I. Introduction

Many borrowers in the Philippines discover—often through a statement of account or a call from the bank—that the terms of their loan have “changed”: higher interest, new fees, a different due date, or a longer/shorter term, allegedly without their consent.

When a bank changes loan terms without your clear agreement, several legal and regulatory issues arise, particularly under:

The Civil Code (mutuality of contracts, consent)
The Truth in Lending Act (Republic Act No. 3765)
The Financial Consumer Protection Act of 2022 (Republic Act No. 11765)
Bangko Sentral ng Pilipinas (BSP) regulations on financial consumer protection and transparency

This article explains:

When a “change in loan terms” is legally problematic
Your rights as a borrower
The step-by-step process to complain to your bank
How and when to escalate your complaint to the BSP
Practical strategies and sample complaint wording

II. Legal Basis: Why Banks Cannot Just Change Loan Terms

1. Mutuality of Contracts (Civil Code)

Article 1308 of the Civil Code provides that a contract must bind both parties and its validity or compliance cannot be left to the will of one of them.

Applied to loans:

Once you and the bank agree on principal, interest, term, payment schedule, and key charges, those core terms cannot be changed only because the bank decides so.
Any substantial change normally needs your consent—ideally in writing.

If a bank unilaterally increases the interest rate or adds fees without any valid contractual or legal basis, that can be attacked as void or unenforceable as to the unilateral change.

2. Interest and Charges Must Be Agreed in Writing

Under the Civil Code (e.g., Article 1956), interest is not due unless expressly stipulated in writing.

This principle extends in practice to penalties, charges, and various fees: they should be properly disclosed and agreed, not hidden or imposed later without notice or agreement.

3. Truth in Lending Act (RA 3765)

RA 3765 requires creditors (including banks) to truthfully and clearly disclose:

Finance charges
Effective interest rates
Other charges and conditions affecting the cost of credit

Key implications:

You should have been given a clear breakdown of the costs at the time of contracting.
If the bank later adds or increases material charges not disclosed or agreed upon, you can question that under RA 3765 principles.

4. Financial Consumer Protection Act (RA 11765)

RA 11765 and BSP implementing regulations strengthen protections for borrowers:

Right to fair and equitable treatment
Right to disclosure and transparency
Right to protection against unfair, abusive, or unconscionable practices
Right to prompt handling of complaints

Unilateral, non-transparent changes to loan terms may qualify as:

Lack of transparency
An unfair or abusive practice
A violation of internal complaint-handling rules if the bank refuses to address your concern properly

5. BSP Regulatory Framework

The BSP, through various circulars and manuals, requires banks to:

Clearly disclose terms and conditions of loans
Provide key information statements for certain credit products
Maintain effective consumer assistance mechanisms (CAMs) and complaint-handling units
Avoid misleading representations and unfair practices

Thus, if a bank changes your loan terms without proper disclosure or beyond what the contract allows, this is not just a contractual issue—it may be a regulatory compliance issue that the BSP can step in to address.

III. What Counts as an Unauthorized Change in Loan Terms?

“Change” can mean many things. Common problematic scenarios include:

Interest Rate Increases
- Example: From 8% per annum to 10.5% per annum, without you signing any amendment or being properly notified according to the contract.
New or Increased Fees and Charges
- Processing fees, “system maintenance” fees, restructuring fees, or insurance premiums suddenly appearing on your statements.
Changes in Payment Schedule or Due Dates
- Moving your due date earlier or shortening your term, making monthly amortizations higher, without your agreement.
Changes in Amortization Type
- From fixed amortization to variable amortization computation without your knowledge.
Changes in Collateral or Security Terms
- Additional collateral requirements or changes in conditions for foreclosure not covered by your original mortgage documents.
Imposition of New Penalties
- New types of penalty charges for late payment or pre-termination that were not in the original loan contract.
Restructuring Without Clear Consent
- Bank “restructures” your loan, resets your term, or capitalizes unpaid interest, claiming it is “automatic” or “system-generated,” but you never signed a restructuring agreement.

If any of these occur without a clear, valid provision in your contract or without your clear, informed consent, you may have grounds to contest and complain.

