In the Philippines, the rise of Online Lending Applications (OLAs) and traditional lending companies has led to an increase in reports regarding predatory lending practices. While the lifting of the interest rate ceiling in the 1980s via Central Bank Circular No. 905 initially deregulated rates, the Supreme Court and the Securities and Exchange Commission (SEC) have since established clear boundaries to protect borrowers from "unconscionable" terms.

1. The Legal Basis: When is Interest "Excessive"?

Under Philippine law, there is no longer a specific "usury" law that sets a hard cap on all interest rates. However, the Supreme Court has consistently ruled that interest rates that are "iniquitous, unconscionable, and contrary to morals" are void.

Judicial Precedent: Rates exceeding 12% to 24% per annum (or roughly 1% to 2% per month) are often scrutinized. If a rate reaches 3% to 6% per month (36% to 72% per annum), courts frequently strike them down as "unconscionable," reducing them to the legal rate (currently 6% per annum for judgments).
SEC Memorandum Circular No. 3 (Series of 2022): This specific circular provides a ceiling for short-term, low-value loans (often issued by OLAs):
Nominal Interest Rate: Maximum of 6% per month (approx. 0.2% per day).
Effective Interest Rate (EIR): Maximum of 15% per month (includes all fees like processing, service, and technical fees).
Penalties for Late Payment: Capped at 1% per month of the outstanding amount.

2. Common Violations by Lending Companies

Aside from excessive rates, lenders often violate the Financial Products and Services Consumer Protection Act (Republic Act No. 11765) and the Truth in Lending Act (Republic Act No. 3765) through:

Non-Disclosure: Failure to provide a "Disclosure Statement" before the loan is perfected, clearly showing the net proceeds, interest, and all other charges.
Unfair Collection Practices: This includes debt shaming, threatening legal action that is not legally possible (e.g., claiming you will go to jail for non-payment of a civil debt), and accessing phone contacts to harass friends and family.

3. Step-by-Step Filing Process

Step A: Document Everything

Before filing a formal complaint, gather the following evidence:

Loan Agreement and Disclosure Statement: To prove the agreed-upon interest.
Proof of Payment: Receipts or screenshots of transfers.
Communication Logs: Screenshots of threats, harassment, or demand letters.

Step B: File with the Securities and Exchange Commission (SEC)

The SEC is the primary regulator for lending and financing companies.

Draft a Formal Complaint: Use the SEC's Complaint Form available on their website (Corporate Governance and Finance Department).
Submit via Email: Send the complaint and supporting documents to enforcement_ipce@sec.gov.ph or through the SEC's online portal.
Grounds: Cite violations of SEC MC No. 3 (2022) regarding interest caps or SEC MC No. 18 (2019) regarding Unfair Debt Collection Practices.

Step C: Coordinate with the National Privacy Commission (NPC)

If the lender accessed your contact list or posted your information on social media (debt shaming), file a complaint for violation of the Data Privacy Act of 2012.

Process: Submit a "Statement of Admissibility" and a formal complaint via the NPC's official website.

Step D: Bangko Sentral ng Pilipinas (BSP)

If the lending entity is a bank or a quasi-bank, the complaint should be directed to the BSP Consumer Protection and Market Conduct Office (CPMCO).

4. Summary of Key Protections

Law/Regulation	Protective Provision
RA 3765 (Truth in Lending Act)	Requires full disclosure of the cost of credit.
SEC MC No. 3 (S. 2022)	Caps interest and fees for small, short-term loans.
RA 11765 (Financial Consumer Protection)	Prohibits unfair or deceptive acts and predatory lending.
Art. 1306, Civil Code	Contracts cannot be contrary to law, morals, or public policy.

5. Legal Remedies Against Harassment

Under SEC Memorandum Circular No. 18 (Series of 2019), the following are prohibited:

Using profane or abusive language.
Contacting persons in the borrower's contact list who are not co-makers or guarantors.
Disclosing the borrower's name as a "delinquent" in public.

Criminal Action: If the harassment involves grave threats or coercion, the borrower may file a criminal complaint for Cyberlibel or Unjust Vexation with the assistance of the PNP Anti-Cybercrime Group (ACG) or the NBI Cybercrime Division.