For informational and educational purposes only; not a substitute for advice from a Philippine lawyer or regulator.

I. Why Legitimacy and SEC Registration Matter

In the Philippines, legitimate lending companies must be registered with the Securities and Exchange Commission (SEC) and comply with a number of laws and regulations, including:

Lending Company Regulation Act of 2007 (Republic Act No. 9474)
Financing Company Act of 1998 (Republic Act No. 8556)
Corporation Code / Revised Corporation Code
Truth in Lending Act (RA 3765)
Data Privacy Act of 2012 (RA 10173)
Applicable SEC rules, regulations, memorandum circulars and advisories

If a lender is not properly registered, or is operating beyond what it is allowed to do, it may be:

An illegal lender (e.g., “5–6” schemes, fly-by-night online loan apps), or
A company committing fraud, unfair debt collection practices, or data privacy violations

Borrowers who deal with illegitimate lenders face risks such as:

Extremely high and hidden charges
Harassment and public “shaming” during collection
Misuse of personal data and access to phone contacts
Difficulty enforcing their rights in case of abuse

So, before signing any loan agreement or even installing a loan app, it’s crucial to know how to verify if the lender is legit and SEC-registered.

II. Understand the Types of Legitimate Lenders in the Philippines

Not all entities that lend money are under the SEC. It helps to know who regulates whom.

1. Banks and Quasi-Banks

Examples: universal banks, commercial banks, thrift banks, rural banks, digital banks.
Regulator: Bangko Sentral ng Pilipinas (BSP), not SEC (although banks are corporations and are also registered with SEC at incorporation, their actual banking license is from BSP).
Verification: Check if they are a BSP-supervised financial institution (BSFI) and normally they have well-known brand names and branches.

2. Lending Companies (RA 9474)

Primary business: granting loans from own capital to the public.
Must be:
- Organized as a corporation, not a sole proprietorship or partnership; and
- Registered with SEC; and
- Issued a Certificate of Authority (CA) to operate as a lending company.
This is the typical category for small to medium non-bank lenders, including some online lending companies.

3. Financing Companies (RA 8556)

Primary business: financing by extending credit (e.g., installment sales, leasing) or acquiring receivables.
Also required to be corporations registered with SEC and to have a Certificate of Authority to operate as a financing company.
Many “auto loan,” “appliance loan,” or “salary loan” providers may fall under this category.

4. Cooperatives

Lending cooperatives are usually registered with the Cooperative Development Authority (CDA), not SEC.
They may extend credit to members under cooperative rules.
To verify legitimacy, you don’t go to SEC, you check with CDA and the cooperative’s registration and permits.

5. Microfinance NGOs and Others

There are also microfinance NGOs, pawnshops, and other entities with specific frameworks. Some of these are:

Registered with SEC (as corporations or NGOs) but regulated operationally by other agencies (like BSP for pawnshops).

Key idea: If the entity calls itself a “lending company” or “financing company” serving the general public, it should have an SEC Certificate of Registration (COR) and SEC Certificate of Authority (CA) as a lending or financing company.

III. Core Legal Requirements for Lending and Financing Companies

1. Corporate Form

Under RA 9474 and RA 8556, lending and financing companies must:

Be organized as stock corporations
Have a minimum paid-in capital (amount depends on rules and location; historically, for example, at least ₱1 million, sometimes higher, especially for Metro Manila, but exact figures can change)
Have a primary purpose clause in their Articles of Incorporation stating that they are engaged in lending or financing.

2. SEC Certificate of Registration (COR)

This is the basic SEC document showing:

Company name
SEC Registration Number
Date of incorporation

But: being a registered corporation is not enough to operate as a lending or financing company.

3. SEC Certificate of Authority (CA)

A lending or financing company cannot operate without a Certificate of Authority to operate as such, issued by the SEC.

A legitimate lender should be able and willing to show:

Their SEC COR; and
Their SEC CA (usually clearly stating “to operate as a lending/financing company”).

If they only have a DTI Business Name Registration (for sole proprietorship) or a Mayor’s/Business Permit but no SEC CA, that is a red flag for lending to the public.

4. Business Permits and Other Local Requirements

Legitimate companies should also have:

Mayor’s permit / Business permit from the LGU where they operate
Barangay clearance
BIR registration and official receipts/invoices

These do not replace SEC registration, but they are additional signs that the business is legally operating.

