CA Stops SEC on Finance firmsa[euro][TM] Rules
Byline: ANA MARIE MACUJA
The Court of Appeals (CA) has directed the Securities and Exchange Commission (SEC) to discontinue from implementing its Memorandum Circular No. 13, Series of 2001, a circular that requires lending investors to convert into finance companies and be subjected to capital and reportorial requirements of the Commission.
The CA Order comes in line with the Petition for Prohibition filed by Easton Credit Corporation, a lending firm, which questioned the SECas authority to impose Circular No. 13 on lending investors considering that there is still no law regulating such entities.
CA Associate Justice Japar B. Dimaampao found merit on Easton Credit Corp.as Petition saying that the SEC strayed from the well recognized limits of its power when it imposed the Circular to lending companies because there is still now law regulating lending investors and the Finance Company Act was never meant to apply to lending investors.
According to Dimaampao, administrative rules and regulations such as Circular 13 can only be valid if they were issued based upon a legislative act. This means that there must be a law authorizing it.
"The apparent defect in Memorandum Circular No. 14 is that its issuance was not derived from an existing law; there is still no law regulating the business of lending investors. This is bolstered by the fact that at present, there are pending bills in the Congress of the Philippines intending to regulate the establishment and operation of lending companies in the Philippines," the Order stated.
According to the CA, the SEC exceeded in its jurisdiction in issuing Circular No. …