Chapter 4

PRESENTATION, RESULTS AND DISCUSSION

The Chapter contains the presentation and analysis of the data gathered

based on the information given by the participants during the In-depth-

Interview (IDI). This chapter will discuss on how does the lenders experiences

in legalizing money lending business and the implication of the legalization to

the money lending businesses.

This study consisted Seven (7) participants (Key Informants) conducted

using a Focus Group Discussion with In-depth-Interview (IDI) to draw out

responses with regards to Legalization of Money Lending: Lender’s Dilemma.

Lenders Experiences in Legalizing

Money Lending Business

Moreover, based on Figure 1 below, from the in-depth-interview (IDI)

conducted about the lenders dilemma in legalizing lending business, we have

explored the themes which were drawn out. And, besides, Final Theme is

presented according to each composite theme emerged:

Further to discuss this thematic analysis implies with the Final Theme

Facing Legal Consequences in Performing Money Lending Business,

presented according to the composite themes are as follows: hard to

compromise the business with legalities, feeling unhappy, facing more taxes

to pay, hard time to run small lending business, the importance of legalizing

lending business.
 hard to
compromise
the business
with legalities

the
importance of
Feeling
legalizing
unhappy
lending Facing legal
business
consequences
in performing
Money Lending
Business

hard time to
run small Facing more
lending taxes to pay
business

Figure 1: Thematic Diagram

Facing legal consequences in performing

Money Lending Business

Hard to compromise the business with legalities is one of the

experiences of the lenders. According to Republic Act 9474 Section 5, the
minimum paid in capital of any lending company which may be established
shall be one million pesos (1,000,000.00). It is shown in the data gathered that,
money lenders are unable or impossible to meet the government’s demand. The
capital set by the SEC is too much and they are stuck between the situation of
continuing their illegal lending or its time to put an end to their business.

One of the respondents said that:

“Ako isip usa ka nagapautang ug kwarta daghan na jud ko ug
naagian nga probema aning akong pagpautang labi na sa mga
kustomer. Ug sa karon kaning gihimong aksyon sa atong
presidente, naa pud koy ginagmay nga problema labi na nga
ilegal jud ni akong negosyo. So sa pagkakaron naglibog na ko
unsaon nako ni siya. [As a moneylender, I have experienced a
lot of problems in lending money, especially when it comes to
customers. And as of now, with this action that is undertaken
by our president, I have also encountered problems especially
that my business is illegal. So for now, I don't know of what
will I do to solve this problem.]”
 It was supported by participant 7 that:

“Maayo man pud ni kung mahimong legal ang akoang negosyo kaso
lang kay dako pa kayo ang proseso unya perti pa jung gastuha.
Maglisod pud ko ug buhat ana kay wala koy kwarta ika-gasto. Nindot
unta mahimo na ning legal ang negosyo nako para dili nako magtago-
tago ug pautang. [It is an advantage that my business will be legalized
but it is a long process and costly. It is hard for me because I cannot
provide the expenses. It is nice that my business will be legalized
because I don't need to hide from the authority.]”

As what as the participant said, they don’t know how to deal their
current situation.

Feeling unhappy is what the money lenders felt when the government
criticizes the unregistered lending business. Looking back, the Securities and
Exchange Commission (SEC) has warned firms and individuals engaging in
lending business without the required authorization from the commission. As
what the participants reveal they are worried about the strict implementation of
Republic Act No. 9474 or known as “Lending Company Act of 2007” because
their source of living is affected. Some of the participants reveal:

“Siyempre, murag mahiubos pud ta sa gobyerno ani kay dili man pud
ni pareho sa uban ang akong pagpautang nga dinagko na jud kayo ang
interest. Ginagmay raman unta ni akoa pero sa ilang pagbatikos sa mga
illegal nga pautangan siyempre maigo man jud ta ani di ba? So maong
naguol pud ko ani. [Of course I will be disappointed to the government
because my business is not the same to the other business that lends
money with a high interest rate. My business just caters few borrowers
but when they criticize the illegal lending, of course, we are indeed
affected, isn’t it? That’s why I am worried about it.]”

It was also supported by participant 3 that the government seem seizes

the small money lending business.
 “Siyempre malain ko sa gobyerno kay ginagmay ra man unta ning
amoang pagpa-utang ug maguol pud ko kay mao ra baya unta ning
akoang pangwarta then unsaon na lang ang pambayad nako sa suga,
sa tubig unsaon nalang to. [Of course I feel bad to the government
because my business is just a small lending business and I also feel
sad because it is my only source of income in order for me to pay the
electricity bill, water bill and others.]”

