Verifying Legitimacy of Micro Lending Corporations Registered in the Philippines

Introduction

The Philippines has one of the most active micro-lending sectors in Southeast Asia, driven by high financial inclusion needs, widespread smartphone penetration, and aggressive digital lending platforms. While legitimate micro-lending corporations provide essential credit to unbanked and underbanked Filipinos, the sector has also become a breeding ground for predatory, unregistered, and outright fraudulent operators. Borrowers have suffered exorbitant interest rates, abusive collection practices, harassment, identity theft, and public shaming through unauthorized contact-list access.

Verifying the legitimacy of a micro-lending corporation is therefore not merely prudent—it is a legal necessity and a fundamental consumer right under Philippine law.

Primary Regulatory Authority: Securities and Exchange Commission (SEC)

All stock corporations whose primary purpose is lending (including micro-lending) are classified as “lending companies” under Republic Act No. 9474 (Lending Company Regulation Act of 2007) and its Implementing Rules and Regulations (SEC Memorandum Circular No. 18, series of 2019, as amended).

Key points:

• Lending companies are under the exclusive supervision and jurisdiction of the Securities and Exchange Commission (SEC), not the Bangko Sentral ng Pilipinas (BSP).
• Financing companies (those engaged in quasi-banking or funded substantially by borrowings from 20 or more lenders) fall under BSP supervision.
• Microfinance NGOs that are non-stock, non-profit are exempt from RA 9474 but are still required to register with the SEC as non-stock corporations and comply with the Microfinance NGOs Act (RA 10693).
• Cooperatives engaged in micro-lending are regulated by the Cooperative Development Authority (CDA).

Since May 2018, the SEC has imposed a continuing moratorium on the acceptance of new lending company applications (SEC Memorandum Circular No. 3, series of 2018). Only corporations already granted a Certificate of Authority (CA) before the moratorium may legally operate as lending companies. Any entity that began lending operations after 2018 without a pre-existing CA is operating illegally.

Mandatory Licenses and Registrations for Legitimate Micro-Lending Corporations

A legitimate micro-lending corporation must possess all of the following:

1. SEC Certificate of Incorporation with lending as primary or secondary purpose.
2. SEC Certificate of Authority to Operate as a Lending Company (CA) issued under RA 9474.
3. Mayor’s/Business Permit from the LGU where the principal office is located.
4. BIR Certificate of Registration (COR) and official receipts/cartridge tapes.
5. Valid NBI clearance of directors/officers (submitted to SEC during application).
6. For online lending platforms: Compliance with SEC Memorandum Circular No. 19, s. 2019 (Registration of Online Lending Platforms operated by Lending Companies/Financing Companies).

Step-by-Step Guide to Verify Legitimacy (2025 Updated Process)

Step 1: Check the Official SEC Lists (Primary and Most Reliable Method)

Go to the official SEC website: https://www.sec.gov.ph

Navigate to: “Public Information” → “Lending Companies and Financing Companies” → “List of Registered Lending Companies with Certificate of Authority” (updated monthly or quarterly).

As of December 2025, the SEC maintains four critical lists:

a. Registered Lending Companies with Certificate of Authority (approximately 1,800–2,000 entities as of late 2025). b. Online Lending Platforms Operated by Registered Lending/Financing Companies (separate list containing apps such as UnaCash, Digido, JuanHand, Cashalo, Tala Philippines, etc.). c. Entities with Ceased Operations or Revoked/Suspended Certificate of Authority. d. Entities Charged/Under Investigation for Illegal Lending.

If the company or its app does not appear in lists (a) or (b), it is not authorized to lend money legally in the Philippines.