IV. How to Check If a Lending Company Is Legit and SEC-Registered

Here’s a practical, step-by-step guide tailored to the Philippine setting.

Step 1: Ask for the Company’s Full Legal Name and Details

Get the exact:

Registered corporate name (not just brand name or trading name)
SEC Registration Number
Certificate of Authority (CA) Number and date
Physical office address and landline (not just a prepaid mobile number or social media account)

Legitimate firms should not be secretive about these.

Step 2: Check SEC Corporate Registration and CA

Even without browsing, in principle, you can:

Verify whether the entity exists as a corporation with SEC.
Confirm if it has a Certificate of Authority as a lending/financing company (not just any corporation).

If you were doing this in real life, you would:

Use the SEC’s public search tools or
Request verification from SEC (online or at its main/extension offices).

If the company name does not appear in SEC’s records, or appears without a CA as lending/financing company, that is a major warning sign.

Step 3: Check for SEC Advisories and Cease-and-Desist Orders

The SEC issues public advisories and cease-and-desist orders (CDOs) against:

Unregistered lending and financing companies
Abusive online lending applications
Entities soliciting investments or loans without authority

You should confirm that:

The company’s name does NOT appear in any SEC advisory as unregistered or acting without authority; and
The company is not subject to a CDO.

If it is, avoid them.

Step 4: Check the Type of Entity vs. What It Actually Does

Some entities try to bypass SEC rules:

They register as a trading or consultancy corporation, then engage in public lending without the proper CA.
They register with DTI as a sole proprietorship then extend loans to the general public.

If the primary business is lending but:

They are not a corporation, or
They are a corporation without a lending/financing CA,

then their operations may be illegal under RA 9474 or RA 8556.

Step 5: Review the Loan Documentation and Disclosures

Under the Truth in Lending Act (RA 3765) and related rules, legitimate lenders should:

Provide a written contract in understandable language
Clearly state:
- Principal amount
- Interest rate (per month and effective per annum, if applicable)
- Service or processing fees
- Penalties and charges
- Schedule of payment
Give you a copy of the contract and official receipts for payments

Red flags:

No written contract, only chat messages or verbal promises
Contract is very short, vague, or missing key terms
They refuse to give you a copy
They refuse to issue official receipts

Step 6: Check the Interest Rates and Charges

The Philippines has technically lifted the usury law ceilings, but:

Courts and regulators can still consider “unconscionable” or “excessive” interest and charges as unenforceable or illegal.
For some lending sectors, caps and guidelines have been issued by regulators (especially for low-value loans and microfinance).

Be wary if:

The effective interest rate plus fees and penalties is extremely high (e.g., triple-digit annualized rates).
The lender charges very short due dates and huge penalties for even a 1-day delay.

Excessive, hidden, or confusing charges are a practical red flag, even if not automatically illegal by themselves.

Step 7: Evaluate How They Handle Personal Data

Under the Data Privacy Act, companies must:

Obtain your personal data lawfully and transparently
Inform you what data they collect, why, and how it will be used
Implement reasonable safeguards

Red flags in practice:

The app forces you to give full access to your contacts, photos, and messages even if these are not reasonably necessary for credit evaluation
No clear privacy notice or data retention policy
History or complaints of contact-shaming, where they send messages to all your contacts

Lenders that abuse your data may be liable under the Data Privacy Act, even if they are SEC-registered.

Step 8: Observe Their Collection Practices

SEC rules and circulars on debt collection generally prohibit:

Threats of physical harm
Use of obscene or profane language
Public shaming, such as posting your photo on social media
Harassment of your employers, colleagues, or distant relatives
False representation as lawyers, police, or government agents

If the lender engages in these practices, they may be in serious violation of SEC rules and possibly criminal laws, regardless of registration.

V. Special Case: Online Lending Apps

Online and app-based lending has been a hotbed of abuse. To be legit, a Philippine online lending app must:

Be operated by a corporation that is SEC-registered with a CA as a lending or financing company.
Have the online platform itself compliant with SEC rules (the SEC has issued specific memorandum circulars regulating online lending platforms).
Comply with the Data Privacy Act and rules of the National Privacy Commission.
Follow fair collection practices.