Facing more taxes to pay is another experience of lenders in legalizing

the lending business. It is stated that lending companies are required to pay the
following internal revenues taxes in the course of its lifetime. It is revealed by a
participant that once your business has the authorization to operate the
government will have the power to control the lending. A participant reveal:

“Naa koy nakita siyempre, pareha anang tax. Naa man jud nay tax kung
magparegister ka ana kay kontrolado man gud sa gobyerno. Ana baya
na noh, depende baya na sa income, kung taas ang income, taas pud na
imohang tax. [I see negative effect of course, just like the tax. If you
are already registered, you will have to pay taxes. And your business
will be controlled by the government. For instance, if your income is
high, your tax also will be high, it will just depend on how much your
income is.]

Hard time to run small lending business is another experience of

lenders. According to the study of Norunn Haugen, lenders lend money only to
individuals whom they know well. Based on the data gathered, lenders do not
trust people whom they did not know because they are afraid if that person will
tell the authority that he/she is operating his business illegally. A participant
reveal:

“Dili na kayo ko basta-basta nagapautang kay basig wala ko kabalo

kung unsa ang maresulta ana sa akoa. Mahadlok nako mosalig sa
ubang tao samot na kung di najud kayo nako kaila. [I minimize lending
 money because I don't know what will be its effect to me. I am also
afraid to lend money to the people that I don't know that much.]”

Another participant also reveal that they are having hard time in running
their business because they are afraid if they will be caught and put into jail.
Furthermore, they are also scared because they have no enough money to pay
the fines they will be facing.

“Maglisod nakog operate sa akuang negosyo kay mahadlok naman

kayo ko magpautang kay basig madakpan ko. Basig kulang pa ng
income nako sa akoang pyansa sa kulungan. [It is hard for me to
operate my business because I am afraid that I will be reported to the
authority. Maybe my income will not be sufficient to pay the fines if I
will be caught.]”

The importance of legalizing lending business is another experience of

money lenders and they learned how advantageous it is. The implementation of
R.A No. 9474 serves as an eye-opener to the lenders on how important it is to
be legalized. According to Rule 2 (f) of this Act, Certificate of Authority (CA)
shall refer to a certificate issued by the SEC in favor of a lending company to
engage in the business of lending regulated by R.A No. 9474 and its
implementing rules and regulations.

One of the respondents said that:

“Kuan kanang nalinawan ko kung unsa jud ka importante ang lisensiya.

Nakakat-on pud ko nga mas nindot kung usa ka karehistrado nga
pautangan kay luwas ta sa mga batikos aning gobyerno. [I am
enlightened of how important the license is. I also learn that it is more
advantageous if your business is registered because you will be safe to
the criticisms of the government.”]

In summary, the final theme Facing legal consequences in performing

Money Lending Business shows the various experiences of the lenders in
dealing with the legalization of money lending, which includes hard to
compromise the business with legalities, feeling unhappy, facing more taxes to
pay, hard time to run small lending business, and the importance of legalizing
lending business. Although, legalization is important, these consequences still
prove that the participants are having a hard time by the government’s move.
According to the Securities and Exchange Commission (SEC) they are strictly
implementing the Republic Act 9474 also known as the Lending Company
Regulation Act of 2007 based on the declaration of President Rodrigo Duterte
against people who are involved in illegal lending business. As the government
has warned firms and individuals engaging in lending business without the
required authorization from the commission, the money lenders are facing
different dilemmas towards this. For that reason, the participants stated that
they feel disappointed with the government. They believed that it will take
more time to legalize their lending business for they do not have the enough
money that is needed to become a legal lending business.

