(Legal article; Philippine context)

1) Start with the hard truth: “Excessive interest” is usually a civil issue, not a simple “usury” case

The Philippines once had a statutory Usury Law setting ceilings on interest. Those ceilings were effectively suspended for most loans decades ago through Central Bank/BSP issuances, so “interest above X% is automatically illegal” is generally not the rule today.

What is firmly established in Philippine law, however, is this:

Courts can strike down or reduce interest that is unconscionable, iniquitous, or exorbitant, even if both sides signed the contract. This flows from Civil Code principles on obligations/contracts, autonomy of contracts being limited by law, morals, good customs, public order, and public policy, plus jurisprudence recognizing the power of courts to equitably reduce oppressive interest.
Even if the numeric rate isn’t capped, lenders must comply with disclosure and consumer protection rules (especially for banks and regulated financial institutions). A loan can be attacked not only for “excessive” pricing, but also for hidden charges, misleading disclosures, improper computation, and abusive collection.

So complaints typically succeed through one (or more) of these angles:

Unconscionable interest (equitable reduction / partial nullity of interest stipulation)
Non-disclosure / misleading disclosure (Truth in Lending and consumer-protection standards)
Illegal or unlicensed lending (SEC registration issues, especially with online lenders)
Abusive or unlawful collection conduct (harassment, threats, doxxing; privacy/cybercrime angles)

2) Know the governing legal framework (what you can cite)

A. Civil Code (core contract rules)

Key principles you will rely on:

A contract is binding, but stipulations contrary to law/public policy are void.
Courts may moderate penalties and refuse to enforce oppressive terms.
Interest must generally be expressly stipulated in writing; otherwise, the lender may be limited to principal (and, in some cases, legal interest may be imposed by the court depending on the circumstances).

Practical effect: Even if there’s no general ceiling, a borrower can ask a court to reduce the interest to a fair level, or annul the interest/charges that are invalid or unconscionable.

B. Truth in Lending Act (RA 3765) and disclosure rules

This law requires lenders (particularly those in the business of lending) to disclose the true cost of credit. The most common issues:

“Monthly interest” stated, but effective annual rate not clearly explained
Interest computed on a flat rate basis without clear disclosure (making the effective rate much higher)
Fees, add-ons, and insurance bundled in a way that hides the real finance charge

Practical effect: If disclosures are incomplete or misleading, that strengthens your complaint and your court case.

C. Financial consumer protection (for BSP-supervised institutions)

The Philippines now has a comprehensive financial consumer protection law: RA 11765 (Financial Products and Services Consumer Protection Act). It strengthens standards on:

Disclosure and transparency
Fair treatment
Responsible pricing / prevention of abusive practices
Effective complaint handling and redress

Practical effect: If your lender is BSP-supervised (banks, many non-bank financial institutions under BSP), you have a clear complaint path and strong consumer rights framing.

D. SEC regulation for lending/financing companies (and many online lenders)

If the lender is a lending company or financing company, it is typically under SEC jurisdiction (registration, compliance, and enforcement). Many online lending operations fall here.

Practical effect: If the lender is unregistered, misrepresenting terms, or using abusive practices, the SEC route can be powerful.

E. Data Privacy Act (RA 10173) for harassment and contact-list abuse

A major pattern in “excessive interest” complaints—especially with online lending apps—is abusive collection that involves:

Accessing your contacts
Messaging your employer/friends
Posting/sharing your personal data
Threats and shaming

Practical effect: This becomes a separate and strong complaint with the National Privacy Commission (NPC), independent of the interest-rate dispute.

F. Cybercrime / penal laws (as applicable)

Depending on conduct, you may have angles involving:

Threats, coercion, grave threats/illegal threats
Online harassment, impersonation, unauthorized access, etc.

Practical effect: This can support police/blotter actions or prosecutorial complaints, especially for extreme collection abuse.

3) “Excessive” compared to what? Understanding how interest gets challenged

Since there is usually no universal cap, “excessive” is assessed through fairness and context:

Indicators of unconscionable or iniquitous interest

Rates that are extremely high relative to principal and term
Compounding that balloons the debt rapidly
Penalty interest + late fees + “service fees” stacking (double- or triple-charging for the same delay)
Flat-rate computation presented as “simple interest” (effective rate becomes much higher)
One-sided terms (e.g., immediate acceleration + massive penalties + attorney’s fees)

Add-ons matter as much as the stated rate

In practice, disputes often turn on the total finance charge, not just “X% per month.” These can include:

Processing fee
Service fee
Insurance
“Membership” or “platform” fee
Collection fee
Notarial/documentary fees
Late payment fee and penalty interest
Attorney’s fees (sometimes automatically imposed)

If these are not transparently disclosed or are excessive, you have more leverage.

4) Identify your lender first — the correct forum depends on this

Your complaint goes faster when filed with the right regulator.

