Mita Lending Investor Co.

SECURITIES AND EXCHANGE COMMISSION SEC BIdg. EDSA, Greenhills, Mandaluyong City Republic of the Philippines MITA LENDING INVESTOR, In the matter of For: Cease and Desist Order SEC Admin. Case No. 01-12-141 DEPARTMENT, ENFORCEMENT AND PROSECUTION Petitioner. ORDER Petition for Revocation. of the Certificate of Registration of MITA LENDING Department ('EPD " of the Commission. INVESTOR CO. ('Mita Lending'>) filed by. the Enforcement and'.Prosecution This resolves the prayer for the issuance of a Cease and Desist Order in the The relevant facts are narrated below. its Articles of Partnership, Mita Lending is engaged in lending activities, viz: 1999 under SEC Registration No. A199900202.1 As indicated in the purpose clause of Mita Lending is a partnership duly registered with the SEC on 08 January money to persons and entities under the terms and conditions allowed by law, provided that the company shall not engage in financing activities under R.A. 5980 and pawnbroker under PD 114. ."a) To engage in the business of a lending investor, lending therefore and to secure the same by any lien or mortgage for the not more than 19 lenders.2" furtherance of the business operations which shall be derived from b) To borrow money, issue notes or other obligations Regulation Act of 2007 (R.A. 9474), was passed and signed into law mandating that On 22 May 2007, Republic Act No. 9474, also known as the Lending Company 1 Records, p. 24. 2 Id, p. 2i. Page 2 of 4 Enforcement and Prosecution Department, Petitioner SEC Administrative Case No. 01-12-141 In the matter of Mita Le. 3 investor co all companies engaged in lending activities or business shall secure a Certificate of with the minimum capitalization requirement, viz. Authority from the Commission and comply with the minimum capital requirement of one .million pesos (Php1,000,000.00). wherein existing companies engaged in lending activities are given such time as determined by the Commission to comply investors organized as sole 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 this Act. established only as a corporation, Provided that existing lending 'Section 4. Form of Organization. - A lending company shall be authority to operate by the SEC. No lending company shall conduict business unless granted an minimum capitalization required under the provisions of this Section within company which may be established after the effectivity of this Act shall be such time as may be prescribed by the SEC which time shall, in no case, be Iess. than ' three years from the date of effectivity of : this Act companies established: and in operation prior thereto shall comply with the and: Provided, further, That the SEC may prescribe a higher minimum capitalization if warranted by circumstances." One million pesos (P1,000,000.00): Provided, however,That lending Section 5. Capital. - The minimum paid in capital of any lending Rule 3 (a) (i) of the Implementing Rutes and Regulations of R.A. 9474 requires existing lending companies organized as partnership, as in the case of Mita Lending; to organize itself as a stock corporation with the prescribed minimum capitalization and to secure a Certificate of Authority to operate as a lending company, viz - lending company shall be established as a stock corporation. "RULE 3. Reauirements for Organization - (a) Form of Organization - A Act and secure a Certificate of Authority to operate a iending of granting loans to the public. xxx from. the effectivity of the Act, organize themselves as a stock corporation with the minimum capitalization prescribed under the company. Otherwise, they shall be disallowed from engaging in the business proprietorships or partnerships shall, within a period of one (1) year Existing Lending Companies organized xxx xx" as single Commission sent a show cause letter to' Mita Lending directing the latter to secure from the Commission a secondary license -or a Certificate of Authority to Operate as On 03. August 2009, the Corporation Finance Department (CFD) of the a Lending Company as required under R.A. 9474 and its Implementing Rules and Regulations (IRR), and to show cause why it should not be held liable for violation of Rule 10 of said IRR and be subjected to a fine of not less than Ten Thousand Pesos Enforcement and Prosecution Department, Petitioner SEC Administrative Case No: 01-12-141 In the matter of Mita Lerr Page 3 of 4 J Investor Co and not more than Fifty Thousand Pesos or imprisonment of not less than six months but not more than ten years or both for doing lending business without the required Certificate.3 On 20 January 2010, CFD issued SEC CFD Order No. 071, series of 2010 Lending Company.1 Mita Lending ignored said directive and signified no intention to against Mita Lending enjoining it to secure a Certificate of Authority to Operate as a comply with the same. Mita Lending.5 In reply, Ms. De Leon-Arce issued a certification dated 25 January Arce, Head of .the Business Permits and Licensing Office (BPLO) of Mandaluyong 2011 stating that Mita Lending appears in the list of businesses registered with the City, requesting for a certification on whether they have issued a business permit to BPLO of Mandaluyong, and has dutifully renewed its license since 03 March 1999. It On 04 January 2011, EPD sent a letter addressed to Ms. Catherine De Leon- further certified that the latest renewal of its license was on 19 January 2011. and her son Ramon Lloret appeared before EPD in a scheduled conference wherein On 19 October 2011,.Teresita Lloret, the only Filipino partner of Mita Lending. she informed that she has no knowledge about the formation, activity and operation of Mita Lending and that she only borrowed moriey from a certain Mr. Singh, an Indian, and signed several documents pertaining to her loan and not as a partner of Mita Lending.: engage in the lending business without the required Certificate of Authority. Being a From the foregoing, it has been established that Mita Lending continues to partnership, Mita Lending has been in violation of Section 4 of R.A. 9474, which mandates all entities engaged in lending activities or business to incorporate as a stock corporation and to secure a Certificate of Authority from the Commission. violates R.A: 9474 and may cause injury or fraud to the investing public. Accordingly, Thus, the continued operation of Mita Lending without the requisite Certificate the issuance of a cease and desist order pursuant to Section 5.1 (i) of Republic Act No. 87999 against Mita Lending Investor Co. is warranted under the foregoing circumstances. 6 Id, pp. 6, 29. 3 Records, pp. 18, 30. I Id, pp. 17, 30. 5 Id, pp. 7, 29. 8 Id, pp. 1, 28. 1 I Securities Regulation Code, SEC. 5. Powers and Functions of the Commission. - 5.1. The Commission shall act with transparency and shall have the powers and functions provided by this Code, Presidential Decree No. 902-A, the Corporation Code, the Investment Houses Law, the Financing Company Act and other existing laws. Pursuant thereto, the Commission shall have, among others, the following powers and functions: xxx xxx XXX (i) Issue cease and desist.orders to prevent fraud or injury to the investing public; xxx xxx. SEC Administrative Case No. O1-12-141 Enforcement and Prosecution Department, Petitioner In the matter of Mita Le. Page 4 of 4 3 Investor Co. officers, representatives, agents, conduits, assigns, and any and all persons claiming immediately CEASE AND DESIST, under pain of contempt, from further conducting business as a lending company. and acting for and in behalf and under their authority, are hereby ordered to WHEREFORE, premises considered, Mita Lending Investor Co., its partners FAIL NOT UNDER PENALTY OF LAW. SO ORDERED. City of Mandaluyong, 29 March 2012. S TERESITA J. HERBOSA Chairperson MA. JUANITA E. CUETC Commissioner RAUL J. PALABRICA Commissioner MANU tO B. GAIte EladIo M. VALA Commissioner Comhistioner