The proliferation of Online Lending Applications (OLAs) in the Philippines has provided quick credit access to the unbanked. However, this convenience often comes at a steep price: exorbitant interest rates, hidden charges, and predatory collection practices. If you are struggling with an OLA, it is crucial to understand that the Philippine legal framework provides specific protections against "conscionable" debt and harassment.

1. The Legal Ceiling on Interest Rates

While the Philippines technically "suspended" the Usury Law decades ago, the Supreme Court has consistently ruled that interest rates must not be "excessive, iniquitous, unconscionable, and exorbitant."

SEC Memorandum Circular No. 3 (Series of 2022): This is the primary regulation for OLAs. It imposes a cap on interest rates and fees for short-term consumer loans (loans below ₱10,000 or tenures below 4 months):
Nominal Interest Rate: Maximum of 6% per month (approx. 0.2% per day).
Effective Interest Rate (EIR): Maximum of 15% per month (this includes the interest plus all other fees like processing, service, and administrative fees).
Penalties for Late Payment: Maximum of 1% per month on the outstanding principal.
Total Cost Cap: The total sum of all interest, fees, and penalties cannot exceed 100% of the principal amount.

Note: Any rate exceeding these limits is legally contestable. If an OLA charges 20% or 30% per month, they are in direct violation of SEC regulations.

2. Unfair Collection Practices and Privacy Violations

One of the most common complaints against OLAs is "debt shaming" or the unauthorized access of contact lists. These actions are strictly prohibited under SEC Memorandum Circular No. 18 (Series of 2019) and the Data Privacy Act of 2012.

Prohibited Acts Include:

Using threats of violence or other criminal means to harm the person, reputation, or property of any person.
Using profanity or abusive language.
Contacting persons in the borrower’s contact list who are not designated as co-makers or guarantors.
Disclosing the borrower's name as a "delinquent" on social media or public platforms.
Threatening to take any action that cannot legally be taken (e.g., claiming you will be jailed for "non-payment of debt," which is a violation of the Constitution).

3. Step-by-Step Guide to Dealing with Unfair Terms

A. Audit the Loan Agreement

Demand a Disclosure Statement before or during the loan release. Under the Truth in Lending Act, creditors are required to disclose the full cost of credit (interest, processing fees, etc.) in writing. If these were hidden, the OLA cannot legally enforce those specific charges.

B. Formal Communication

If the interest is unconscionable, write a formal letter (or email) to the OLA. State that you are willing to pay the principal plus a reasonable/legal interest rate, but you object to the excessive fees based on SEC M.C. No. 3.

C. Document Harassment

If agents begin to harass you or your contacts:

Screenshots: Take photos of threatening texts, social media posts, or emails.
Recording: Record phone calls (inform them you are recording if possible, though in harassment cases, the record serves as vital evidence for complaints).
Logs: Keep a timeline of when they contacted people outside of your references.

4. Legal Remedies and Where to File Complaints

If the OLA refuses to adjust the terms or continues harassment, you should escalate the matter to the following regulatory bodies:

Agency	Scope of Complaint
Securities and Exchange Commission (SEC)	Violations of interest rate caps, unfair collection practices, and lack of a Certificate of Authority to operate.
National Privacy Commission (NPC)	Unauthorized access to phone contacts, debt shaming, and data breaches.
Bangko Sentral ng Pilipinas (BSP)	If the OLA is operated by or linked to a regulated bank or financing company.
National Bureau of Investigation (NBI)	If the harassment involves cyber-libel, threats, or extortion.

5. The "No Imprisonment for Debt" Rule

Article III, Section 20 of the Philippine Constitution explicitly states: "No person shall be imprisoned for debt." While you can be sued civilly for collection of a sum of money, you cannot be jailed simply because you cannot afford to pay a loan. Criminal cases (like Estafa or BP 22) only apply if there was fraud, deceit, or if you issued a "bouncing" check. Defaulting on an OLA loan due to high interest is a civil matter, not a criminal one.

Summary Checklist for Borrowers

Check the SEC website to see if the OLA is a registered Lending or Financing Company.
Calculate the Effective Interest Rate; if it’s over 15% monthly, it’s illegal for small loans.
Report "Contact List" harvesting to the NPC immediately.
Never pay through unofficial channels; always use the app's verified payment gateways to ensure documentation.