Basics of the Lending Company Regulation Act of 2007 (RA 9474)

On 22 May 2007, Republic Act No. 9474, also known as the “Lending Company Regulation Act of 2007,” was approved. The law is consistent with the delcared policy of the State to regulate the establishment of lending companies and to place their operation on a sound, efficient and stable condition to derive the optimum advantages from them as an additional source of credit; to prevent and mitigate, as far as practicable, practices prejudicial to public interest; and to lay down the minimum requirements and standards under which they may be established and do business. Here’s a basic discussion of the new law:

What is a Lending Company?

It refers to a corporation engaged in granting loans from its own capital funds or from funds sourced from not more than nineteen (19) persons. It shall not be deemed to include banking institutions, investment houses, savings and loan associations, financing companies, pawnshops, insurance companies, cooperatives and other credit institutions already regulated by law. The term shall be synonymous with lending investors.

What is the form of organization for a lending company?

A lending company shall be established ONLY as a corporation. Existing lending investors organized as single proprietorships or partnerships shall be disallowed from engaging in the business of granting loans to the public one year after the date of effectivity of the law. No lending company shall conduct business unless granted an authority to operate by the SEC.

What is the capital required for lending companies?

The minimum paid in capital of any lending company established under the law is One Million Pesos (P1,000,000.00). Existing lending companies established and in operation prior to the effectivity of this law shall comply with the required minimum capitalization within such time as may be prescribed by the SEC which time shall, in no case, be less than three years from the date of effectivity. The SEC may also prescribe a higher minimum capitalization if warranted by circumstances.

What is the citizenship requirement?

Upon the effectivity of the law, at least a majority of the voting capital stock shall be owned by citizens of the Philippines. The percentage of foreign-owned voting stock in any lending company existing prior to the effectivity of the law, if such percentage is in excess of forty-nine percent (49%) of the voting stock, shall not be increased but may be reduced and, once reduced, shall not be increased thereafter beyond forty-nine percent (49%) of the voting stock of the lending company. The percentage of foreign-owned voting stocks in any lending company shall be determined by the citizenship of the individual stockholders. In the case of corporations owning shares in a lending company, the citizenship of the individual owners of voting stock in such corporations shall be the basis in the computation of the percentage. No foreign national may be allowed to own stock unless the country of which he is a national accords reciprocal rights to Filipinos.

What are the prescribed amount and charges on loans?

A lending company may grant loans in such amounts and reasonable interest rates and charges as may be agreed upon between the lending company and the debtor. However, the agreement shall be in compliance with the provisions of Republic Act No. 3765, otherwise known as the “Truth in Lending Act” and Republic Act 7394, otherwise known as the “Consumer Act of the Philippines”. The Monetary Board of the Bangko Sentral ng Pilipinas, in consultation with the SEC and the industry, may prescribe such interest rate as may be warranted by prevailing economic and social conditions.

*Originally posted at the Pinoy Entrepreneurs blog.

35 thoughts on “Basics of the Lending Company Regulation Act of 2007 (RA 9474)

  1. siemji

    Hi! Tanong ko lang, makakasuhan ba ako if e report ko na lost yung atm ko? when ang totoo nasa isang lending institution siya. eto kasing Lil’s or Orpadi Lending Shop, nagpapautang ng 150,000 sa teachers tapos sabi nila okay lang daw 3000 yung monthly payment since yun yung required na ititira sa sahod. Kami naman sa matinding pangangailangan, go agad. yun pala ang original amount is 298,000. ang laki ng interest. tapos kapag mgtatanong kami what if mababayaran namin earlier yung full amount meron ba kaming rebates, sabi meron maliit lang pero d nila masabi magkano at dpat hndi pa nag 1 yr sa kanila yung atm. so if more than 1 yr ka na sa kanila may utang kahit meron ka namang remittance monthly, talagang 298k ang ipapabayad nila.

  2. Ina

    Hi I wanted to ask , I lend an amount of 3000 from moola lending. i paid the amount with the said due date also after a month they keep on bugging me about my payment that I already paid. They are asking me for a receipt which I dont have anymore,but I ve got an email confirmation of the payment I sent it to them the email and yet it was not enough

  3. Mercy

    Greetings Attorney,

    I would like to ask regarding in my case.
    – My mother lend money for about 30k using my lot title as collateral.
    – Capital money 30k – May 2014
    – Interest rate 5% per month
    – Payment made:
    – 1,500 – 6/3/2014,
    – 1,500 – 7/18/2014
    – 1,500 – 8/16/2014
    – 7,600 – 01/26/2016

    And now they ask me to pay 133,304.00php – as of Nov. 2017
    – They never give a copy of the contract which my mother signed it.
    – No computation given ever since.
    – No name of the lending company because she is a friend of my sister.
    – How many time I call thru her globe and even send many text to her mobile numbers but still no reply, no answers.
    – Sending message on fb.
    – Only reply with the amount and no more reply at all.

    In my computation with the 5% is about 50,900 interest plus 30k capital = 80,900

    Is there any legal ways to get my lot title?
    Is their any ways not to pay the 133,304.00php? but the lesser amount.

    Please advice.

    Thank you very much.

    Please advice.

  4. Sarah

    HI po, Good day! Is okay for a Lending company to get our online account access even if they already have our ATM cards? They even changed my online account password which I have my Checking account and other accounts linked into it. I have no access to my online no more. Is this fine? I felt like my privacy was breached.

  5. Anne

    Hi good evening! I would like to ask po I have a loan on a lending company amounting to 6000p but I was unable to pay it in a month time period. They are charging me 2% daily penalty that is 60% in a month on top of 700 late payment fee. Is this reasonable or if not where can I file a complain??? Thank you!

