Loan Company Legitimacy Check With the Philippine SEC
A comprehensive legal guide (updated to 30 April 2025)
Introduction
Predatory lending remains one of the most persistent consumer-protection problems in the Philippines. Whether you are a borrower shopping for credit or an investor planning to place funds in a lending business, the single most important step is verifying that the entity is properly authorised by the Securities and Exchange Commission (SEC). This article pieces together every critical rule, procedure, and best practice involved in that legitimacy check, based on the full body of Philippine corporate and financial-services law in force as of April 2025.
Quick take-away: A legitimate loan company must hold both
- an SEC Certificate of Incorporation (CI) and
- a distinct Certificate of Authority (CA) to operate as a Lending Company (LC) or Financing Company (FC).
No CA = illegal lending, no matter what the advertisements say.
1 Regulatory Framework
| Instrument | Key points for legitimacy |
|---|---|
| Republic Act 9474 – Lending Company Regulation Act of 2007 | Defines “lending company,” requires ₱1 million minimum paid-up capital (plus ₱1 million per branch), mandates the CA, sets criminal penalties for unlicensed lending. |
| Republic Act 8556 (amending RA 5980) – Financing Company Act of 1998 | Covers “financing companies,” higher capital floor (₱10 million; provincial branch: 50 % of head-office capital), prescribes CA and ongoing SEC oversight. |
| Republic Act 8799 – Securities Regulation Code | Gives SEC the power to license, examine, and sanction LCs/FCs and to issue cease-and-desist orders. |
| Republic Act 11765 – Financial Products and Services Consumer Protection Act, 2022 | Introduces hefty administrative fines (up to ₱2 million plus thrice the amount gained) and empowers SEC to suspend or revoke CAs for unfair practices. |
| SEC Memorandum Circulars | – MC 19-2019: registration & conduct rules for Online Lending Platforms (OLPs); – MC 10-2021 & MC 03-2022: app-store disclosure, complaint handling, and data privacy obligations; – MC 18-2023: beneficial-ownership transparency for LCs/FCs; – MC 21-2019 & MC 2-2024: electronic filing (E-FAST) of audited FS and General Information Sheets. |
| Other regimes | Banks and digital banks (Bangko Sentral ng Pilipinas); Cooperatives (CDA); Micro-finance NGOs (RA 10693). These do not need an LC/FC CA but are verified with their own regulators. |
2 Lending vs Financing vs Online Lending Platform
| Feature | Lending Company (LC) | Financing Company (FC) | Online Lending Platform (OLP)¹ |
|---|---|---|---|
| Typical activity | Simple, direct loans funded from own equity or borrowings. | Structured credit (installments, factoring, leasing, etc.). | Mobile/web interface matching borrowers and lenders; may itself be an LC/FC or act as agent. |
| Governing law | RA 9474 | RA 8556 | MC 19-2019 (plus the underlying LC/FC law if the platform itself lends). |
| Minimum paid-up capital | ₱1 million + ₱1 million per additional branch. | ₱10 million head office (₱5 million outside NCR). | Must show the valid CA of the LC/FC behind it plus separate SEC OLP registration. |
| Regulator | SEC | SEC | SEC (coordination with NPC, BSP, DICT). |
¹If an app claims only to “facilitate” loans but the firm behind it has no CA, it is illegally operating an OLP.
3 The Two SEC Certificates
Certificate of Incorporation (CI)
Every Philippine corporation receives this once its Articles of Incorporation are approved. It merely says the entity exists.Certificate of Authority (CA) to Operate as an LC/FC
- Applied for after the CI is issued, via the SEC’s eSPARC and Online CA Application Portal (OLRAD).
- Principal requirements
- Paid-up capital (see table above)
- Board resolution approving the business purpose
- Surety bond (for LCs) or risk-management framework (for FCs)
- Sworn disclosure of beneficial owners (MC 18-2023)
- The CA number must appear on all loan documents, advertisements, websites, and mobile apps and be displayed conspicuously at physical premises.
- Valid until revoked; annual compliance via Audited FS, General Information Sheet, and LC/FC-specific reports.
4 Step-by-Step Legitimacy Check
Get the Exact Corporate Name
Scammers often tweak spellings (“ABC Lending Inc.” vs “A.B.C. Lending Corp.”). Insist on the SEC-registered name plus the CA number.Verify on Official SEC Systems
- SEC eSPARC Search (public module) or SEC Express System – confirms CI.
- SEC List of Registered Lending & Financing Companies – downloadable pdf updated monthly on <sec.gov.ph data-preserve-html-node="true"> lists those with active CAs.
- SEC List of Registered/Delisted OLPs – separate list for mobile apps.
