A practitioner-style explainer for borrowers, advocates, and in-house compliance teams

Quick take: “Usury” ceilings were suspended decades ago, but courts still strike down unconscionable interest, abusive collection is illegal, and lending/financing businesses must be licensed. If a lender is unlicensed or engages in predatory rates and harassment, you can pursue administrative, civil, and criminal remedies—often in parallel.

1) The legal landscape at a glance

Licensing & who regulates whom
- Securities and Exchange Commission (SEC) regulates lending and financing companies (including most app-based “online lenders”). Lending/financing requires prior authority to operate and, for online operations, additional approvals and platform disclosures.
- Bangko Sentral ng Pilipinas (BSP) regulates banks, quasi-banks, e-money issuers, and other BSP-supervised financial institutions (BSFIs).
- Insurance Commission (IC) regulates insurers/HMOs (relevant if a “loan” is bundled with insurance).
- National Privacy Commission (NPC) enforces the Data Privacy Act (common in “debt shaming,” phonebook scraping, excessive permissions).
Usury ceilings: Statutory interest caps under the old Usury Law are not in force, but interest must be expressly agreed in writing and courts reduce or nullify rates that are “unconscionable” (e.g., exorbitant per-month compounding, oppressive penalty interest).
Consumer protection: The Financial Products and Services Consumer Protection Act (FCPA, 2022) empowers the SEC, BSP, and IC to curb abusive practices, order restitution, and impose penalties.
Collection conduct: Unfair or abusive collection (threats, public shaming, contacting phonebook, obscene/vulgar language, contacting workplace/relatives with sensitive details) can trigger administrative sanctions, privacy enforcement, and even criminal liability (e.g., grave threats/coercion, unjust vexation, cyber-libel).

2) When is a lender “unlicensed”?

A lender is unlicensed if it:

Offers or grants loans for profit to the public without SEC grant of authority (for lending/financing companies), or
Operates an online lending platform without the required SEC registration/approvals and mandated disclosures (corporate name, certificate/number, physical address, contact channels, complaint process).

Practical indicator: No SEC registration number on the app/website; mismatched corporate names; only a generic email/Telegram; no physical address; requests for fees before release; or instructions to pay to personal e-wallets.

3) What counts as “unconscionable” interest?

There’s no fixed cap, but Philippine courts routinely invalidate or reduce rates that are:

Extremely high effective annualized rates (e.g., 30–60% per month, daily compounding, “roll-over” fees) with short tenors designed to trap borrowers.
Hidden or back-loaded fees that inflate the true cost (processing fees deducted upfront, “service fees,” verification fees).
Punitive penalty interest and liquidated damages stacked atop already high regular interest.
One-sided fine print sprung after disbursement (e.g., terms “accepted” by clicking inside the app with no prior disclosure).

Courts may (a) void the usurious interest clauses entirely, (b) reduce them to a reasonable rate, or (c) allow recovery of overpayments, and then apply legal interest on amounts due (the prevailing legal rate has been 6% per annum in recent jurisprudence).

4) Your remedies: administrative, civil, and criminal (and when to use each)

A) Administrative actions

Where to file:
- SEC–Enforcement & Investor Protection (for unlicensed lenders, illegal online lending, unfair collection by SEC-regulated entities).
- BSP Consumer Assistance (if the lender is a bank/BSFI).
- NPC (debt shaming, phonebook scraping, intrusive data processing, data breaches).
What you can get: Investigations, cease-and-desist orders, platform takedowns, fines/penalties, and directed refunds/restitution under the FCPA and sectoral rules.

B) Civil actions

Goals:
1. Annul or reform unconscionable interest/penalties;
2. Recover overpayments and damages (actual, moral, exemplary, attorney’s fees);
3. Seek injunction against harassment or unlawful collection;
4. Small Claims for straightforward money disputes (no lawyers required; check the current monetary cap—recently increased—before filing).
Venue/Jurisdiction: Typically where you or the defendant reside, or where the cause of action arose. For small claims, file in the first-level courts (MCTC/MTCC/MeTC).

