How to Verify if a Lending Company Is Legit with the SEC Philippines

Verifying the legitimacy of a lender in the Philippines isn’t just prudent—it’s your best defense against predatory lending, harassment, and fraud. Below is a practitioner-style guide to everything you need to know under Philippine law and regulatory practice to determine whether a lending company is lawful and aboveboard.

1) Know the Legal Categories: “Lending Company” vs “Financing Company”

  • Lending Companies operate primarily by granting loans sourced from their own capital. They are governed by the Lending Company Regulation Act of 2007 (RA 9474) and its implementing rules.

    • Key hallmark: The corporate name must include “Lending Company” (or a close variant).
    • Form: Must be a corporation—not a sole proprietorship or partnership.
    • Capitalization: Subject to a statutory minimum paid-in capital (historically ₱1,000,000 for lending companies).

  • Financing Companies (e.g., offering credit facilities, installment plans, or more structured asset financing) are governed by the Financing Company Act (RA 8556, as amended) and related rules.

    • Key hallmark: The corporate name must include “Financing Company.”
    • Capitalization: Historically higher minimum paid-in capital than lending companies.

Why the distinction matters: Each type requires SEC corporate registration and a Certificate of Authority (CA) to operate. A business calling itself a lender but lacking the correct corporate form and CA is not legit.

2) The Two Non-Negotiables: SEC Registration + Certificate of Authority (CA)

A legitimate lending/financing company must have BOTH:

  1. SEC Certificate of Incorporation (proof it exists as a corporation), and
  2. SEC Certificate of Authority to Operate as a lending/financing company (proof it’s authorized to do the business of lending/financing).

No CA = illegal lending. A corporation with SEC registration but without a CA is not allowed to engage in lending/financing. Individuals or sole proprietors engaging in “lending business” are likewise illegal under RA 9474.

3) Where and How to Check

A. Company Identity Check

  • Corporate Name: Must contain “Lending Company” or “Financing Company,” not generic descriptors like “Trading,” “General Services,” or “Marketing.”
  • SEC Registration Number: Ask for it. Cross-check on SEC’s online verification channels or official lists.
  • SEC Certificate of Authority Number: Ask for a copy or the number. This is the key license for the business activity.

B. Official Records & Documents to Request from the Lender

  • Photocopy or digital copy of:

    • SEC Certificate of Incorporation (with company name and SEC Registration No.)
    • SEC Certificate of Authority (explicitly stating authority to operate as a lending/financing company)
    • Articles of Incorporation and By-Laws (to verify the corporate purpose includes lending/financing)
    • Recent General Information Sheet (GIS) (to see officers, directors, and principal office)
    • Mayor’s/Business Permit and BIR registration (for local operation legitimacy)

  • Branch/Outlet details: Each location should display permits and the CA.

  • For digital/app-based lenders: Confirm the corporate name of the app owner matches the SEC-licensed entity—not just a brand name.

C. Independent Validation (Offline/Direct)

  • Visit the company’s principal office indicated in its filings.
  • Check if displayed permits match the company name and address on SEC documents.
  • Call the listed office number to confirm details. Ask: “Is your CA current? What’s the CA No.? Who is your Compliance Officer?”

4) Red Flags of Unlicensed or Non-Compliant Lenders

  • No SEC CA (only shows SEC registration), or refuses to show a copy.
  • Sole proprietorship or partnership offering loans as a business.
  • Corporate name doesn’t contain “Lending Company” or “Financing Company.”
  • Misaligned identities: The app/brand name differs from the corporation on the CA, with no clear disclosure of the licensed entity.
  • Impossible terms or vague fee breakdowns: Hidden charges, unexplained “service fees,” or “processing fees” that bloat costs.
  • Debt collection harassment: Threats, public shaming, contacting your employer or contacts, or doxxing; harvesting excessive phone data.
  • No formal contract or asks you to sign blank/undated documents or surrender IDs/ATM cards.
  • Unsecured personal-data access without proper disclosure and consent mechanisms.
  • Loan proceeds released in cash in a non-office location with no proper receipts or disclosure statement.

5) What a Legitimate Loan Package Should Contain

A compliant lender should provide clear, written disclosures before you sign:

  • Identity & License: Corporate name, principal office, SEC Reg. No., SEC CA No.