Implication of Legalizing Money Lending

in the Lending Business

Moreover, based on Figure 2 below, from the in-depth-interview (IDI)

conducted about the lenders dilemma in legalizing lending business, we have

explored the themes which were drawn out. And, besides, Final Theme is

presented according to each composite theme emerged:

Further to discuss this thematic analysis implies with the Final Theme

The Beneficial Effect of Legalizing Money Lending Business, presented

according to the composite themes are as follows: the importance of legalizing

money lending business, legal security of your business, both beneficial for

the lenders and the borrowers, all small lending individuals are affected,

small source of personal income is affected.

 the
importance of
legalizing
money lending
business

small source
legal security
of personal
income is The beneficial of your
business
affected effect of
legalizing
money
lending
business

all small both beneficial

lending for the lenders
individuals are and the
affected borrowers

Figure 2: Thematic Diagram

The Beneficial Effect of Legalizing

Money Lending Business

The importance of legalizing lending business is another experience of

money lenders and they learned how advantageous it is. The implementation of
R.A No. 9474 serves as an eye-opener to the lenders on how important it is to
be legalized. According to Rule 2 (f) of this Act, Certificate of Authority (CA)
shall refer to a certificate issued by the SEC in favor of a lending company to
engage in the business of lending regulated by R.A No. 9474 and its
implementing rules and regulations.

One of the respondents said that:

“Naa jud. Kanindot ra anang rehistrado naka kay kung magkina-unsa

naa kay ikapakita sa mga tao nga rehistrado ang negosyo nimo. [It is
 very nice that I will operate legally because whatever happens I have
the proof that I can show to the public.]”

It was also supported by participant that legalizing their business means

having the right to run after from the borrower.

“Kanang nindot man jud na siya nga malegalize ang money lending kay
naa kay ikapakita sa tao. Ang imong negosyo ba kay rehistrado jud
siya. Mao nay nakanindot pud. [It is nice if the money lending will be
legalized because you have the proof to show to the public that your
business operates legally.]”

Legal Security of Your Business is one of the beneficial effect of

legalizing the lending. According to the Republic Act No. 9474, also known as

“Lending Company Regulation Act of 2007”, the law is consistent with the

declared policy of the State to regulate the establishment of lending companies

and to place their operation on a sound, efficient and stable condition. As what

the participant said, having a legal security of your business can ensure that the

borrowed money they lent can be returned to them. Furthermore, they will have

also the legal documents to be shown to their clients and they have the rights to

recover the money in a legal process.

One of the respondents said that:

“Ang iyang epekto kay maayo man kay naa naman guy kasiguraduhan
nga pwede nimo mapugos ug bayad ang usa ka nangutang kay naa
naman kay right nga maningil jud. Pero ako isip usa ka ilegal nga
nagapautang murag madugay dugayan jud akong pagparehistro ani kay
mangita pako ug kwarta para aning pagparehistro ug murag daghan
pud ni siya ug process pud. [The effect of legalizing the money lending
 is that you can make sure that the debtor will pay their obligation
because you have the rights to force them and the rights to collect the
borrowed money.]”

It was also supported by participant 3 that:

“Wala man, okay man gihapon kung ilegalize jud siya kay dako man ug
pabor kung illegalize ang money lending kay ang mga tao nga
mangutang nay ikapakita nga gurantor kung dili sila magtinarong ug
bayad makasiguro man ka nga mabawi jud nimo imong kwarta kay ang
ilang gi-guarantor kay mao ang gihimong collateral para makabayad
sila mao nang dako jud siya ug pabor sa mga legal nga mga money
lenders. [None so far. It’s okay to legalize lending business because it
is advantageous for a lender like me because the people who owed you
and will not pay their obligation will be still liable because of the
guarantor that they presented and that serves as their collateral.]”

Another participant said that:

“Ang pinakanindot lang jud kung malegalize ning 5-6 kay kanang
hayahay na kaayo ming mga nagapautang kay naa namiy habol sa mga
mangutangay kung dili mobayad. [The nice thing about legalizing 5-6
is that we moneylenders have the right to go after the borrowers.]”

Both Beneficial for the Lenders and the Borrowers. According to

Republic Act No. 9474 Section 7, a lending company may grant loans in such
amounts and reasonable interest rates and charges as may be agreed upon
between the lending company and the debtor: Provided, that the agreement
shall be in compliance with the provisions of Republic Act No. 3765,
otherwise known as the “Truth in Lending Act” and Republic Act No. 7394,
otherwise known as the “Consumer Act of the Philippines”: Provided, further,
that the Monetary Board, in consultation with the SEC and the industry, may
prescribe such interest rate as may be warranted by prevailing economic and
social conditions. In the absence of such agreement, the interest due is six
percent (6%) per annum according to Usury law and provided by Monetary
Board. Lenders are not only the one who can benefit from legalization but as
well as the borrowers because all the money lending business should follow the
reasonable interest set by the monetary board.

