Excessive Interest & Online-Loan Harassment in the Philippines A comprehensive legal survey (July 2025)

1 | Why this topic matters

Over the past decade, mobile “salary-loan” and “cash-loan” apps have proliferated in the Philippines, riding on high smartphone penetration and gaps in mainstream banking. Many of these platforms are legitimate and fill a real credit need. Yet a sizeable number have operated with (1) interest and fee structures that far exceed reasonable commercial rates, and (2) debt-collection tactics that shame, threaten or otherwise harass borrowers. This article maps all the major Philippine legal rules, jurisprudence, enforcement trends, and remedies that now govern excessive interest and online-loan harassment as of 11 July 2025.

2 | Regulatory map: who watches whom?

Regulator	Key statutes / issuances	Coverage
Securities and Exchange Commission (SEC)	– RA 9474 Lending Company Regulation Act (LCRA) – RA 8556 Financing Company Act – SEC Memorandum Circular (MC) 18-2019 (Prohibition on Unfair Debt Collection) – SEC MC 19-2019 (Disclosure & App Registration) – SEC MC 10-2022 (Enforcement Guidelines)	Non-bank lending & financing companies, including their online lending platforms (OLPs)
Bangko Sentral ng Pilipinas (BSP)	– CB Circular 905 (1982) suspended statutory usury ceilings – BSP Circular 1133 (2021) & Circular 1165 (2023) interest-rate & fee caps for small-value consumption loans – BSP Memorandum M-2020-074 (Collection Guidelines)	Banks, their digital channels, and, when partnered with banks, certain fintech lenders
National Privacy Commission (NPC)	– RA 10173 Data Privacy Act (DPA) – NPC Advisory 20-01 (Permissible Phone-Book Access by Apps)	All personal-data processing, including OLPs’ scraping of contact lists
Financial Products & Services Consumer Protection Act (RA 11765, 2022)	Provides a cross-cutting prohibition on abusive collection & mis-selling, enforceable by SEC, BSP, Insurance Commission & CDA	Any entity offering financial products/services
Department of Trade & Industry (DTI)	– RA 7394 Consumer Act (residual authority)	Non-regulated entities & deceptive online advertising
Law-enforcement (PNP, NBI Cybercrime Division)	– Revised Penal Code (RPC) – RA 10175 Cybercrime Prevention Act	Criminal harassment, threats, libel, coercion

3 | Excessive interest: from “no usury” to new caps

Usury Law (Act 2655, 1916) originally set absolute ceilings (6-12 % a year).
Central Bank Circular 905 (Dec 1982) “lifted” those ceilings, effectively deregulating rates—but courts retained power to strike down unconscionable interest under the Civil Code’s Articles 19, 20, 21, 1229 & 1366 (equity, good faith, public policy).
Leading Supreme Court cases:
- Medel v. Court of Appeals (G.R. 131622, 27 Nov 1998) – 5.5 % per month voided as “excessive and iniquitous”; interest re-computed at 12 % p.a.
- Spouses Abellera v. China Bank (G.R. 175017, 30 Jan 2013) – 5 % per month similarly reduced.
- Security Bank v. Spouses Laurel (G.R. 155171, 11 Feb 2015) – affirmed courts’ power to nullify unconscionable rates even after Circular 905.
Digital-loan-specific caps (effective 03 Nov 2021, enforced from 03 Jan 2022; updated 2023):
- Interest + any fees ≤ 0.8 % per day (≈ 24 %/month) for loans ≤ ₱10,000 with tenors ≤ 4 months.
- Total cost cap: 100 % of principal (no borrower can ever owe more than double).
- Violations expose lenders to SEC/BSP fines, license revocation, and consumer restitution under RA 11765.