  • Loan Disclosure Statement:

    • Principal amount, all fees (processing, documentary, insurance), net proceeds
    • Nominal annual interest rate and computation method (simple/compounded, per-annum/per-month)
    • Total cost of credit (APR or effective interest, if provided)
    • Repayment schedule and amortization table
    • Penalties for late payment (fixed peso or percentage), grace periods, and how penalties are computed
    • Prepayment rules (fees or rebates)

  • Data Privacy Notice & Consent: Purpose of data collection, retention period, who they share with, and your rights to access/correct/withdraw consent.

  • Complaints handling: A Compliance Officer and a complaints channel (email/phone) should be identified.

6) Interest, Fees, and “No Usury” Reality Check

The Usury Law ceilings have long been suspended, so there’s no general cap on interest rates in the Philippines. However:

  • Lenders must be transparent about all charges.
  • Unconscionable rates and abusive practices may be struck down by courts under civil law principles and consumer protection rules.
  • Certain products (e.g., credit cards) have regulatory caps set by the Bangko Sentral ng Pilipinas (BSP); these don’t automatically apply to all lending companies.
  • Illegal collection tactics and deceptive advertising can trigger enforcement, regardless of the quoted rate.

7) Debt Collection Rules & Digital Conduct

Philippine rules and SEC issuances restrict unfair debt collection, especially by online lending platforms. In practice, the following are prohibited or sanctionable:

  • Harassment or threats, public shaming, contacting your phone contacts or employer to pressure payment
  • Excessive app permissions that scrape contacts/photos/files unrelated to creditworthiness
  • False statements or misrepresentation in collecting debts
  • Posting or sharing personal data without lawful basis and consent

If you experience these, keep screenshots, call recordings, SMS/chat logs, and emails as evidence.

8) Due Diligence Checklist (Quick Reference)

  1. Corporate form: Is it a corporation (not a sole prop/partnership)?
  2. Proper name: Includes “Lending Company” or “Financing Company”?
  3. SEC Registration: Obtain the SEC Registration No. (Certificate of Incorporation).
  4. Certificate of Authority: Obtain and verify the SEC CA (must be current).
  5. Local permits: Mayor’s Permit and BIR registration match the same legal entity.
  6. Contract package: Full disclosure of all fees, rates, penalties, schedule, and data privacy.
  7. Collection conduct: No harassment, shaming, or invasive data grabs.
  8. App/brand alignment: App owner matches the SEC-licensed corporation.
  9. Receipts: Official receipts for fees and repayments.
  10. Paper trail: Keep copies of IDs, contracts, disclosures, and communications.

9) If You Suspect a Lender Is Illegal or Abusive

  • SEC (Enforcement and Investor Protection Department):

    • File a complaint with supporting documents (IDs, contracts, screenshots, receipts).
    • The SEC can issue advisories, conduct investigations, and revoke a CA.

  • National Privacy Commission (NPC):

    • For privacy/data abuses (contact scraping, doxxing, unauthorized disclosure).

  • NBI/PNP (Cybercrime/Anti-Fraud Units):

    • For extortion, threats, fraud, identity theft, or other criminal acts.

  • Local Government Unit (LGU):

    • Report establishments operating without Mayor’s Permit.

  • Civil action:

    • Consider filing for damages and injunctive relief (with counsel). Keep an evidence file.

10) Special Notes for Borrowers Using Lending Apps

  • Install only from official app stores and check the developer’s legal name.
  • Compare the developer name with the SEC-licensed corporation.
  • Review app permissions; deny access unrelated to credit assessment (e.g., contacts, photos).
  • Never send selfies/IDs through informal channels (DMs/third-party chats) without necessity and secure handling.
  • Avoid lenders that won’t provide their CA, principal office, and contract package before you sign.

11) Practical Script (What to Ask)

  • “Please send a copy of your SEC Certificate of Authority and your SEC Registration Number.”
  • “Who is your Compliance Officer and what is your complaints email?”
  • “Is the corporate name on the app/contract exactly the same as on your CA?”
  • “Please provide the loan disclosure statement showing all fees, the annualized rate, penalties, and the amortization schedule.”

If they refuse or delay, treat it as a serious red flag.

12) Key Takeaways

  • Both SEC corporate registration and SEC Certificate of Authority are mandatory.
  • Corporate name matters: “Lending Company” or “Financing Company” must appear.
  • No CA, no lending.
  • Transparency, fair collection, and data privacy are core compliance duties.
  • When in doubt, walk away and report suspicious actors.

Disclaimer

This article provides general legal information for the Philippine context. It is not legal advice. For specific cases, consult a Philippine lawyer or contact the SEC for official guidance.

Disclaimer: This content is not legal advice and may involve AI assistance. Information may be inaccurate.

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