Red flags with online lending apps:

The app is not associated with any identifiable corporation (only a generic name)
The app operator has no SEC CA, or the corporate name doesn’t match the app branding at all
The app has multiple reports of shaming and harassment in reviews and social media
SEC has issued an advisory warning the public not to use the app

If any of these appear, it is safer to avoid the app entirely.

VI. Distinguishing Legit Lenders from Illegal “5–6” and Fake Companies

Certain behaviors are classic signs of illegal lending operations:

No SEC registration but openly lending to the public
“Lending” business run by an individual only with a DTI certificate (no corporation, no CA) but advertising publicly
Lending with very high interest, payable daily or weekly, with no contract and no receipts
Use of violence, threats, or public humiliation for collection
Operators who regularly change business names or locations to avoid complaints

Even if the lender claims to be registered, if they cannot or will not show proof, treat them as suspicious.

VII. What to Do If You Suspect a Lender Is Illegal or Abusive

If you discover that a lender is not SEC-registered, lacks a Certificate of Authority, or is subject to an SEC advisory, or if they engage in abusive practices, you may consider the following options:

1. Report to the SEC

The SEC has an Enforcement and Investor Protection function that:

Investigates unregistered lending/financing companies
Issues advisories and cease-and-desist orders
May initiate administrative, civil, or criminal cases

Complaints typically include:

Your personal information and contact details
The lender’s name, address, phone numbers, app name
Copies of contracts, screenshots, receipts, and abusive messages

2. Report Data Privacy Violations

If the lender:

Illegally accesses your contacts
Sends humiliating messages to your contacts
Misuses your personal information

You may file a complaint with the National Privacy Commission (NPC).

3. Report Threats or Harassment to Law Enforcement

If there are:

Threats of physical harm
Extortion
Defamation, cyberbullying, or grave threats

You may report to:

PNP (Philippine National Police), including local police stations or cybercrime units
NBI (National Bureau of Investigation) Anti-Cybercrime or Anti-Fraud Divisions

4. Seek Legal Remedies in Court

Depending on the case, you may:

File a civil suit to question unconscionable interest rates or abusive contract terms
Use small claims court for certain money claims within the jurisdictional amount
Defend yourself in a collection case by raising violations of Truth in Lending, Data Privacy, or unconscionable interest

Legal strategy should be discussed with a Philippine lawyer.

VIII. Practical Checklist Before Borrowing

Here’s a quick, concrete checklist you can apply before taking a loan:

Corporate Identity
- Do they have a corporate name, not just a trading name?
- Can they show their SEC Certificate of Registration?
Certificate of Authority
- Do they have a Certificate of Authority as a lending or financing company (not just any business)?
Regulatory Standing
- Are they absent from any SEC advisory as an illegal lender?
- If a cooperative, are they CDA-registered? If a bank, are they BSP-supervised?
Permits and Presence
- Do they have a Mayor’s permit and BIR registration?
- Is there a real office address and verifiable contact details?
Loan Terms
- Are the interest rate and fees clearly disclosed?
- Are there no hidden charges or confusing add-ons?
- Is the repayment schedule realistic?
Contracts and Documentation
- Is there a clear written contract?
- Do you receive a copy of what you signed?
- Do they issue official receipts for payments?
Data Privacy and Collection
- Does the lender respect your data privacy?
- Are their collection practices fair and legal?

If the answer to any of these is no, proceed with extreme caution or walk away.

IX. Key Takeaways

In the Philippines, legitimate lending and financing companies must be corporations with SEC registration and a Certificate of Authority specifically to operate as such.
SEC registration alone (as a regular corporation) is not enough; they must also have a CA as required by RA 9474 and RA 8556.
Online lending apps must be tied to properly registered companies and are subject to specific SEC and Data Privacy rules.
Red flags include: no SEC record, no CA, only DTI registration, no written contract, hidden charges, abusive collection, and data privacy violations.
If you suspect illegal or abusive practices, you can report the lender to SEC, NPC, and law enforcement, and seek remedies in court.

By systematically verifying SEC registration, Certificates of Authority, regulatory standing, and actual business behavior, you significantly reduce your risk of dealing with illegal lenders in the Philippines.