Credit-Card Penalty & Interest-Waiver Requests in the Philippines (A 2025 Legal-Practice Guide)

1. Why Waiver Requests Matter

Unpaid credit-card balances accrue two separate—but often conflated—charges:

Charge	Typical Trigger	Regulator-Imposed Ceiling¹
Finance/interest charge	Imposed the day after statement due date on any unpaid portion	1 % per month (12 % p.a.) on outstanding principal (BSP Circular No. 1165 s. 2023, amending 1097 s. 2020)
Penalty fee	Imposed once an account is past due	3 % per month on the amount in default (same Circular)

Waiver requests seek the partial or total condonation of one or both items, frequently citing hardship, bank error, or fairness principles.

2. Governing Legal & Regulatory Framework

Layer	Key Issuance	Core Provision for Waivers
Primary law	Republic Act No. 10870 (Credit Card Industry Regulation Law, “CCIRL,” 2016)	Empowers Bangko Sentral ng Pilipinas (BSP) to set ceilings and compels issuers to maintain “reasonable, transparent and customer-centric” collection practices (Sec. 5,14).
	Republic Act No. 11765 (Financial Products & Services Consumer Protection Act, FPSCPA, 2022)	Establishes consumers’ right to raise complaints and directs BSP to create an Alternative Dispute Resolution (ADR) scheme; violators may face fines up to ₱2 million per transaction or 3× the amount involved.
COVID legislation	RA 11469 (“Bayanihan I”) & RA 11494 (“Bayanihan II”)	Mandated a 30- then 60-day mandatory grace on interest & penalties (now lapsed, but grounds for retroactive waiver if bank failed to implement).
Secondary rules	BSP Circulars 702 (2011), 957 (2017) & 1165 (2023)	Define: (a) caps shown in table above; (b) good-conduct inducements—banks must offer restructuring or waiver programs before filing suit; (c) collection-agency code of conduct.
Consumer statutes	RA 3765 (Truth in Lending); RA 7394 (Consumer Act)	Require accurate disclosure of finance charges; mis-disclosure is a classic ground for waiver.
Data privacy	RA 10173 (Data Privacy Act, 2012)	Requires consent to disclose unpaid status to third-party collectors; unlawful disclosure can be leveraged to negotiate fee cancellation.

3. When Is a Waiver Legally Tenable?

Regulatory Non-Compliance – Charges above BSP ceilings, retroactive interest repricing, failure to apply Bayanihan grace periods, or hidden fees all create statutory violations; the consumer may demand cancellation.
Bank Error – Misposting of payments, double charging, or currency-conversion mistakes.
Force Majeure / Calamity – BSP Memoranda (e.g., M-2020-008, “Calamity Measures”) encourage banks to extend debt-relief—including waivers—in disaster areas.
Good Payment History & Hardship – Though discretionary, issuers commonly waive penalties to rehabilitate otherwise performing clients rather than sell debt at a loss.
Prescription & Judicial Economy – Civil actions on written contracts prescribe in 10 years (Art. 1144, Civil Code). Banks often waive aged penalties during restructuring to avoid litigation costs.

4. The Statutory Procedure for Dispute & Waiver

Internal Complaints Handling
- File a written dispute with the creditor’s Customer Experience/ Remediation team.
- Attach supporting documents: SOA screenshots, proof of payment dates, calamity certifications, etc.
- Timelines: Under BSP Circular 1164 (2023), banks must acknowledge in 2 business days and resolve in 15 business days (extendable to 45 if complex).
Elevation to BSP Consumer Assistance Mechanism (CAM)
- Submit the CAM Form + supporting evidence via email or in person.
- BSP may mediate; most banks settle to avoid an Administrative Case (possible penalties, publication of name, and impact on supervisory ratings).
Alternative Dispute Resolution (FPSCPA)
- If unresolved after 40 days, the consumer may request BSP-facilitated ADR (quasi-judicial).
- Non-appearance or refusal to comply with a compromise agreement may trigger monetary penalties.
Civil or Small-Claims Litigation
- Waiver can be pleaded as a counterclaim or affirmative defense to a collection suit.
- Amounts not exceeding ₱400,000 (Rule on Expedited Procedures in First-Level Courts, A.M. 08-8-7-SC, as amended 2022) qualify for small-claims, no lawyer needed.

5. Drafting the Waiver Request Letter

Tip: Frame the request as a win-win—emphasise readiness to pay principal if punitive charges are lifted.

