SEC wins conviction vs. illegal lenders

Published December 7, 2021, 5:05 PM

by James A. Loyola

The Securities and Exchange Commission (SEC) has won another legal battle against on illegal lending with a regional trial court having convicted the incorporators and directors of X-CEE789 Lending and Trading, Inc. for submitting falsified documents for its registration.

In a decision dated June 30, the Pasay City Regional Trial Court Branch 118 found Merlinda A. Derequito, Mila R. Anonuevo, Haydee S. Alarcon, Maria Collen A. Custodio, Marisa D. Abaquin, Ramona C. Belen, Pinder Kaur Bhopal, Parvesh Kumar, Karan Kumar, Surinder Bhopal, Kamaljit Kaur, and Jaswinder Kaur guilty beyond reasonable doubt of violating the Lending Company Regulation Act of 2007 (LCRA).


The court sentenced each of the respondents, who formed X-CEE789 as incorporators and directors, to pay a fine of P10,000, with costs.

The SEC filed the criminal complaint against the respondents upon finding that they made a false statement in their application for the incorporation of X-CEE789 and issuance of its authority to operate, as mandated by the LCRA.

X-CEE789 submitted a Certificate of Bank Deposit in the amount of P1 million, purportedly issued by Banco de Oro-Two Shopping Center Branch in Pasay City, to comply with the minimum paid-up capital prescribed by the LCRA during its registration as a lending company with the Commission in 2017.

Upon verifying with the bank, however, the SEC found that no such certificate was issued to X-CEE789. The Commission subsequently denied the company’s application for registration as a lending company.

Section 12, paragraph 3(a) of the LCRA penalizes with a fine ranging from P10,000 to P50,000 or imprisonment of not less than 6 months but not more than 10 years or both, any officer, employee or agent of a lending company who shall knowingly and willingly make any statement in any application, report, or document required under the law, which statement is false or misleading with respect to any material fact.

“For knowingly and willingly making a false statement in their Articles of Incorporation and submitting a falsified Certificate of Bank Deposit that the law requires lending companies to file, the accused have clearly violated Section 12(3)(a) of RA 9474,” the court noted.

Luis Lopez, who was the former liaison officer of X-CEE786, said that it was his godfather Salvador Dapadap who told him to secure a Certificate of Bank Deposit from a certain Sarah Jane Ibasco for the company’s application.

Lopez would then pay Ibasco, who supposedly arranged documents for filing with the SEC, P5,000 in exchange for the bank certificate.

Surinder Bhopal, Haydee Alarcon, and Karan Kumar admitted to signing the Articles of Incorporation of X-CEE789 stating that the company had a paid-up capital of P1 million.

Kumar also noted that it was their agreement to pay their capital contribution to their friend, Parvesh Kumar, only after the company was registered with the SEC.

“Per their own admission, the accused never made any capital contribution at all…they said that they held on to their money because they believe that they will only give their contribution after the corporation has been registered and started operating as a lending company,” the court said.

It added that, “This is a willful violation of the law for which the accused cannot be excused.”

The conviction of the incorporators and directors of X-CEE789 represents the eighth conviction the SEC has won under a crackdown initiated in 2017 on illegal lenders, including those engaged in “5-6” schemes and other usurious practices.

In the eight cases decided so far, the concerned trial courts found 71 individuals, 33 of whom are foreigners, guilty beyond reasonable doubt of violating the LCRA.

The SEC, through the Corporate Governance and Finance Department (CGFD), has likewise revoked the primary registration of a total of 2,081 lending companies to date for non-compliance with the LCRA.

To date, the SEC has also cancelled the licenses of 35 financing/lending companies due to various violations of applicable rules and regulations. A total of 58 online lending applications have likewise been ordered to cease operations for lack of authority to operate as a lending or financing company.