Step 2: Verify Company Registration via SEC eSPARC or SEC Express System

Visit https://esparc.sec.gov.ph/application/ or https://secexpress.ph

Search by exact company name or SEC registration number. This will show:

• Date of incorporation
• Current status (Active, Suspended, Revoked)
• Registered address
• Directors and officers

Step 3: Cross-Check the Online Lending Platform List

Even if the corporation is SEC-registered, its mobile app must be explicitly listed in the SEC’s “Approved Online Lending Platforms” list. Many legitimate corporations operate multiple apps; each app must be individually approved.

Step 4: Verify Physical Office and Contact Details

Legitimate lending companies are required to maintain a physical principal office in the Philippines (verified by SEC during inspection). Use Google Street View or visit the registered address. Be wary if the company has no verifiable Philippine office or uses only virtual offices/co-working spaces as principal office.

Step 5: Examine the Privacy Notice and Authority to Collect Personal Data

Under the Data Privacy Act of 2012 (RA 10173) and NPC Circular 2020-03, lending companies may collect only the minimum data necessary. Any app that demands access to contacts, SMS, gallery, or microphone without clear, specific justification is almost certainly operating illegally and preparing for harassment-based collection.

Step 6: Check Interest Rate Disclosure and Contract Terms

Legitimate lenders must provide a full disclosure statement before loan approval (RA 3765 – Truth in Lending Act). The disclosure must include:

• Total amount to be financed
• Finance charges
• Effective interest rate (annualized)
• All fees and penalties
• Schedule of payments

Effective interest rates of registered lenders typically range from 0.5% to 8% per month (6%–96% per annum), though higher rates are technically allowed since usury was decriminalized in 1983. Rates exceeding 15% per month are strong indicators of predatory (though not necessarily illegal) lending.

Common Red Flags of Illegal or Predatory Micro-Lenders (2025)

• Not found in any SEC list of authorized lending companies or approved apps.
• Uses brand names very similar to legitimate apps (e.g., “UnaCashh,” “Digldo”).
• Requires upfront processing fees, training fees, or insurance fees deducted from principal (prohibited by SEC MC No. 3, s. 2021).
• Demands access to phone contacts, SMS, gallery, or camera.
• Threatens to shame borrowers publicly or contact employers/family (violation of RA 10173 and RA 11765).
• Operated by foreign nationals with no visible Philippine corporation.
• Uses TikTok, Facebook Messenger, or Telegram as primary lending channel.
• Offers “instant” loans within minutes without proper credit investigation.

Legal Remedies Available to Victims

1. File a criminal complaint for violation of RA 9474 (punishable by fine of ₱50,000–₱2,000,000 and/or imprisonment of 6 months to 10 years).
2. File estafa (Art. 315, Revised Penal Code) if deception was used.
3. File unjust vexation or grave coercion for harassment.
4. File violation of RA 10173 (Data Privacy Act) with the National Privacy Commission (up to ₱5,000,000 fine per violation).
5. File complaint under RA 11765 (Financial Products and Services Consumer Protection Act of 2022) with the SEC, BSP, or appropriate agency. This law imposes strict liability on corporations and personal liability on directors/officers for abusive practices.
6. File civil case for damages and refund of excessive interest.

The Supreme Court in a long line of cases (e.g., G.R. No. 230957, Dio v. Dio, 2020) has consistently ruled that contracts with unregistered lenders are void ab initio. Borrowers may recover everything paid, without obligation to return the principal in certain cases involving predatory practices.

Conclusion

In the Philippines in 2025, there is simply no excuse for falling victim to an unregistered micro-lender. The SEC provides free, publicly accessible, regularly updated lists that take less than five minutes to check. Any entity that is not explicitly named in the SEC’s “Registered Lending Companies with Certificate of Authority” or “Approved Online Lending Platforms” list is operating illegally, regardless of how professional its app appears or how many paid influencers promote it.

Borrowers must treat the SEC verification process as non-negotiable due diligence. Lenders that resist or cannot provide their SEC Certificate of Authority within minutes should be treated as fraudulent until proven otherwise.

Legitimate credit is a right. Predatory exploitation is a crime. Verify first, borrow second.