Petitioner Pilipinas Loan Company and private respondent Filipinas Pawnshop are both registered corporations. Filipinas Pawnshop filed a complaint alleging Pilipinas Loan was operating as an unregistered pawnbroker in violation of its articles of incorporation. Pilipinas Loan denied the allegation. The SEC ruled that a corporation can only engage in activities expressly allowed by its articles. To determine if Pilipinas Loan violated its articles, the SEC had to inquire if it was holding itself out as a pawnshop, which would violate its prohibition on pawnbroking. The determination of whether it also violated related pawnbroking laws was incidental to the SEC's role in ensuring a corporation does
Petitioner Pilipinas Loan Company and private respondent Filipinas Pawnshop are both registered corporations. Filipinas Pawnshop filed a complaint alleging Pilipinas Loan was operating as an unregistered pawnbroker in violation of its articles of incorporation. Pilipinas Loan denied the allegation. The SEC ruled that a corporation can only engage in activities expressly allowed by its articles. To determine if Pilipinas Loan violated its articles, the SEC had to inquire if it was holding itself out as a pawnshop, which would violate its prohibition on pawnbroking. The determination of whether it also violated related pawnbroking laws was incidental to the SEC's role in ensuring a corporation does
Petitioner Pilipinas Loan Company and private respondent Filipinas Pawnshop are both registered corporations. Filipinas Pawnshop filed a complaint alleging Pilipinas Loan was operating as an unregistered pawnbroker in violation of its articles of incorporation. Pilipinas Loan denied the allegation. The SEC ruled that a corporation can only engage in activities expressly allowed by its articles. To determine if Pilipinas Loan violated its articles, the SEC had to inquire if it was holding itself out as a pawnshop, which would violate its prohibition on pawnbroking. The determination of whether it also violated related pawnbroking laws was incidental to the SEC's role in ensuring a corporation does
Petitioner Pilipinas Loan Company and private respondent Filipinas Pawnshop are both registered corporations. Filipinas Pawnshop filed a complaint alleging Pilipinas Loan was operating as an unregistered pawnbroker in violation of its articles of incorporation. Pilipinas Loan denied the allegation. The SEC ruled that a corporation can only engage in activities expressly allowed by its articles. To determine if Pilipinas Loan violated its articles, the SEC had to inquire if it was holding itself out as a pawnshop, which would violate its prohibition on pawnbroking. The determination of whether it also violated related pawnbroking laws was incidental to the SEC's role in ensuring a corporation does
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Pilipinas Loan Company vs SEC 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:
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.
