In the Philippines, the lending industry is strictly regulated by the Securities and Exchange Commission (SEC) under the Lending Company Regulation Act of 2007 (Republic Act No. 9474) and the Financing Company Act of 1998 (Republic Act No. 8556). As the digital economy expands, there has been a proliferation of Unlicensed Online Lending Platforms (ULPs) that often engage in predatory pricing and coercive collection practices.
Navigating the SEC’s database is the primary legal defense for consumers and businesses against usurious or fraudulent entities.
1. The Legal Requirement for Lending Entities
For a company to legally engage in lending or financing in the Philippines, it must possess two distinct documents:
- Certificate of Incorporation: Proves the entity is a registered corporation.
- Certificate of Authority (CA): Specifically grants the corporation the power to operate as a lending or financing company.
Operating without a CA is a criminal offense under R.A. 9474, and any entity lacking this certification is considered "unlicensed," even if they are registered as a general corporation.
2. Where to Access the Official SEC Lists
The SEC maintains a live database on its official website (sec.gov.ph) to help the public verify the status of lending firms. These lists are categorized to provide clarity on the legal standing of various entities.
A. The List of Licensed Lending Companies
This is the "White List." It contains companies that have been granted a Certificate of Authority.
- Location: Under the "Lending & Financing Companies" section of the SEC website.
- Verification: Users should check if the exact name of the app or company matches the SEC record.
B. The List of Revoked and Suspended Certificates of Authority
This list contains companies that once held a license but lost it due to violations such as:
- Failure to disclose true interest rates (Truth in Lending Act violations).
- Engaging in unfair debt collection practices (SEC Memorandum Circular No. 18, s. 2019).
- Non-compliance with reporting requirements.
C. The SEC "Advisories" Section
For entities that were never licensed—including many "Wildcat" mobile apps—the SEC issues Public Advisories.
- Function: These advisories warn the public against dealing with specific entities that have been flagged for illegal solicitation or unauthorized lending.
- Searchability: These are usually listed chronologically under the "Advisories" tab.
3. Key Red Flags of Unlicensed Lenders
The SEC frequently updates its list based on common denominators found in illegal operations. Legal scrutiny should be applied if an entity displays the following:
- Absence of a SEC Registration Number: Every legitimate lender must display their CA number on their platform and advertisements.
- Use of Personal Bank Accounts: Unlicensed lenders often ask borrowers to remit payments to individual names rather than a corporate bank account.
- Invasive Permissions: Many unlicensed apps require access to a phone’s contact list, gallery, and social media accounts as a prerequisite for a loan—a hallmark of future harassment.
4. Legal Recourse and Reporting
The SEC’s Corporate Governance and Finance Department (CGFD) is the specific office tasked with overseeing lending companies. If an entity is found to be operating without a license or is on the revoked list, the following legal steps are typically taken:
| Action | Description |
|---|---|
| Cease and Desist Order (CDO) | An enforceable command from the SEC for the company to stop operations immediately. |
| Formal Complaint | Borrowers can file a verified complaint with the CGFD for violations of the Lending Company Regulation Act. |
| Criminal Prosecution | Operating without a CA carries a fine of up to ₱50,000 and/or imprisonment of six months to ten years. |
5. Summary Table: Verification Steps
| Step | Action | Objective |
|---|---|---|
| 1 | Visit sec.gov.ph | Access the primary regulatory source. |
| 2 | Check "Lending Companies" List | Verify if the company holds an active Certificate of Authority. |
| 3 | Check "Advisories" | See if the entity has been flagged for fraudulent activity. |
| 4 | Verify App Name vs. Corp Name | Ensure the mobile app is officially tied to a registered corporation. |
Legal Note: Under the Truth in Lending Act (R.A. 3765), all lenders are required to provide a "Disclosure Statement" before a loan is consummated. Failure to do so is a clear indicator of regulatory non-compliance, regardless of the company's registration status.