SEC revokes certificate of authority of Moola Lending Corp

MANILA, Philippines — The Securities and Exchange Commission (SEC), has revoked the certificate of authority of Moola Lending Corp., more commonly known as Doctor Cash Philippines.

The SEC, through its Corporate Governance and Finance Department (CGFD), has found out that the company failed to furnish its debtors with the necessary disclosure statements in violation of the Truth in Lending Act.

The law requires a creditor like Moola to disclose in writing the true cost of a credit being extended to a borrower prior to the consummation of the transaction.

Moola also failed to disclose the finance charges in terms of pesos and centavos and the percentage that the finance charge bears to the total amount to be financed.

Under SEC rules, an erring creditor is subject to penalties ranging from a basic fine of P20,000 and P100 for each day of continuing violation for the first offense to suspension and revocation of the certificate of authority to operate a lending or financing company for the fourth offense.

Aside from failing to properly disclose finance charges, Moola violated the terms and conditions of its certificate of authority, when it imposed interest rates and penalty charges inconsistent with those declared in its business plan, the SEC said.

According to its disclosed business plan, Moola was supposed to charge a flat interest rate of two percent per month, a one-time service charge of two percent for a loan with minimum term of one month and maximum of three months and a penalty charge of two percent per month for nonpayment of the outstanding balance.

However, in practice, Moola imposed up to 30 percent monthly interest rate, a 10 percent service charge and a 10 percent penalty charge, the SEC said.

It also collected extension, processing and late payment fees.

Aside from its failure to disclose its lending terms, Moola also violated other rules and regulations when it used a business or trade name and changed its principal office address without properly amending its articles of incorporation, failed to replace its certificate of authority to reflect the aforementioned changed, and missed certain reportorial requirements.

It also violated Republic Act 7042, otherwise known as the Foreign Investments Act of 1991, according to the CGFD.

In its order of revocation, CGFD said it acted upon the number of complaints against Moola and the company’s exploitative practices.

“Moola admitted that many of its customers do not have strong credit standing; therefore, banks and other financing institutions refuse to give them loans.”