L & R Corporation

October 9, 1984 L & R Corporation 5th Floor, Ablaza Bldg., 117 E. Rodriguez Sr. Blvd., Quezon City Attention : Mr . Luis G . Ablaza, Sr . Gentlemen: This refers to your letter dated June 18, 1984 requesting for exemption from the requirement for the renewal of certificate of authority to engage in financing business inasmuch as the business operation of the corporation are only confined to direct lending, real estate dealership and general building construction. A perusal of the purposes of the amended articles of incorporation of your corporation approved by the Commission on July 24, 1970 disclosed that the provisions thereof do not include "financing business". In view thereof, the corporation need not secure certificate of authority under RA 5980. However, to enable the corporation to engage in "direct lending" business, prior authority from the Central Bank must first be secured. It is to be noted that under Section 2-B of the General Banking Act (R.A. 337, as amended), "financial intermediaries" are subject to the regulation by the Central Bank of the Philippines. The law provides, thus: "SECTION 2-B. The operation and activities of non-bank financial intermediaries , except insurance companies, shall be subject to the regulation by Monetary Board ". . . . (Emphasis supplied) Considering that in the enumeration of non-banking financial intermediaries in Section 4101 Q.1 of the Manual of Regulations for Banks and Other Financial Intermediaries of the Central Bank, "lending investor" is included, the operation of "direct lending" business is subject to regulation by the Central Bank. The manual provides, to wit: "Non-banking financial intermediaries shall include the following: 1. A person or entity licensed/and or registered with any government regulatory body as a non-bank financial intermediary such as investment house, investment company, financing company, securities dealer/broker lending investor , pawnshop, money broker, fund manager, cooperative, insurance company, non-stock savings and loan association and building loan association." (emphasis supplied). Thus, to enable the corporation to engage in "direct lending", prior authority/license from the Central Bank must first be secured. Please be advised accordingly. Very truly yours, (SGD.) MANUEL G. ABELLO Chairman