I. Overview: Why Verification Matters

In the Philippines, lending is heavily regulated because it directly affects the public’s money, privacy, and access to credit. While there are many legitimate lending corporations that comply with the law, there are also fly-by-night lenders, illegal “5–6” schemes, and abusive online lending apps.

Verifying that a lender is lawful, SEC-registered, and properly licensed is your first line of defense. This isn’t just a “nice to have”—it can make the difference between a manageable loan and financial or legal trouble.

This article explains, in detail and in a Philippine legal context:

Which regulator (SEC, BSP, CDA, etc.) you should be looking at
The difference between SEC registration and authority to operate as a lending company
Step-by-step how to verify a lender
Red flags that suggest a lender is illegal or abusive
Your rights and remedies if things go wrong

II. The Legal and Regulatory Framework

1. Securities and Exchange Commission (SEC)

For most corporate lenders (non-banks), the primary regulator is the Securities and Exchange Commission (SEC). Its powers include:

Registering corporations (primary registration)
Issuing a Certificate of Authority (CA) to operate as a lending company or financing company
Monitoring compliance with the Lending Company Regulation Act of 2007 (Republic Act No. 9474)
Issuing rules to protect borrowers and the public, especially in the context of online lending apps
Issuing public advisories against unregistered or abusive entities

If a business is presented to you as a “lending corporation”, you should assume that it is supposed to be SEC-registered and CA-licensed unless it clearly falls under another regulator (like a bank, cooperative, etc.).

2. Lending Company Regulation Act (RA 9474)

RA 9474 and its implementing rules:

Require any corporation engaged in the business of granting loans from its own capital as a regular business to secure a Certificate of Authority from the SEC.
Provide minimum capital requirements (which may vary depending on location and updated rules).
Require proper disclosures of interest, charges, and loan terms.
Impose criminal and administrative penalties for operating without a CA or violating its provisions.

Key takeaway: SEC corporate registration alone is not enough. A lending company must also have a Certificate of Authority to Operate as a Lending Company.

3. Financing Company Act & Related Rules

Some entities are financing companies, which also fall under SEC jurisdiction under the Financing Company Act and its amendments. They primarily provide credit facilities like leasing, installment financing, and similar arrangements. They likewise need SEC registration and a specific license (CA) to operate as a financing company.

4. Bangko Sentral ng Pilipinas (BSP)

If the entity is a:

Bank (commercial bank, thrift bank, rural bank, etc.)
Quasi-bank, or
Non-bank financial institution under BSP supervision (e.g., certain credit card issuers, e-money issuers)

its main regulator is the BSP, not the SEC (although banks are originally created by laws or registered with the SEC or through special charters). Verification is done through BSP, not through the SEC’s lending company lists.

Rule of thumb:

If it calls itself a bank → verify with BSP.
If it calls itself a lending corporation/company, finance corporation, or online lender but not a bank → verify with SEC.

5. Cooperatives and CDA

If you are borrowing from a cooperative (e.g., a multipurpose cooperative, employees’ cooperative):

The regulator is the Cooperative Development Authority (CDA), not SEC.
Cooperatives are governed by the Philippine Cooperative Code.

6. Other Relevant Regulators

National Privacy Commission (NPC) – regulates data privacy practices, especially for online lending apps that access your phone, contacts, and photos.
Local Government Units (LGUs) – issue business permits.
Bureau of Internal Revenue (BIR) – for tax registration and receipts.

III. Who Needs SEC Registration as a Lending Corporation?

A lending company is generally:

A corporation
Engaged in granting loans from its own capital on a regular and recurring basis
To the public (individuals or businesses)

They must:

Incorporate with the SEC (primary registration) with lending as their primary purpose; and
Obtain a Certificate of Authority (CA) from the SEC to operate as a lending company.

Entities that typically do not need an SEC lending CA (because they are regulated elsewhere or differently):

Banks (BSP-regulated)
Cooperatives (CDA-regulated)
Individuals or informal moneylenders who lend occasionally (though they may still violate other laws and local ordinances, and may be subject to anti-usury jurisprudence and anti-harassment rules)
Pawnshops and some other regulated non-bank financial institutions (BSP-regulated or special laws)

Important: A corporation whose primary or regular business is lending money, but which has no SEC Certificate of Authority as a lending/financing company, is likely in violation of RA 9474 or related rules.

IV. SEC Registration vs. Authority to Operate: Two Different Things

When verifying a lending corporation, understand that there are two distinct layers:

1. Primary SEC Registration (Corporate Existence)

Evidence: SEC Certificate of Incorporation

This document proves:

The corporation legally exists.
It has a corporate name and SEC Registration Number.
It has submitted basic documents (Articles of Incorporation and By-Laws).

However, this certificate does not by itself authorize the corporation to engage in lending as a regular business.

2. Certificate of Authority (CA) as a Lending / Financing Company

Evidence: SEC-issued Certificate of Authority to Operate as a Lending Company or Financing Company

This certificate:

Specifically authorizes the corporation to engage in lending or financing activities.
Indicates that it has complied with RA 9474 / Financing Company Act requirements such as minimum paid-up capital and documentary submissions.

