18%), or such percentage
as may be prescribed by the Monetary Board, of the value at maturity of the
credit assigned or receivable purchased, based on a period of twelve months or
less, and to one and one-half per cent (1-1/2%), or such percentage as may be
prescribed by the Monetary Board, for each additional month or fraction thereof
in excess of twelve months, regardless of the terms and conditions of the
assignment or purchase.
"In case of factoring of accounts receivables or other evidences of
indebtedness, the discounting rate that can be charged, exclusive of interest
and other charges shall be limited to two per cent (2%), or such percentage as
may be prescribed by the Monetary Board, of the value of the credit assigned or
receivable purchased for every thirty (30) days, regardless of the terms and
conditions of the factoring agreement."
SEC. 2. This Decree shall take effect immediately.
Done in the City of Manila, this 11th day of June, in the year of Our Lord,
nineteen hundred and seventy-eight.
(Sgd.) FERDINAND E. MARCOS
President of the
Philippines
By the President:
(Sgd.) JACOBO C. CLAVE
Presidential Executive
Assistant
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