IV. When Changes May Be Lawful

Not every change is illegal. Some changes can be valid if:

Contract Contains a Clear, Specific Repricing Clause Many housing loans and variable-rate loans state something like:
- “Interest shall be subject to periodic repricing every 1/3/5 years based on the bank’s prevailing fixed rate or reference rate plus a spread…”
If:
- The clause is clear,
- You understood and agreed when you signed, and
- The bank follows the stipulated formula and procedure (including notice, where required),
then changes in rate per the contract may be valid.
Reference Rate Changes (e.g., Benchmark Rates) If the loan is tied to a recognized reference rate plus a fixed margin, and the benchmark moves up or down, your rate may lawfully change, as long as the bank applies the formula correctly.
Voluntary Restructuring or Renewal You Actually Signed If you signed a new loan agreement, restructuring agreement, or amendment that clearly states the new terms, then those changes are valid—provided there was no fraud, coercion, or misrepresentation.
Regulatory or Legal Requirements In rare cases, a change may be required by law or regulatory directives, and the bank must comply. Even then, proper disclosure and notice should still be observed.

V. How to Check if the Change Was Authorized

Before complaining to the BSP, you need to determine if the bank’s action is really unauthorized. Do the following:

Get Your Documents in Order
- Original loan agreement or promissory note
- Disclosure statement and any key information statement
- Mortgage documents (if applicable)
- Any restructuring agreements or amendments you signed
- Past and current statement of account (SOA) or billing statements
Compare Original Terms vs. Current Implementation Check:
- Interest rate: original vs. current
- Loan term: number of months/years originally agreed vs. now
- Monthly amortization: initial schedule vs. current amount
- Fees and charges: which ones appear now that did not appear before
Locate Repricing or Change Clauses
- Look for clauses about repricing, variable interest, changes in charges, or the bank’s right to amend terms.
- See if those clauses are:
  - Specific (e.g., “every 3 years, based on X rate plus Y% spread”)
  - Subject to notice requirements (e.g., written notice before effectivity)
Check for Notice or Consent
- Did you receive a formal letter, email, SMS, or other notice indicating the change, before it took effect?
- Did you sign any acknowledgment or amendment?
- Was the notice clear (not buried in fine print or generic marketing material)?

If the change does not match the contract or you were not informed or did not consent in the way the contract requires, you have a reasonable basis to complain.

VI. First Line of Action: Complain Directly to the Bank

The BSP expects you to exhaust the bank’s internal complaint process first, except in extraordinary cases (fraud, imminent foreclosure, etc.).

Step 1: Document Everything

Prepare:

Copies (not originals) of:
- Loan contract and disclosure statement
- Relevant statements of account
- Any correspondence with the bank
A written summary of facts: dates, what changed, who you talked to, what was said.

Step 2: Ask for Clarification (Informal but Documented)

You may start with a non-confrontational approach:

Visit the branch or call the bank’s hotline.
Ask them:
- Why did the terms change?
- Which provision of the contract allows this?
- Can they give you a written explanation and computation?

Important: After any call or visit, follow up in writing (email or letter) summarizing what was explained to you. This becomes part of your evidence.

Step 3: File a Formal Written Complaint with the Bank

If the explanation is unsatisfactory or clearly wrong:

Address your letter or email to the bank’s Consumer Assistance / Customer Care / Complaint Handling Unit (names differ per bank).
Include:
- Your full name, contact details, and account/loan number
- Detailed description of the issue (what changed, when, how you discovered it)
- Why you believe the change is unauthorized or unfair
- Clear reference to the contract provisions you rely on (if possible)
- What you want the bank to do (e.g., restore original interest rate, reverse excess charges, correct the records)
Attach copies of supporting documents.

Keep proof that you sent the complaint (email sent confirmation, receiving stamp, etc.).

Step 4: Wait for the Bank’s Response (Within Regulatory Timeframes)

BSP rules require banks to:

Acknowledge complaints promptly (usually within several working days)
Resolve or respond within a reasonable period (commonly around a month or so, depending on complexity)

If the bank:

Fails to respond within a reasonable time, or
Responds with a decision you believe is incorrect, unfair, or unsupported,

you may escalate to the BSP.

VII. When and How to Complain to the BSP

1. When to Go to the BSP

You can bring your complaint to the BSP when:

You have already complained to the bank and:
- You received no response within a reasonable time, or
- The response is unsatisfactory or clearly contrary to law/regulation; or
The situation is urgent or serious (e.g., imminent foreclosure, large financial loss, suspected fraud), and you reasonably need regulatory intervention.

The BSP handles complaints involving BSP-supervised financial institutions, such as:

Banks (universal, commercial, thrift, rural, cooperative)
Some other BSP-supervised entities (quasi-banks, certain lenders)

If your lender is not BSP-supervised (e.g., some lending or financing companies), other regulators like the Securities and Exchange Commission (SEC) or the local government unit may have jurisdiction.