One of the respondents said that:

“Para sa akua kay tama man pud ning gibuhat sa atong presidente kay
dili lang man pud ni para sa amua nga nagapautang pero apil na pud
ang mga nangutang nga makabenepisyo. Pero ang sa ako lang pud unta
walaon na lang ng gikinahanglan nga capital para magpalending nga
legal bisag pila na lang unta to kay para kami pud nga gusto
magparehistro kay makaparehistro mi bahalag magsugod sa mi sa
ginagmay. [For me, our President did it well in legalizing money
lending. It is not just for the lenders like us but also for the borrowers.
Both of us can benefit from it. In my opinion, I suggest that it is better
if there will be no required minimum amount upon registering and it is
better if the capital won’t matter if all lenders will apply for
registration.]”

Another participant said that:

“Kung rehistrado naka di naka basta-basta makapataas sa imohang

interest kanang matrace naman ka nila kay register nagud ka. [If I will
be registered, I don't have the confidence to increase my interest rate
because I will be traced by the authority for the reason that I am
already registered.]”

It was also supported by participant 4:

“Kung na legalize na kay lisod kaayo kay naa nay limit sa interest,
gamay ra kayo ang mabalik sa imoha. [If my business operates legally,
it is hard for me because I have to limit my interest and my profit will
be minimized.]”
 All Small Lending Individuals Are Affected. Considering the fact that
the government has a required capitalization in order to acquire Certificate of
Authorization, small holders cannot afford this requirement. For this reason,
there are some money lending businesses who are not yet registered to the
Commission. Since the implementation of R.A No. 9474, it shows that lenders
are indeed affected because they can only count it by their fingers the
individual who borrowed money to them.

One of the respondents said that:

“Maapektuhan jud eh kay pati ang ubang tao mahadlok naman pud
mangutang kay basin pud ug masakpan. Dili na lang jud mi
mokumpyansa ani. [Of course I am affected because some of the
people are also afraid to borrow money because what if they will be
caught by the authority. We really need to be careful.]”

It was also supported by participant 6:

“Maapektuhan man pud kay wala naman kaayoy mangutang sa akoa

kay mahadlok nga illegal ko. Unya daghan naman pud mga pautangang
legal karon unya gamay ra pajud ug interest. [My business is affected
of course because the number of borrowers is slowly decreasing
because they are afraid that I am an illegal moneylender. And the
number of legal moneylenders nowadays is increasing which also has
a lower interest rate.]”

Small Source of Personal Income Is Affected. According to the Circular

No.799 issued by the Monetary Board, the legal rate of interest will be

the six percent (6 %) per annum. This legal interest rate become a

problem to the money lenders for they are depending their day-to-day

fund for their expenditures in their illegal lending business. As what the
 participants said, their income was highly affected when the government

takes an action to pull out the illegal money lenders in the economy.

They said that they cannot easily impose high interest rates on their own

that makes their income low.

One of the respondents said that:

“Ah oo. Maapektuhan jud siyempre. Kung malegalize siya, gamay

nalang ang interest, meaning ang ma earn pud nako ana gikan sa
interest kay gamay pud. [Yes, my business is affected of course. If it
will be legalized, I should impose low interest rate. If the interest rate
will be lower, it means that my profit will also be lower.]”

It was also supported by participant 7 that:

“Dili nako makapatakag patong ug interest kung mahimong legal na jud

ang 5-6, unya mogamay napud ang ginansya nako ani. [I will not be

able to easily impose high interest rate if the so-called 5-6 will be

legalized, and my profit will be reduced.]”

In summary, the final theme The Beneficial Effect of Legalizing

Money Lending Business shows the different implications of the legalization

of money lending to the lenders, which includes the importance of legalizing

money lending business, legal security of your business, both beneficial for the

lenders and the borrowers, all small lending individuals are affected, and small

source of personal income is affected. Through the government’s movement to

strongly implement the legalization of money lending, many informal money

lenders have shown their interest and complaints about the said movement.

According to the Republic Act No. 9474, also known as “Lending Company

Regulation Act of 2007”, the law is consistent with the declared policy of the

State to regulate the establishment of lending companies and to place their

operation on a sound, efficient and stable condition. This will assure the

entity’s legal security of many lending companies to operate safely. From what

the participants stated, they are highly affected with this movement but

somehow agreed to legalize their business provided that they will have the

enough capitalization to be register as a lending company. They believed that

operating a legal business will bring them a secure operation of their business

and both parties the creditor and the debtor will benefit for the legal

compliance.