  6. john mark

    Hi, ask ko lang if legal ba ba ang nnagpapautang ng 20% every payday ang tubo or 40% every month. halimbawa ang 40k na utang na babayaran mo sa 4 na buwan ay aabot sa 72k lahat ang babayaran mo. which is 9 k every payday, at kung hnde makompleto ang bayad mo every payday or deficit ka ang remaining balance ay another 20% penalty. kung kulang ang byad mo every pay ay ipapahiya ka muna. Makatuwiran po ba ang ganitong klase na pautang. Tanong ko din if nakalock in ang utang with in 4 months pwede nman cguro di ako makabayad within the lock in period tutal hnde pa nman tapos ang 4 months.

  7. bea

    Hello po, legal po ba na pag na delay ang bayad sa lending kahit 1 day, may penalty na 200 per delayex na day? Thank you

  8. fely

    i would like to ask your opinion po, i have borrowed 3000 pesos only at the lending company called robocash at that time i was confident that i would be able to pay it however unexpected things happen and not knowing that the interest would be 3% per day, i tried to ask for a installment but they do not allow it.

  9. violeta

    Dear Sir
    itanong ko sana sir meron akong utang na 100K tapos after 3 months nagkaroon ako ng pera babayaran ko ang principal loan pero meron pa additional na 2thousand para masauli ang lahat na papers ko meron bayan sa batas

  10. Troy 3097

    Good evening i just wanna ask if the anti 5 6 law is still implemented? I have a situation that i borrow money from a friend then she told me that she will add on another 35% to the amount I borrowed. Due to my emergency needs i accepted her condition but without any black and white agreement. It was just a verbal agreement and she asked for a collateral. She asked for the title of our condominium, my passport and my wife’s and the OR CR of my car. Again due to our needs we agreed again to give her those. She gave us 2 months to pay for it which is already 3 days past due. The amount I borrowed was 45k then i need to pay her back 60k because of the 35% add on. I dont have plans of not to pay her and i messaged her almost everyday asking for an extension because its too hard for us because I accidentally lost my job. But she kept on saying bad words to us and threatened us that she will post our faces on facebook. I just want to ask what should we do to prevent it. All am asking was to give me an ample time to produce the money. She gave us deadline until tom. Thursday. i hope you can help us. Hoping to hear from you soon sir. I know its not a priority to you sir because i know how busy you are but please please i need advise on what to do ??????

  11. Catherine

    Hi good day,
    May loan po ako sa lending company na 10,000 emergency loan po. 200 pesos per day po ang ibinabayad ko hanngat di ko po naibabalik ang loan amount na 10,000. Dahil po nagipit at biglaan nawalan ng trabaho. Umabot na po ako ng mahigit isang buwan a pagbabayad dahil di ko po ma provide yung 10,000 ng buo. 10,000 (credit) + 8,600 ( naibayad na). Legal po ba paraan ng paniningil nila?
    Kailangan ko pa rin po maibalik yung halagang 10,000 kahit nkabayad na ako ng halagang 8,600. Parang hindi po kasi tama.

    Gusto ko po sana mag complaint kung hindi po tama sa batas ang paniningil sa kanila.

  12. Ana

    Hi Sir/Ma’am,

    Gusto ko lang mag inquire. Wayback 2015 nag loan ako sa 2 lending company sa pilipinas ,1 is well known lending while the other one is kumbaga baby company pa lang sya. OFW po ako first country ko so I went under an agency.Everything went smoothly as planned but unfortunately prang semi naloko kame ng mismong recruiter dito sa country na pinuntahan namen. The recruiter here promised us na maibabalik ung ticket fee namen once we arrived and maendorse sa employer. To make it short. Yung lending company na 2 until now im still paying. yung isang well known lending is ang nhram ko lang is 50k ang interest nila sken is 33k so in total of 83k payable within 10 months. Pero since nde kame naendorse agad agad ng recruiter dito wala kameng work for almost a month which is nakahiram na ng pera 2 months prior nameng makaalis. So now.. 2 lending company slowly kong bnbyaran. Meanwhile yung 1 well known lending. From 83k ang current balance ko now is PHP160k around that amount. The catch is monthly ako nghuhulog dun even nde man the complete amount pero for sure dpat makacover na sa interest rate per month. Kaso prang ang nngyayari nde nila binabawas ung hnuhulog ko sa capital amount kundi sa per DAY penalty nila. Yung penalty nila nag pepenalty sya per day meaning. I would like to know if may rights ba sila mgpatong ng interest ng ganun kalaki even though ngbabayad naman ung debtor. Nananakot pa sila to sue me and may guarantor etc. Which is I find harrassing.

  13. Grace

    hello concerned ko lang po, nagloan po kasi ako sa dating company last 2016 ko sa isang third party nila.. 80k yung amount with .75% in 3 years, then nagresign po ako ng wala pang 1 yr na nababayaran.. after nun yung lastpay ko po dun lang napunta lahat sa bayad sa loan ko… then di ko na po sya nabayaran ng tuloy tuloy, then this year po nakatanggap na ako ng demand letter… hindi ko po sinipot yung hearing instead anagbayad po ako ng 11700 nitong June 2018, parang basta na lang po ako nagbayad sa kanila kung magkanong halaga lang ang maibabayad ko every month. ngayon po nag e mai sila sa akin na kapag hindi ko raw po nabayran yung remaining balance eh mag eexecute daw sila ng motion against me. Hindi ko po kasi alam ang gagawin ko? at sasabihin ko. Baka po may makakatuong sa akin dito.


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