2. What the BSP Can and Cannot Do

The BSP can:

Require the bank to explain and justify its actions
Check compliance with laws and regulations
Order banks to correct errors (e.g., reverse unauthorized charges, correct records)
Impose sanctions or penalties on the bank for regulatory violations

The BSP generally cannot:

Act as a court to award moral or exemplary damages
Give legal representation or act as your lawyer
Decide complex civil disputes beyond its regulatory mandate

For damages and more complex contractual claims, you may need to consult a private lawyer and possibly file a case in court or use other dispute resolution mechanisms, even while the BSP process is ongoing.

3. Contents of a Complaint to the BSP

Your BSP complaint should be clear, factual, and organized. It should include:

Your Personal and Account Details
- Full name
- Address, contact number, email
- Bank name and branch, loan account number
Nature of the Complaint
- “Unauthorized change in loan terms” (e.g., interest rate increase, new charges, shortened term)
Chronology of Events
- When you obtained the loan
- Key original terms (interest rate, term, monthly amortization, etc.)
- When and how you discovered the change
- Who you spoke with at the bank and what they said
- Steps you took to complain to the bank, with dates
Legal/Contractual Points (If You Can)
- Cite contractual provisions (or lack thereof) about repricing or changes
- Cite your rights as a financial consumer under RA 11765 (transparency, fairness, protection from abusive practices)
Relief Sought
- Restore original agreed terms (interest rate, charges, schedule)
- Refund/credit back any excess interest or charges already paid
- Correct your records to avoid negative credit reporting or foreclosure
- Appropriate regulatory action against the bank, if warranted
Attachments
- Copy of your complaint letter to the bank
- The bank’s written response (if any)
- Loan contract and disclosure statement
- Statements of account showing the discrepancies
- Any email/SMS or written notices from the bank about the change

4. How to File the Complaint

You can usually submit your complaint to the BSP through:

The BSP’s official consumer assistance/complaints webpage (online form)
Email to the designated BSP financial consumer protection/consumer affairs address
Postal mail or courier addressed to the BSP’s consumer assistance office
Walk-in (personally visiting BSP offices) where allowed

Always keep copies of everything you send, including proof of submission.

VIII. What Happens After You File with the BSP

Although procedures may vary, generally:

Initial Screening
- BSP checks if the complaint falls under its jurisdiction and if basic requirements (identity, documents) are complete.
Referral to the Bank for Comment
- BSP typically asks the bank to explain and to comment on your allegations within a set period.
Evaluation
- BSP examines whether the bank’s actions comply with laws, BSP regulations, and the contract.
Outcome
- BSP may:
  - Require the bank to correct its actions (e.g., restore terms, reverse charges)
  - Direct the bank to improve practices (e.g., better disclosures, fairer policies)
  - Impose sanctions or other regulatory measures if there are violations

BSP will usually inform you of the result or status, but note that this process is administrative and regulatory, not a substitute for a full-blown civil case if you seek substantial damages.

IX. Practical Tips While the Dispute Is Pending

Avoid Default if Possible
- Try to continue paying at least the undisputed portion of your amortization (based on original terms).
- Make payments “under protest,” and keep proof of payment.
- This reduces the risk of default, penalties, and foreclosure while the dispute is being resolved.
Put Everything in Writing
- Verbal promises from branch staff mean little without written confirmation.
- After each conversation, send a short email: “As discussed, you said X…”
Do Not Sign Documents You Do Not Understand
- Some “solutions” proposed by banks are actually restructuring agreements locking in unfavorable new terms.
- Read carefully; seek independent legal advice before signing.
Monitor Your Credit Record
- Unauthorized rate hikes or changes might push you into “late” or partial payments.
- Ask the bank to refrain from negative credit reporting while the complaint is pending, especially if their own actions triggered the issue.
Consult a Lawyer for Complex or High-Value Cases
- If the amount involved is large or foreclosure is threatened, legal advice is highly recommended.
- Your lawyer can coordinate your BSP complaint with a possible court action or negotiation.

X. Sample Structure for Complaints

A. Sample Outline: Complaint Letter to the Bank

Subject: Complaint on Unauthorized Change in Loan Terms – [Loan Account No. ______]

[Date]

[Name of Bank] [Branch / Office] [Address]

Dear [Sir/Madam],

I am writing to formally complain about an apparent unauthorized change in the terms of my loan with your bank, with details as follows:

Borrower: [Your Name]

Loan Account Number: [Number]

Type of Loan: [Housing / Personal / Auto / Business, etc.]

Date of Loan Approval / Release: [Date]

Original Terms (per contract and disclosure statement): – Principal amount: [₱] – Interest rate: [% per annum, fixed/variable] – Loan term: [** years/months] – Monthly amortization: [₱**] – Other relevant terms: [state briefly]

Nature of the Issue: On [date], I discovered that [describe the change: increase in interest rate, new charges, change in amortization, etc.]. I was not informed of this change in a clear manner, nor did I sign any amendment or restructuring agreement authorizing such change.