C) Criminal complaints (situational)

Grave threats/coercion, unjust vexation, hacking, cyber-libel, identity theft, and related offenses may apply depending on the conduct.
Where to file: NBI-Cybercrime Division or PNP Anti-Cybercrime Group; then inquest or prosecutor’s office.

Tip: Administrative and civil remedies can proceed in parallel. A favorable SEC/NPC outcome (finding of violations) often strengthens a civil case.

5) Evidence strategy (build this before you file)

Identity of the lender: Screenshots of the app store page, in-app “About,” website captures, SEC/BSP disclosures (if any), corporate name, addresses, emails, numbers.
Your transaction trail:
- Loan application flow (screens/steps), T&Cs acceptance, timestamps.
- Loan release proof (bank/e-wallet credit, amount actually received).
- All charges (processing fees, verification fees, interest tables).
- Repayments (receipts, bank/e-wallet debits, reference numbers).
Harassment/abuse:
- Call logs, recordings (where lawful), messages (SMS, chat, email), social posts.
- Evidence of third-party contacts (employer, relatives), public shaming, threats.
Privacy violations: Permission prompts, screenshots of the app requesting contacts, photos, SMS, location, and any disclosures (or absence of them).
Computation sheet: A clear table calculating the effective interest rate and overpayments, distinguishing principal, contractual interest, penalties, and fees.

Keep original files; export chats; back up to cloud/USB; record dates/times.

6) How to file—step by step

A) Filing with the SEC (unlicensed and abusive online lenders)

Prepare a verified complaint (brief facts, parties, violations, reliefs).
Attach identity + transaction + harassment evidence and your computation sheet.
Include your government ID, addresses, and contact details.
Request (i) cease-and-desist, (ii) platform/app takedown, (iii) administrative fines, (iv) restitution/refund of unlawful charges, and (v) referral for criminal prosecution if warranted.
File via the SEC’s designated intake channel (physical or electronic, per current SEC guidelines).
Cooperate with requests for additional documents or affidavits.

B) Filing with the NPC (debt-shaming/privacy violations)

Draft a complaint-affidavit narrating the data processing: what was collected, how it was used, lack of consent/notice, and harms suffered.
Attach screenshots of permission prompts, copies of shaming messages, and third-party attestations where possible.
Pray for compliance orders, fines, erasure/cease processing, and damages/restitution under the FCPA/Data Privacy framework.

C) Filing a civil case (annul/reform interest; damages; small claims)

Cause of action: (a) nullity/reformation of unconscionable interest/penalties; (b) sum of money for excess charges; (c) damages for abusive collection and privacy harms.
Pleadings: Complaint with narrative + computation; attach contracts/T&Cs, payment records, and administrative findings (if any).
Reliefs to pray for:
- Declaration that interest/penalties are void or reduced;
- Accounting and refund of overpayments;
- Permanent injunction against harassment;
- Damages (moral, exemplary) and attorney’s fees;
- Costs and legal interest on amounts due/refundable.

D) Criminal complaints (if threats/coercion or cyber offenses)

Prepare a complaint-affidavit with message logs/recordings; request digital forensics where needed; identify handlers/agents and numbers used.

7) Litigation playbook: legal theories that work

No written stipulation, no interest. Interest must be expressly stipulated in writing; if not, only legal interest may be imposed from default/judicial demand.
Unconscionability control. Even with a written rate, courts strike down/reduce interest/penalty rates that shock the conscience (commonly monthly rates with heavy compounding or cumulative penalties).
Penalty reduction. Courts may reduce iniquitous penalty clauses separate from the regular interest.
Partial nullity. Courts often uphold the principal (the money you received) while voiding or reducing the interest/penalty portions and awarding refunds/damages for abusive conduct.
Privacy and tort overlay. Debt shaming, unauthorized disclosure to contacts, and misuse of personal data can ground independent liability (privacy breaches, defamation/cyber-libel, tort under the Civil Code).