A. If your lender is a bank (including credit cards issued by banks)

Primary forum: BSP (Bangko Sentral ng Pilipinas) consumer protection / complaint handling Common products: personal loans, salary loans, credit cards, auto/home loans, bank-affiliated financing

B. If your lender is a lending company / financing company (many OLA/online lenders)

Primary forum: SEC Common products: online lending apps, short-term loans, installment financing by financing companies

C. If your lender is a pawnshop

Many pawnshops are under BSP regulatory supervision. Primary forum: typically BSP, depending on the entity classification.

D. If your lender is a cooperative

Primary forum: often CDA (Cooperative Development Authority), depending on the cooperative and the product.

E. If your lender is an individual/informal lender (“5-6,” private lender)

No regulator complaint may be effective for pricing alone; remedies are usually:

Civil action (court) to reduce interest / contest charges
Complaints for harassment/threats (police/prosecutor)
Data privacy complaint if personal data misuse occurred

5) Step-by-step: the complaint process that actually works

Step 1 — Secure and organize evidence (do this before you message anyone)

Collect:

Loan contract / promissory note / terms & conditions / screenshots (if app-based)
Disclosure statements (Truth in Lending disclosures, schedules, amortization table)
Statements of account and payment history
Receipts, bank transfer proofs, e-wallet logs
All messages from collectors (SMS, email, chat logs, call recordings if lawful)
Screenshots showing app permissions requested/granted (contacts, photos, etc.)
Any advertisements or “quoted rates” shown to you before you accepted

Create a simple one-page summary:

Principal received (net proceeds)
Fees deducted upfront
Total amount demanded
Stated interest rate
Effective rate (if you can compute; even a rough computation helps)
Key abusive practices (if any)

Step 2 — Compute the “true cost” in plain terms

Even without complex math, show:

Net proceeds received vs total repayment demanded
Total charges (interest + fees + penalties)
Timeline (how quickly it escalated)

A persuasive framing:

“I received ₱___ net on (date). Within ___ days/weeks, I was required to pay ₱___, equivalent to ___% for the period, excluding/including fees.”

If there is “flat interest,” emphasize:

Flat interest often makes the effective rate much higher than what borrowers assume.

Step 3 — Send a written demand/complaint to the lender (required in many regulated complaint systems)

Write a concise demand:

Dispute the charges as unconscionable / not properly disclosed
Ask for:
1. itemized breakdown of principal/interest/fees/penalties,
2. recomputation using lawful and properly disclosed charges,
3. suspension of illegal/abusive collection,
4. correction of your account.
Set a deadline (e.g., 7–15 days) and keep proof of sending.

Why this matters: Regulators (especially BSP) typically expect you to first use the institution’s internal complaint channel.

Step 4 — Escalate to the correct regulator

If BSP-supervised (banks and many BSP-regulated non-banks)

Your complaint should include:

Your personal details and account/loan reference
Clear narration of facts (chronological)
The relief you want (recompute, refund/waive excessive charges, stop harassment)
Attachments/screenshots
Proof you raised it to the institution first (or explain why you couldn’t)

BSP complaints are strongest when framed as:

Unfair pricing / abusive terms
Misleading disclosure
Improper computation
Unfair collection conduct
Violation of consumer protection standards under RA 11765

If SEC-supervised (lending/financing companies, many OLAs)

File with the SEC emphasizing:

Whether the entity is properly registered (if unsure, state you are unsure and request verification)
Deceptive or unclear pricing
Unconscionable interest/fees
Abusive collection practices
Misrepresentations, threats, and harassment
Any indications of operating without authority or using deceptive business names

SEC complaints often have added force when they include:

Screenshots of app store listings
Proof of the company name used vs the entity in contracts
Collection scripts showing harassment and disclosure of debt to third parties

Step 5 — File a Data Privacy complaint if harassment involves your personal data (NPC)

File a separate complaint if:

Your contacts were messaged
Your photos/info were accessed or shared
Your debt was disclosed to employer, family, friends
You were threatened with posting/shaming
The lender processed your data without valid basis or beyond what was necessary

Evidence that wins here:

Screenshots of messages to third parties
App permission logs
The lender’s privacy policy (if any) and what you consented to
Proof of identity and account linkage

Step 6 — Consider court action when the money is significant or the lender won’t budge

You have several court pathways:

A. Small Claims (if the dispute fits the rules and you’re seeking a money claim)

Small Claims is designed for faster resolution without lawyers in many cases (subject to current rules and thresholds). This can be useful when:

You are seeking refund of overpayments, or
The lender sues you and you need defenses set out clearly (procedurally, defenses may be raised in the appropriate manner)

B. Civil action to reduce/annul unconscionable interest and charges

Typical remedies sought:

Declaration that interest/penalty provisions are unconscionable and should be reduced
Reformation of the obligation based on correct computation
Accounting (detailed recomputation)
Damages (in egregious cases)
Injunction (to stop unlawful collection acts, depending on facts)

Courts frequently use equity to reduce interest and align outcomes with fairness and public policy, and apply the prevailing legal interest doctrines when appropriate.