I have reviewed my loan documents and have not found any clear provision that allows this specific change, or, if there is such a provision, it appears not to have been properly implemented or disclosed.

Relief Requested:

Kindly provide a written explanation and detailed computation showing the legal and contractual basis for the change; and

If there is no valid basis, please restore the original agreed loan terms and reverse or refund any excess interest or charges already imposed, and correct your records accordingly.

I am raising this concern in good faith and in the exercise of my rights as a financial consumer under applicable laws and BSP regulations, including the Financial Consumer Protection Act.

Please treat this as a formal complaint under your internal complaint-handling procedures. I respectfully request a written response within the applicable time frame.

Thank you.

Sincerely, [Your Name] [Signature, if printed] [Contact details]

B. Sample Outline: Complaint Letter to the BSP

Subject: Complaint Against [Name of Bank] for Unauthorized Change in Loan Terms – [Loan Account No. ______]

[Date]

[Bangko Sentral ng Pilipinas – appropriate office] [Address / “Thru: Financial Consumer Protection Department,” etc., as applicable]

Dear [Sir/Madam],

I respectfully submit this complaint as a financial consumer against [Name of Bank] concerning an apparent unauthorized change in the terms of my loan, with details as follows:

Complainant: [Your Name], [Address], [Contact Number], [Email]

BSP-Supervised Institution: [Name of Bank, Branch]

Loan Account Number: [Number]

Type of Loan: [Housing / Personal / etc.]

Background: – On [date], I obtained a loan from [Bank]. The original terms were: [principal, interest rate, term, amortization, etc.]. – On [date], I discovered that the bank had [describe changes]. – I did not sign any amendment or restructuring agreement authorizing this change, and I did not receive clear prior notice.

Actions Taken with the Bank: – On [date], I raised the issue with [branch/office/person]. – On [date], I sent a formal complaint letter (copy attached). – On [date], the bank responded [or “the bank has not responded as of this date”]. Their response was unsatisfactory because [state reasons briefly].

Grounds for Complaint: – The change in loan terms appears to violate the mutuality of contracts under the Civil Code and my right to transparency and fair treatment. – I believe this may also be inconsistent with the Truth in Lending Act and the Financial Consumer Protection Act, as well as BSP regulations on disclosure and unfair practices.

Relief Requested:

That the BSP evaluate whether [Bank] has complied with applicable laws, regulations, and its contractual obligations in making these changes;

That [Bank] be directed, if appropriate, to restore the original agreed terms, reverse any unauthorized charges or excess interest, and correct its records; and

That [Bank] be required to improve its disclosure and consumer protection practices to prevent similar incidents.

Attachments: – Copy of loan contract and disclosure statement – Statements of account showing the changes – Complaint letter(s) to the bank and its response(s) – Any other supporting documents

I submit this complaint in good faith and in the exercise of my rights as a financial consumer under Republic Act No. 11765 and relevant BSP regulations.

Thank you for your attention to this matter.

Respectfully, [Your Name] [Signature, if printed]

XI. Special Situations

1. OFW Borrowers or Those Abroad

You can communicate via email and online forms and authorize a representative in the Philippines to transact with the bank (via SPA).
Ensure your representative has copies of all relevant documents.

2. Imminent Foreclosure

If foreclosure is threatened based on disputed amounts:

Immediately put your objection in writing to the bank.
Ask them to hold foreclosure actions while the complaint is under review.
Escalate quickly to the BSP and consult a lawyer; foreclosure involves strict procedural rules and timelines.

3. Co-Borrowers and Guarantors

Make sure all co-borrowers and guarantors sign or at least concur in the complaint letters.
They are also affected by any unauthorized change and may be equally liable if the loan is mishandled.

XII. Conclusion and Reminder

A bank changing your loan terms without your agreement is not merely a “customer service issue.” It raises serious questions about:

Contractual validity (mutuality of contracts and consent)
Regulatory compliance (disclosure, fairness, consumer protection)

Your main tools are:

Careful review of your loan documents and statements
Clear written complaints to the bank’s official channels
Escalation to the BSP if the bank fails to resolve the matter properly
Legal advice where the amounts at stake or the risks (e.g., foreclosure) are significant

This article provides general legal information in the Philippine context. For specific situations, especially those involving large sums or complex facts, it is prudent to consult a lawyer who can assess your documents and represent you before the bank, the BSP, or the courts, as needed.