If a corporation is lending to the public without this CA, it is likely operating illegally (even if it has a standard SEC registration as a corporation for some other purpose).

V. Step-by-Step: How to Verify If a Lending Corporation Is Legit

Below is a practical, structured process you can follow.

Step 1: Get the Full and Exact Corporate Name

Ask the lender to provide:

Exact corporate name (including “Inc.” or “Corp.”, if any)
SEC Registration Number
Business address and contact details

Red flag: They refuse to give the full corporate name and SEC registration number, or only give a “brand name” or app name without any corporate identity.

Step 2: Ask to See Their SEC Documents

You are within your rights to request to view copies (or scans) of:

SEC Certificate of Incorporation
SEC Certificate of Authority to Operate as a Lending/Financing Company

When reviewing:

Check that the name on the certificates exactly matches the name the lender uses.
Verify that the dates and signatures look consistent and not crudely altered.
Check whether the stated primary purpose in the Articles of Incorporation involves lending/financing (if shown to you).

Red flags:

Blurry, obviously edited, or inconsistent certificates
Certificates that show a different corporate name than what appears on contracts, receipts, or the app

Step 3: Confirm Registration with SEC (Directly)

Beyond simply believing whatever document is shown to you, you should independently confirm:

Use SEC’s public search facilities or inquiries (online or at SEC offices) to verify:
- That such a corporation exists
- Its registration number
- Its status (active, revoked, suspended)
- Whether it is recorded as a lending or financing company and/or has a Certificate of Authority

Tip: Some official SEC tools or services specifically list registered lending and financing companies and also provide advisories against illegal lenders. You can also inquire at SEC helpdesks or through official contact channels.

Step 4: Verify Local Business Permits and BIR Registration

A legitimate lending company should also have:

Business permit from the city/municipality where its principal office is located
BIR registration, including authority to issue Official Receipts (ORs)

Ask:

Where is your registered office?
Which LGU issued your business permit?
Do you issue BIR-registered Official Receipts for payments?

Non-issuance of receipts, or refusal to show a business permit, is a warning sign.

Step 5: For Banks – Verify with BSP, Not the SEC Lending List

If the entity is clearly holding itself out as a bank:

Look for BSP licensing. Banks will often display BSP approval and information about deposit insurance (e.g., PDIC coverage for deposits).
You may verify via BSP’s list of supervised financial institutions or by contacting BSP.

If they call themselves a “bank” but are not anywhere in BSP’s system, that is a serious red flag.

Step 6: For Cooperatives – Verify with CDA

If it’s a cooperative offering loans to members:

Ask for its CDA registration number.
Verify it with CDA or through CDA’s official channels.

VI. Special Focus: Online Lending Apps and Digital Lenders

Online lending apps raised widespread issues with harassment, unauthorized access to contacts, and public shaming of debtors. In response, SEC and NPC issued rules and advisories, including:

Requirements for registration and authorization of entities operating these apps
Rules on fair debt collection practices, forbidding threats, humiliation, and abuse
Data privacy rules limiting what personal information apps may access and how it may be used

When dealing with an online lender:

Identify the corporate owner
- The app’s name is often just a brand.
- Check the app’s “About” or “Privacy Policy” to see which corporation is operating it.
Check if that corporation is SEC-registered and has a CA
- Use the same steps above; confirm that the corporate operator, not just the brand, is legitimate.
Verify whether SEC has issued any advisories
- SEC regularly issues public warnings or cease-and-desist orders against abusive online lending apps.
Look at the app’s permissions
- Excessive access (contacts, photos, social media, messages) that is not clearly justified for the loan is a red flag and may violate data privacy rules.

VII. Red Flags: Signs a Lender May Be Illegal or Abusive

Be extra careful if you see any of the following:

No SEC/BSP/CDA registration at all
- Refuses to give official registration numbers or certificates.
Mismatch of names
- Corporate name in certificates does not match the name used in ads, contracts, or apps.
No physical office or fake address
- Only an informal meet-up place or purely online presence with no verifiable address.
Extreme interest rates and hidden charges
- Interest and penalties far higher than those generally accepted in case law as reasonable, plus confusing or undisclosed fees.
- Be cautious of “loan approval in minutes” with enormous deductions (processing fees, “service charges”) from the proceeds.
Retention of ATM cards, IDs, or personal documents
- Demanding your ATM card and PIN, passbook, or government IDs as collateral can signal illegal practices and may expose you to other risks (e.g., identity theft, unauthorized withdrawals).
Harassment and public shaming
- Threats to call your employer, relatives, or post on social media to shame you.
- Sending insulting messages or calling at unreasonable hours.
Tying the loan to an “investment scheme”
- “Borrow from us now, then invest with us for guaranteed high returns.”
- This may be a signal of an unregistered investment scheme, which is a separate and serious violation under securities laws.
No written contract or incomplete documentation
- Only oral promises or text messages, no clear loan agreement stating interest, tenure, and repayment schedule.

VIII. What SEC Registration and a CA Do – and Do Not – Guarantee

Even if a lender is fully registered and licensed, borrowers must understand the limits.

