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Pilipinas Loan Company Vs SEC

This case involves a dispute between two lending corporations - Pilipinas Loan Company and Filipinas Pawnshop. Filipinas Pawnshop filed a complaint alleging that Pilipinas Loan was operating as an unauthorized pawnshop and engaging in unfair competition. Pilipinas Loan denied the allegations. The SEC ruled that it has jurisdiction to determine whether Pilipinas Loan violated its articles of incorporation by engaging in pawnbroking, which was prohibited. The SEC must inquire whether Pilipinas Loan held itself out as a pawnshop to the public.

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195 views1 page

Pilipinas Loan Company Vs SEC

This case involves a dispute between two lending corporations - Pilipinas Loan Company and Filipinas Pawnshop. Filipinas Pawnshop filed a complaint alleging that Pilipinas Loan was operating as an unauthorized pawnshop and engaging in unfair competition. Pilipinas Loan denied the allegations. The SEC ruled that it has jurisdiction to determine whether Pilipinas Loan violated its articles of incorporation by engaging in pawnbroking, which was prohibited. The SEC must inquire whether Pilipinas Loan held itself out as a pawnshop to the public.

Uploaded by

Shie La Ma Rie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PILIPINAS LOAN COMPANY, INC. VS. SECURITIES AND EXCHANGE COMMISSION G.R. NO.

104720,
APRIL 4, 2001
FACTS:

Private respondent Filipinas Pawnshop, Inc. is a duly organized corporation registered with the Securities and
Exchange Commission on February 9, 1959. The articles of incorporation of private respondent states that its
primary purpose is to extend loans at legal interest on the security of either personal properties or on the
security of real properties, and to finance installment sales of motor vehicles, home appliances and other
chattels. Petitioner is a lending corporation duly registered with the SEC on July 27, 1989. Based on its articles
of incorporation, the primary purpose of petitioner is “to act as a lending investor or, otherwise, to engage in
the practice of lending money or extending loans on the security of real or personal, tangible or intangible
properties whether as pledge, real or chattel mortgage or otherwise, xxx without however, engaging in
pawnbroking as defined under PD 114." Private respondent filed a complaint with the Prosecution and
Enforcement Department (PED) of the SEC and alleged that: (1) petitioner, contrary to the restriction set by
the Commission, has been operating and doing business as a pawnbroker, pawnshop or "sanglaan" in the same
neighborhood where private respondent has had its own pawnshop for 30 years in violation of its primary
purpose and without the imprimatur of the Central Bank to engage in the pawnshop business thereby causing
unjust and unfair competition with private respondent. Petitioner denied that it is engaged in the pawnshop
business, alleging that it is a lending investor duly registered with the Central Bank. ISSUE

ISSUE:

Whether or not petitioner violated its primary franchise.

RULING:

A corporation, under the Corporation Code, has only such powers as are expressly granted to it by law and by
its articles of incorporation, those which may be incidental to such conferred powers, those reasonably
necessary to accomplish its purposes and those which may be incident to its existence. In the case at bar, the
limit of the powers of petitioner as a corporation is very clear, it is categorically prohibited from "engaging in
pawnbroking as defined under PD 114". Hence, in determining what constitutes pawnbrokerage, the relevant
law to consider is PD 114. Indispensable therefore to the determination of whether or not petitioner had
violated its articles of incorporation, was an inquiry by the SEC if petitioner was holding out itself to the public
as a pawnshop. It must be stressed that the determination of whether petitioner violated PD 114 was merely
incidental to the regulatory powers of the SEC, to see to it that a corporation does not go beyond the powers
granted to it by its articles of incorporation. Clearly, the recital in the complaint of private respondent that
petitioner is engaged in the pawnshop business when it is not authorized to do so by its articles of
incorporation amounts to fraud, detrimental not only to the corporation but also to the stockholders and the
public. The relationship involved in this controversy is a category of relationship over which the SEC has
exclusive jurisdiction

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