Check the CA Itself
- Physical lenders must frame the certificate in the office lobby.
- Online lenders must show a scanned copy inside the app or website imprint.
- The CA bears the SEC seal, CA number, and signature of the Commission Secretary.
Contact SEC IPED if in doubt
Email iped@sec.gov.ph, call (02) 8818-6047, or file an inquiry via the e-Complaints Form. Provide the name, claimed CA number, and screenshots. The SEC will confirm whether the CA is genuine, suspended, or revoked.Cross-check with Other Regulators
- BSP: banks, credit card issuers, and “Buy-Now-Pay-Later” operators investing depositors’ funds.
- CDA: cooperatives offering member-loans.
- NPC: data-privacy compliance of debt-collection apps.
Look for Red Flags
▢ Loans disbursed through personal e-wallets/bank accounts
▢ “Processing fee” paid before loan approval
▢ No physical address or only a Gmail/Yahoo contact
▢ Threatening or “doxxing” text messages
▢ Interest & penalties quoted only verbally
If any red flag appears and the CA cannot be authenticated, treat the firm as unauthorised.
5 Penalties for Illegal Lending
| Violation | Statutory penalty (key provisions) |
|---|---|
| Operating an LC without a CA (RA 9474 § 16) | ₱10 000 – ₱50 000 and/or 6 months – 10 years’ imprisonment for directors/officers; plus SEC revocation & asset freeze. |
| Operating an FC without a CA (RA 8556 § 15) | Fine ≤ ₱10 000 per day of violation, or 5 years’ imprisonment, or both. |
| Violating MC 19-2019 (unregistered OLP) | Immediate cease & desist order; app removed from Google Play/App Store; up to ₱1 million per count of unfair collection. |
| Unfair or abusive conduct (RA 11765) | SEC admin fine up to ₱2 million plus 3× illicit gain, restitution, and CA suspension/revocation. |
Borrowers may also file:
- civil actions for nullification of unconscionable interest (Art. 1229, Civil Code);
- criminal cases for estafa if deceit is proven;
- complaints before the National Privacy Commission for data-privacy breaches;
- harassment indictments under the Safe Spaces Act (RA 11313) or Anti-Cyber-Bullying Ordinances.
6 Consumer-Protection and Complaint Channels
| Concern | Primary agency | How to file |
|---|---|---|
| Unlicensed lender, fake CA, harassment, over-collection | SEC – Investor Protection and Enforcement Department (IPED) | E-Complaint form, email, phone, or walk-in. |
| Data scraping, contact-list mining, shame posts | National Privacy Commission | Online portal: complaints@privacy.gov.ph |
| Threats, intimidation, cyber-hacking | PNP Anti-Cybercrime Group / NBI Cybercrime Division | Physical complaint with screenshots, call recordings. |
| Misleading ads, false promos | Department of Trade & Industry (DTI-Fair Trade Enforcement) | dtifairtrade@dti.gov.ph |
7 2023–2025 Developments You Should Know
- End-to-End Digital Licensing – Since 2023 all CA applications, renewals, and LC/FC reportorial filings run on eSPARC and E-FAST.
- Beneficial-Ownership Audit (MC 18-2023) – All LCs/FCs had to submit the full chain of natural persons owning >25 % voting power; non-filers are now flagged “Non-Compliant” in the SEC public list.
- Joint SEC-BSP Task Force on Consumer Credit Interest Caps (2024) – No cap yet, but draft cap of 24 % APR on micro-installments circulated for comment.
- Fintech-Specific Dispute Resolution (2025) – Pilot Online Mediation Portal allows borrowers to settle claims ≤ ₱500 000 against SEC-licensed OLPs in 30 days without court action.
8 Practical Checklist (Print-friendly)
- □ Get the exact corporate name and CA number.
- □ Verify CI & CA on SEC eSPARC or public pdf lists.
- □ Inspect a scanned CA (digital lenders) or framed CA (physical office).
- □ Read the loan disclosure statement: interest, fees, APR, penalties.
- □ Confirm disbursement and repayment go to the company’s bank/e-wallet, not a personal account.
- □ Keep screenshots, emails, SMS, call recordings.
- □ If anything looks off, walk away and report.
Conclusion
In Philippine law, legitimacy is not a grey area: either a loan company has an active Certificate of Authority from the SEC or it is outlawed. Performing the verification takes minutes on SEC’s online portals and guards you against fraudulent fees, usurious rates, data-privacy abuse, and even identity theft. Borrowers, investors, and the public should develop the habit of running this check before signing any note or installing any lending app.
This article summarises the legal landscape up to 30 April 2025 and is offered for general information only; it is not legal advice. For case-specific guidance, consult a Philippine lawyer or contact the SEC directly.