They DO mean:

The corporation legally exists.
It has authority to operate as a lending or financing company.
It is subject to supervision, inspection, and enforcement by SEC.
It must follow relevant laws and regulations, including those on fair collection and consumer protection.

They do NOT automatically mean:

The interest rate and fees are the best or fairest in the market.
The loan is suitable for your financial situation.
The lender will never commit any violation (though they can be held accountable if they do).

You still need to:

Read and understand the loan contract.
Compare offers from multiple legitimate lenders.
Consider whether the repayment schedule and penalties are realistic for you.

IX. Documents You Should Ask For Before Borrowing

Before signing, you can reasonably demand copies of:

SEC documents
- Certificate of Incorporation
- Certificate of Authority as a Lending/Financing Company
Government permits
- Business permit from the city/municipality
- BIR registration documents (e.g., Certificate of Registration)
Loan documentation
- Loan agreement or promissory note (stating principal, interest rate, charges, due dates)
- Disclosure statement on loan transaction (summary of total obligation, interest, fees)
- Payment schedule

Make sure that:

The corporate name on the documents matches the entity you have verified with the SEC/etc.
All interest rates, fees, and penalties are clearly stated in writing, not just verbally mentioned.

X. Legal Consequences for Unregistered or Illegal Lenders

Operating as a lending or financing company without the required CA from the SEC may result in:

Administrative sanctions (fines, revocation of certificates)
Criminal liability, including imprisonment and fines under RA 9474 and related laws
Possible charges for estafa, grave threats, grave coercion, unjust vexation, violation of data privacy laws, or cybercrime laws if their collection methods are abusive or involve unlawful practices (e.g., doxxing, online shaming).

Borrower’s obligation:

Generally, even if the lender is unregistered, the principal obligation to repay the money actually received remains—though unconscionable interest and penalties may be voided or reduced by courts.
Courts can declare usurious, unconscionable, or iniquitous interest void, and replace them with more reasonable rates in line with jurisprudence.

XI. Your Rights in Debt Collection

Even if you are in default, you are not a fair target for abuse. Among your rights:

To be free from harassment, threats, and public shaming
To be contacted at reasonable times and in reasonable manners
To have your personal data processed in accordance with data privacy laws

Unlawful collection practices may be reported to SEC, NPC, and law enforcement.

XII. Practical Due Diligence Checklist

Before borrowing from a lending corporation, go through this checklist:

Identify the entity
- What is the full corporate name?
- Are you dealing with a corporation, bank, cooperative, or just an individual?
Know the regulator
- Corporate lender → SEC
- Bank → BSP
- Cooperative → CDA
Check registration
- Ask for SEC registration number (or BSP/CDA registration, as applicable).
- Verify with the regulator’s official channels.
Check the Certificate of Authority
- For a lending/financing company, confirm that it has a valid CA from the SEC.
Verify business permit and BIR registration
- Ask where the office is located.
- Ask for proof of business permit and BIR registration.
Review the contract
- Is there a written loan contract?
- Are interest rates, charges, and penalties clearly spelled out?
Assess collection practices
- Do they hint at “calling your family/employer” or “posting you online” if you’re late?
- Do they request access to your contacts and photos without clear justification?
Check for advisories
- See whether regulators have issued advisories against this lender or its app.
Compare alternatives
- Obtain quotes from other legitimate lenders (banks, cooperatives, financing companies) for comparison.
Borrow only what you can realistically repay

Avoid short-term, high-interest loans just to cover recurring expenses when it may lead to a debt spiral.

XIII. What to Do If You Are Already a Victim

If you discover that you borrowed from an unregistered or abusive lender, do the following:

Document everything
- Keep screenshots of apps, chats, text messages, abusive calls or messages, threats, and any shaming posts.
- Keep copies of contracts, receipts, and proof of payments.
Report to appropriate authorities
- SEC – for unregistered lending/financing companies, abusive online lending apps, or violations of RA 9474.
- NPC – for data privacy violations (unauthorized access to contacts, doxxing, etc.).
- PNP or NBI – for harassment, threats, extortion, identity theft, or cybercrimes.
- CDA/BSP, if the lender misrepresents itself as a cooperative/bank.
Consider legal action
- File a complaint with SEC or NPC depending on the specific violation.
- Consider a small claims case or appropriate civil action to question unconscionable interest and penalties.
- Consult with a lawyer or free legal aid organizations (e.g., PAO, law school legal clinics) for guidance on your specific situation.
Protect your data
- Change passwords and review which permissions cannot be revoked in apps.
- Inform contacts if there is a risk of them being harassed.

XIV. Final Notes

Verifying whether a lending corporation is legit and SEC-registered in the Philippines is not just about seeing one piece of paper. It is a multi-step process:

Confirm the proper regulator (SEC/BSP/CDA).
Verify corporate existence and the specific authority to operate as a lending/financing company.
Check permits, documentation, and the fairness of contract terms.
Watch for red flags in both the loan offer and the lender’s collection behavior.

A legitimate registration and license greatly reduce your risk—but they do not replace the need for good judgment, careful reading of contracts, and a realistic assessment of your ability to repay.