4 | Harassment & unfair collection practices

Common complaints

Tactic	Typical borrower experience	Governing rule(s)
“Shame-lending”	Blast‐SMS/Viber to all phone contacts, calling borrower a scammer	DPA Sec 12 (lawful criteria), Sec 16(b) (purpose limitation), NPC Advisory 20-01; RPC Art 355 & RA 10175 (cyber-libel)
Threats of arrest, posting edited nude photos, or “police blotter” notices	RPC Art 282 (grave threats), Art 287 (light threats/coercion); RA 10175; RA 11765 Sec 4 (j) (harassment)
Daily robo-calls at odd hours & use of profanity	SEC MC 18-2019 §2(c)–(f) (no profane language, no calls 10 pm-5 am, no violence); BSP M-2020-074
Collection agents posing as “Legal Department of BSP/SEC”	SEC MC 18-2019 §2(a) (no false representation); RA 11765 §8(a) (fraud/misrepresentation)

Administrative precedents

2019–2020: SEC revoked the primary licenses or Certificate of Authority of 44 OLPs (e.g., Cashlend, Peso Tree, CreditPanda) for harassment & unregistered operations.
NPC issued Cease-and-Desist Orders vs 26 apps that scraped contacts without valid consent (2020–2022).
2024: First FCPA joint enforcement—SEC imposed ₱3 million fine & permanent app takedown after verified threats involving “dox-shaming” of 7,400 borrowers.

5 | Borrower remedies & defense toolkit

(a) Administrative)

SEC Phils. Complaint Form 5.0 (online or personally filed) – 15-day investigation window; may lead to license suspension & restitution.
NPC Online Complaints Portal – for privacy breaches; NPC may order data erasure and fine up to 2 % of lender’s annual gross income.
BSP Consumer Assistance Mechanism (for bank-partnered apps) – 7-day mediation; unresolved cases escalate to Financial Consumer Protection Dept.
DTI Fair-Trade Enforcement – deceptive marketing or hidden fees.

(b) Civil)

Annulment or reformation of loan contract in RTC/MTC; interest recalculated per jurisprudence.
Damages under Civil Code Arts 19–21 (abuse of right), including moral & exemplary damages for mental anguish.
Injunction & TRO vs ongoing harassing calls or social-media posts (Rule 58, Rules of Court).

(c) Criminal)

Grave threats, coercion, libel – file with Office of the City/Provincial Prosecutor or PNP-ACG.
Data-privacy offenses – Sec 25-33, RA 10173; imprisonment up to 6 years + fines.

6 | Compliance checklist for lenders & collectors (2025)

Register with SEC (Certificate of Authority) and submit OLP Information Sheet for every mobile/desktop app.
Interest-rate algorithm must auto-block any charge beyond BSP caps; back-end logs produced on demand.
Data-privacy impact assessment (DPIA) + opt-in granular consent; no “all-contact” permissions.
Collection SOP: calls only 8 am-9 pm; no more than once per day per contact point; scripts vetted for tone.
Audit trail retention: 5 years for loan ledgers, 2 years for voice logs, per SEC MC 28-2021.
Staff training on RA 11765 & SEC MC 18-2019; third-party collectors require indemnity bond & joint-liability clause.

7 | Emerging policy trends

House Bill 3312 (Usury Law Modernization) – proposes re-imposing flexible statutory ceilings tied to prevailing policy rates. Passed 2nd reading (May 2025).
Digital Lending Accreditation Framework – draft joint BSP-SEC rules to create a single “fit-and-proper” test for fintech founders; public consultation closed June 2025.
SIM Registration Act (RA 11934, 2023) – facilitates tracing of anonymous harassing numbers; first convictions secured February 2025.
Financial Consumer Mediation Scheme – pilot e-arbitration platform under RA 11765 expected Q4 2025.

8 | Practical advice to borrowers

Document everything – take screenshots of texts, call logs, social-media posts.
Send a written demand to cease harassment (email or registered mail); give lender 5 days to comply, then escalate.
Check if the lender is SEC-registered via www.sec.gov.ph > Certified Entities list.
Do not delete the app until you have exported data; NPC may need forensic copies.
Seek counselling – harassment often leads to anxiety; psychological injury receipts strengthen a damages claim.

9 | Conclusion

Despite the formal lifting of usury ceilings in 1982, Philippine law has never allowed profiteering or abusive debt collection in disguise. Through a lattice of Civil Code equity, recent BSP interest caps, SEC fair-collection rules, the Data Privacy Act, RA 11765, and criminal statutes, regulators now have a robust toolkit to curb excessive interest and online-loan harassment. Borrowers, meanwhile, possess an expanding array of administrative, civil, and criminal remedies. As fintech credit continues to evolve, vigilance by both regulators and consumers remains essential.

This article is for educational purposes only and is not a substitute for tailored legal advice. For specific cases, consult a lawyer licensed in the Philippines.