C. If the lender sues you (collection case)

Common defenses/positions:

Interest/penalties are unconscionable
Amount claimed is inflated and not supported by proper accounting
Lack of proper disclosure / misrepresentation
Payments not credited properly
Abusive collection and bad faith (contextual, may affect damages)

6) What to write: a practical complaint structure (regulator-ready)

Use this structure whether for BSP, SEC, or the lender’s internal process:

Caption / Parties

Your name, address, contact details
Lender’s complete name, address (as best you know), account/loan reference

Product and timeline

Date applied, date approved, date funds received
Principal, net proceeds received, fees deducted
Repayment schedule promised vs what was demanded

Pricing problem

Stated interest rate and penalties
All fees and add-ons
How the debt ballooned
Why it is unconscionable and/or not properly disclosed

Collection conduct (if relevant)

Harassment, threats, third-party disclosures
Attach screenshots and list dates/times

Steps you already took

Date you complained to lender, their response (or lack of response)

Relief requested Choose concrete relief:

Full itemization and accounting
Recompute using properly disclosed and fair charges
Waiver/refund of excessive interest/fees/penalties
Stop unlawful collection; stop contacting third parties
Correct credit records (if applicable)

Attachments Number them (Annex A, B, C…).

7) Common lender tactics — and how to answer them

“You agreed to it.”

Answer: Consent does not validate unconscionable terms; courts can reduce oppressive interest, and disclosure laws require transparent pricing.

“That’s just service fees, not interest.”

Answer: Fees that function as finance charges may be treated as part of the true cost of credit, especially if they inflate the effective rate or were not properly disclosed.

“We can contact anyone to locate you.”

Answer: Disclosure of your debt to third parties and misuse of contact data can violate privacy and fair collection standards. Collection must still be lawful.

“We’ll file a criminal case for estafa if you don’t pay.”

Nonpayment of a loan is generally not estafa by itself. Estafa requires specific fraudulent acts. Threatening criminal prosecution as a pressure tactic may itself be abusive, depending on circumstances.

8) Special focus: Online Lending Apps (OLAs) — where most “excessive interest” complaints arise

Red flags that strengthen your case

Very short terms with massive “fees”
Access to contacts/photos required to release funds
Threats to post/shame
Messages sent to employer/friends
Different company names across app, contract, collector messages
No clear amortization schedule or APR equivalent
“Roll-over” loans that trap you in repeated fees

Multi-pronged enforcement is often best

For OLAs, it’s common to file:

SEC complaint (registration and lending practices)
NPC complaint (privacy violations)
Police blotter/prosecutor (threats/harassment), when severe
Civil action if amounts are large or you need court-ordered accounting/injunction

9) Outcomes you can realistically expect

From regulators (BSP/SEC)

Possible outcomes include:

Orders or directives to respond, explain, correct computation, and improve disclosures
Administrative sanctions (depending on findings and jurisdiction)
Mediation/assisted resolution
Documentation that supports your later court case

Regulators may not always “set your interest rate,” but they can compel fair complaint handling, enforce disclosure standards, and penalize abusive practices within their authority.

From courts

Courts can:

Reduce interest and penalties deemed unconscionable
Order a recomputation (accounting)
Award damages in proper cases
Impose legal interest rules where applicable based on jurisprudence and the nature of the obligation

10) Practical checklist (do this, avoid that)

Do

Preserve evidence immediately (screenshots, logs, receipts)
Demand an itemized accounting
Separate issues: pricing + disclosure + harassment + privacy
File with the correct regulator
Keep communications in writing

Avoid

Relying only on verbal promises of “restructure”
Paying “fees to stop harassment” without written recomputation
Deleting messages (they are evidence)
Confrontational threats; keep complaints factual and documented

11) One-page summary of where to complain (by lender type)

Bank / bank credit card / BSP-supervised financial institution: BSP consumer protection complaint process (after complaining to the institution first)
Lending company / financing company / many OLAs: SEC
Cooperative loan: typically CDA (and internal cooperative mechanisms)
Privacy-invasive harassment (contacts, shaming, third-party disclosures): NPC under the Data Privacy Act
Threats/harassment rising to criminal conduct: Police blotter and possible prosecutor filing, depending on facts
Need recomputation/refund or to contest inflated claims definitively: Court action (civil/small claims as appropriate)

12) Core legal theory to keep repeating in your filings

Even absent a general usury ceiling, unconscionable interest and oppressive penalties are not enforceable as written; equity allows reduction.
The lender must prove and explain the amount claimed with clear accounting.
Credit pricing must be transparent; hidden or misleading charges violate disclosure and consumer protection standards.
Collection must be lawful; privacy-invasive and harassing methods create independent liability and strengthen your main case.