[Date]

Customer Service Head
[Bank Name]

Subject: Request for Waiver of Interest and Penalties – Card No. XXXX-1234

Dear Sir/Madam:

(1)  Facts & account history …  
(2)  Grounds for waiver  
     • Interest charged at 2.25 % per month exceeds BSP cap of 1 % (Circular 1165).  
     • Payment delay arose from Typhoon *Dindin*; the BSP Memorandum to banks dated 1 Sep 2024 enjoins relief in calamity areas.  
(3)  Proposal: I can settle the principal balance of ₱35,000 in two instalments if the ₱8,400 penalty and ₱5,200 excess interest are condoned.  
(4)  Legal basis: RA 10870 Sec. 14; RA 11765 Sec. 10; BSP Circular 1165 Secs. 4-5.  

Respectfully,

[Name, Signature, ID]

6. Negotiation Strategies & Banker’s Perspective

Borrower Move	Why It Works
Offer lump-sum principal payment	Improves bank’s recovery rate versus selling to a collection agency at ~10-15 ¢/Peso.
Invoke supervisory fines	Banks prefer silent settlement over BSP-publicized sanctions.
Reference credit-card portability (RA 10870 Sec. 11)	Threat of balance transfer to competitor incentivizes issuer to retain client.
Document hardship (medical bills, job loss)	Aligns with bank’s Responsible Lending KPIs under BSP’s Sustainable Finance Framework.

7. Jurisprudence Snapshot

Case	G.R. No.	Holding
Citibank v. Sps. Caballero (2014)	203241	Court upheld condonation after Citibank accepted a reduced settlement; acceptance constituted novation, extinguishing excess interest.
BPI v. Leobrera (2018)	214712	Interest beyond stipulated rate and without adequate disclosure declared void under RA 3765.
UnionBank v. Sps. Sebastian (2021)	244777	Waiver letter signed by bank officer bound the bank; estoppel bars subsequent collection of condoned penalties.

8. Tax & Credit-Bureau Consequences

Tax: Under BIR RMC 31-2008, debt waived by commercial lenders is not treated as taxable income to individuals if part of a restructuring program.
Credit Record: Banks must report the final status to the Credit Information Corporation (CIC); properly coded as “R” (restructured) or “S” (settled) without negative days-past-due once waiver is approved, per CIC Memo 2020-05.

9. Common Pitfalls

Pay-first-then-dispute – Once you settle in full without written reservation, the bank may argue payment extinguishes the obligation, eliminating leverage.
Telephone promises – Always demand written confirmation; oral offers are unenforceable under the Statute of Frauds (Art. 1403, Civil Code).
Ignoring collection notices – After 90–120 days past due, many issuers “charge off” and sell the account; third-party buyers are less flexible on waivers.

10. Practical Checklist for Practitioners

✅	Step
Gather SOAs, payment slips, calamity or medical certificates.
Compute interest & penalties versus BSP ceilings.
Draft waiver letter citing legal bases & settlement proposal.
File via email and registered mail; keep proof of transmittal.
Diary 15-day resolution deadline; follow up on Day 16.
Escalate to BSP CAM with all correspondence if no satisfactory action.
Log the final agreement; insist on “Full & Final Settlement” wording.
Confirm correction of CIC credit data within 30 days.

11. Outlook for 2025

Interest Ceiling Review: BSP Monetary Board is scheduled (Q4 2025) to reassess the 1 %/3 % caps; stakeholders expect either retention or slight downward adjustment due to falling policy rates.
Digital ADR Portal: FPSCPA Implementing Rules (IRR) mandate an online portal by September 2025, enabling paper-free filing of waiver disputes.
ESG Pressure: Philippine banks increasingly tie sustainable finance targets to consumer-relief metrics; well-documented hardship cases will likely receive faster approvals.

12. Key Takeaways

Filipino cardholders possess strong statutory leverage—BSP ceilings, disclosure rules, calamity-relief mandates, and the FPSCPA all favor reasonableness and transparency.
A waiver request is most effective when evidence-based, deadline driven, and anchored on explicit legal provisions.
Early, well-structured negotiation almost always beats litigation—for both debtor and creditor.

Disclaimer: This guide is for general information as of June 16 2025. It is not legal advice. Laws and regulations—and each factual situation—may differ; consult a Philippine lawyer or the BSP Consumer Affairs Office for formal guidance.

¹ Note on ceilings: The BSP initially imposed the 1 %/3 % cap under Circular 1097 (2020). Circular 1165 (2023) renewed the cap until January 31 2026, subject to annual review.