8) Defenses you may face (and counters)

“We’re just a ‘marketplace’ app.” If it facilitates lending and sets terms, it’s likely regulated; formal labels don’t control over substance.
“The borrower consented.” Consent must be informed and specific; dark-pattern prompts and bundled permissions are challengeable.
“You accepted the interest.” Courts police unconscionability notwithstanding consent, and can reform or nullify oppressive rates/penalties.
“No damages.” Harassment and privacy violations cause compensable harm (anxiety, reputational injury, workplace issues).

9) Common recovery scenarios

Interest/penalty struck down → Judgment for principal only (minus what you’ve paid) + legal interest; lender’s claims for penalties dismissed.
Excess charges refunded → Court orders accounting and restitution of processing/hidden fees and over-collected interest.
Abuse findings → Damages (moral/exemplary), attorney’s fees, and injunctive relief; plus regulatory fines against the lender.

10) Practical templates & checklists

A) Complaint structure (SEC/NPC/civil)

Parties & jurisdiction/regulatory hook
Material facts (timeline; app/lender identity; amounts; harassment)
Violations & legal basis (licensing; consumer protection; privacy; civil code)
Prayer for relief (CDO, takedown, restitution, damages, injunction, costs)
Verification & certification against forum shopping (for court filings)
Annexes: KYC page/app store listing; T&Cs; disbursement proof; fees; messages; computation

B) Evidence packet index

Annex A: Corporate/app identity (screenshots, domain/WHOIS, addresses)
Annex B: Loan disclosure and T&Cs (full text; acceptance flow)
Annex C: Release vs. net proceeds (bank/e-wallet proof)
Annex D: Repayment ledger & computation (xlsx/printout)
Annex E: Harassment/third-party contact proofs
Annex F: Privacy permission prompts and data flows
Annex G: Sworn statements/affidavits (you and witnesses)

C) Computation worksheet (columns)

11) Timelines, costs, and strategy tips

Act fast on harassment. Seek interim relief (protective/injunction orders) and file with NPC/SEC immediately; regulators can move quickly on abusive collection and illegal apps.
Parallel tracks. Don’t wait for one forum to finish—file administrative and civil in parallel when warranted. Use admin findings to bolster civil claims.
Small claims efficiency. For pure money disputes within the cap, small claims can be the fastest route to a refund of over-collections.
Preserve digital evidence properly (hashing/exports), and avoid altering original files.
Mind venue and service. For app-based lenders, pin down the real juridical entity and its registered address for service of summons.

12) Frequently asked questions

Q: If the lender is unlicensed, is my loan automatically void? A: Courts commonly enforce the principal (money you actually received) but may void interest/penalties and award refunds/damages. The lender also faces regulatory penalties.

Q: They contacted my boss and relatives. What can I do immediately? A: Document everything, file with the NPC (privacy breach) and SEC/BSP (unfair collection), and consider a court injunction and damages claim.

Q: They deducted “processing fees” before releasing the loan. A: Those inflate the effective rate; challenge them as unreasonable/hidden charges and seek refund in civil/admin proceedings.

Q: The app requires access to my contacts/photos. Legal? A: Likely unlawful without clear, specific, and necessary purpose and consent; using that data for debt shaming is sanctionable.

Q: Do I need a lawyer? A: Helpful, especially for civil suits and to coordinate multi-front action. For small claims, lawyers aren’t required, but legal advice is still wise.

13) Action plan (one-page playbook)

Freeze the facts: Export app pages, T&Cs, logs, and all messages.
Map the entity: Identify the corporate name and regulator (SEC or BSP).
Compute the rate/overcharges: Build the worksheet; highlight unconscionable elements.
File admin complaints: SEC/BSP for licensing/collection; NPC for privacy; ask for takedown & restitution.
File civil case: Annul/reform interest; claim refund and damages; consider small claims if purely monetary and within the cap.
Escalate if criminal conduct: NBI/PNP cybercrime complaints with your evidence packet.
Maintain communications discipline: No admissions; keep all exchanges in writing.

Final notes

This article is general information, not legal advice. Facts matter: entity type, documents you signed, payments made, and the manner of collection all change the analysis.
For current filing portals, forms, monetary thresholds, and regulator circulars, check the latest directly with SEC, BSP, NPC, and the Supreme Court’s small-claims rules before you file.